Shelf Prospectus
1. Any public financial institution, public sector bank or scheduled bank whose main object is financing
shall file a shelf prospectus.
2. A company filing a shelf prospectus with the Registrar shall not be required to file prospectus afresh
at every stage of offer of securities by it within a period of validity of such shelf prospectus.
3. A company filing a shelf prospectus shall be required to file an information memorandum on all
material facts relating to new charges created, changes in the financial position as have occurred
between the first offer of securities, previous offer of securities and the succeeding offer of
securities within such time as may be prescribed by the Central Government, prior to making of a
second or subsequent offer of securities under the shelf prospectus.
4. An information memorandum shall be issued to the public along with shelf prospectus filed at the
stage of the first offer of securities and such prospectus shall be valid for a period of one year from
the date of opening of the first issue of securities under that prospectus:
Provided that where an update of information memorandum is filed every time an offer of securities is
made, such memorandum together with the shelf prospectus shall constitute the prospectus.
Explanation.-For the purpose of this section:-
(a) "financing" means making loans to or subscribing in the capital of, a private industrial enterprise
engaged in infrastructural financing or, such other company as the Central Government may notify
in this behalf;
(b) "Shelf prospectus" means a prospectus issued by any financial institution or bank for one or more
issues of the securities or class of securities specified in that prospectus.
Red Herring Prospectus
(1) A public company making an issue of securities may circulate information memorandum to the public
prior to filing of a prospectus.
(2) A company inviting subscription by an information memorandum shall be bound to file a prospectus prior
to the opening of the subscription lists and the offer as a red-herring prospectus, at least three days
before the opening of the offer.
(3) The information memorandum and red-herring prospectus shall carry same obligations as are applicable
in the case of a prospectus.
(4) Any variation between the information memorandum and the red-herring prospectus shall be highlighted
as variations by the issuing company.
Explanation.- For the purposes of sub-sections (2), (3) and (4), "red-herring prospectus" means a
prospectus which does not have complete particulars on the price of the securities offered and the
quantum of securities offered.
(5) Every variation as made and highlighted in accordance with sub-section (4) above shall be individually
intimated to the persons invited to subscribe to the issue of securities.
(6) In the event of the issuing company or the underwriters to the issue have invited or received advance
subscription by way of cash or post-dated cheques or stock-invest, the company or such underwriters or
bankers to the issue shall not encase such subscription moneys or post-dated cheques or stock-invest before
the date of opening of the issue, without having individually intimated the prospective subscribers of the
variation and without having offered an opportunity to such prospective subscribers to withdraw their
application and cancel their post-dated cheques or stock-invest or return of subscription paid.
(7) The applicant or proposed subscriber shall exercise his right to withdraw from the application on any
intimation of variation within seven days from the date of such intimation and shall indicate such withdrawal
in writing to the company and the underwriters.
(8) Any application for subscription which is acted upon by the company or underwriters or bankers to the issue
without having given enough information of any variations, or the particulars of withdrawing the offer or
opportunity for cancelling the post-dated cheques or stock invest or stop payments for such payments shall be
void and the applicants shall be entitled to receive a refund or return of its post-dated cheques or stock-invest
or subscription moneys or cancellation of its application, as if the said application had never been made and
the applicants are entitled to receive back their original application and interest at the rate of fifteen per cent
from the date of encashment till payment of realization.
(9) Upon the closing of the offer of securities, a final prospectus stating therein the total capital raised, whether
by way of debt or share capital and the closing price of the securities and any other details as were not
complete in the red-herring prospectus shall be filed in a case of a listed public company with the Securities
and Exchange Board and Registrar, and in any other case with the Registrar only.]
