PROSPECTUS
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Sec. 23
Public Offer
• A public company may issue securities** —
i. to public through prospectus ("public offer"); or
ii. through private placement (complying with the provisions of
Part II of this Chapter); or
• through
i. rights issue or
ii. bonus issue
• listed company or a company which intends to get its
securities listed also with the provisions of the SEBI Act, 1992
and the rules and regulations made thereunder.
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SCRA Sec. 2 (h)
“securities” include —
(i) shares, scrips, stocks, bonds, debentures, debenture stock or
other marketable securities of a like nature in or of any
incorporated company or other body corporate;
(ia) derivative;
(ib) units or any other instrument issued by any collective
investment scheme to the investors in such schemes;]
(ic) security receipt as defined in clause (zg) of section 2 of
SERFASI, 2002;
(id) units or any other such instrument issued to the investors
under any mutual fund scheme;]
(ii) Government securities;
(iia) such other instruments as may be declared by the Central
Government to be securities; and
(iii) rights or interest in securities;
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Sec. 24
• The provisions contained in this Chapter, Chapter IV (Share Capital &
Debentures) and in section 127 (Dividend) shall,—
(a) in so far as they relate to —
(i) issue and transfer of securities; and
(ii) non-payment of dividend,
• listed companies or those companies which intend to get their securities
listed - shall be administered by SEBI by making regulations in this behalf;
• in any other case - be administered by the Central Government.
• Explanation.— all powers relating to all other matters relating to prospectus,
return of allotment, redemption of preference shares and any other matter
shall be exercised by the Central Government, the Tribunal or the Registrar,
as the case may be.
• SEBI shall, in respect of matters specified in sub-section (1) exercise the
powers conferred upon it under sub-sections (1), (2A), (3) and (4) of section 11,
sections 11A, 11B and 11D of the SEBI Act, 1992
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Prospectus
Sec 2 (70) - "prospectus"
• any document
described or issued as a prospectus and includes
a RHP (Sec. 32) or
Shelf prospectus (Sec. 31 or
any notice, circular, advertisement or other document inviting offers from the public for
the subscription or purchase of any securities of a body corporate;
Deemed Prospectus [Sec. 25]
• Where a company
allots or agrees to allot any securities of the company with a view to all or any of those
securities being offered for sale to the public,
any document by which the offer for sale to the public is made shall, for all purposes, be
deemed to be a prospectus issued by the company;
and all enactments and rules of law as to the contents of prospectus and as to liability in
respect of mis-statements, in and omissions from, prospectus, or otherwise relating to
prospectus, shall apply with the modifications shall have effect accordingly, as if the
securities had been offered to the public for subscription and as if persons accepting the
offer in respect of any securities were subscribers for those securities, but without
prejudice to the liability, if any, of the persons by whom the offer is made in respect of
mis-statements contained in the document or otherwise in respect thereof. 5
• It shall be evidence that an allotment of, or an agreement to allot, securities was made with a
view to the securities being offered for sale to the public if it is shown—
(a) that an offer of the securities or of any of them for sale to the public was made within
6 months after the allotment or agreement to allot; or
(b) that at the date when the offer was made, the whole consideration to be received by
the company in respect of the securities had not been received by it.
• Section 26 (matters to be stated in Prospectus) shall have effect as if —
(i) it required a prospectus to state in addition to the matters required by that section to
be stated in a prospectus—
(a) the net amount of the consideration received or to be received by the company in
respect of the securities to which the offer relates; and
(b) the time and place at which the contract where under the said securities have been or
are to be allotted may be inspected;
(ii) the persons making the offer were persons named in a prospectus as directors of a
company.
• Where a person making an offer to which this section relates is a company or a firm, it shall
be sufficient if the document referred to in sub-section (1) is signed on behalf of the company
or firm by 2 directors of the company or by not less than one-half of the partners in the firm,
as the case may be.
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Matters to be Stated in Prospectus [Sec. 26]
• Every prospectus issued by or on behalf of a public company either with reference to its formation or
subsequently, or by or on behalf of any person who is or has been engaged or interested in the formation
of a public company, shall be dated and signed and shall state such information and set out such
reports on financial information as may be specified by SEBI [SEBI ICDR) Regulations, 2011]
• Declaration of compliance of the provisions of this Act and a statement to the effect that nothing in the
prospectus is contrary to the provisions of CA 2013, SCRA SEBI Act and Regulations made thereunder.
• The provisions will not apply to Rights Issue
• The date indicated in the prospectus shall be deemed to be the date of its publication.
• No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless
on or before the date of its publication, there has been delivered to ROC for filing, a copy thereof signed
by every person who is named therein as a director or proposed director of the company or by his duly
authorised attorney.
• Expert Views/Report - written consent to the issue of the prospectus and has not withdrawn such
consent before the delivery of a copy of the prospectus to the RoC.
• Every prospectus shall, on the face of it,—
• state that a copy has been delivered to RoC; and
• specify any documents required to be attached to the copy so delivered or refer to statements included in
the prospectus which specify these documents.
• The Registrar shall not register a prospectus is accompanied by the consent in writing of all the persons
named in the prospectus.
• No prospectus shall be valid if it is issued more than ninety days after the date on which a copy thereof is
delivered to the RoC.
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• Penalty for violation - ₹ 50,000 upto ₹ 3,00,000 and/or imprisonment upto 3 years or with both.
