In a private placement, a company allocates shares or convertible securities to certain recipients (but not to the general public), in exchange for cash or assets.

A listed company with one type of shares may allocate shares only of the type listed for trading. A listed company whose capital includes different types of shares may allocate only shares of the preferred type, in terms of voting rights. A company may allocate convertible securities from series listed for trading, as well as convertible securities from series not listed for trading.

In some cases, as specified under the Israeli Companies Law, companies are required to convene a general assembly in order to approve the private placement. The manner of approving the allocation and the required majority are specified in the Israeli Companies Law.