PROSPECTUS PART 1 COMPANIES ACT 2013

•    PROSPECTUS PART 1
UPDATED
COMPANY LAW 2013
DR SHASHI AGAGRWAL

•    MEANING OF PROSPECTUS

•    SECTION 2(70 ) OF THE COMPANIES ACT 2013 DEFINES THE PROSPECTUS AS

•   A PROSPECTUS MEANS ANY DOCUMENTS DESCRIBED OR ISSUED AS A PROSPECTUS AND INCLUDES ANY NOTICES,CIRCULAR,ADVERTISEMENT OR OTHER DOCUMENTS INVITING DEPOSITS FROM THE PUBLIC OR DOCUMENTS INVITING OFFERS FROM THE PUBLIC FOR THE SUBSCRIPTION OF SHARES OR DEBENTURES IN A COMPANY.

A PROSPECTUS ALSO INCLUDES SHELF PROSPECTUS AND RED HERRING PROSPECTUS.

A DOCUMENT WILL BE CALLED PROSPECTUS IF IT:

1.       INVITATION OF SUBSCRIPTION TO SHARES OR DEBENTURES OR DEPOSITS

2.       AND THIS INVITATION IS MADE TO PUBLIC.

3.       IN WRITTEN FORM

A PROSPECTUS IS GENERALLY A CIRCULAR OR NEWSPAPER ADVERTISEMENT PUBLISHED BY THE PROMOTERS AFTER THE FORMATION OF THE COMPANY TO INDUCE THE PUBLIC TO TAKE OR SUBSCRIBE SHARES IN THE COMPANY. HERE IT IS MEANT PURCHASE OF SHARES IN CASH ONLY.

•    MEANING OF PROSPECTUS

•     SHELF PROSPECTUS U/S 31,”MEANS PROSPECTUS IN WHICH SECURITIES AND CLASS OF SECURITIES ARE ISSUED FOR SUBSCRIPTION IN ONE OR MORE ISSUES OVER A CERTAIN PERIOD WITHOUT THE ISSUE OF A FURTHER PROSPECTUS.

•     RED HERRING PROSPECTUS U/S 32 MEANS PROSPECTUS WHICH DOES NOT INCLUDE COMPLETE PARTICULARS OF THE QUANTUM OR PRICE OF THE SECURITIES INCLUDED THEREIN.

•    SHELF PROSPECTUS ( SECTION 31)

1.       MANY PUBLIC FINANCIAL INSTITUTION HAVE APPROACHED THE CAPITAL MARKET MORE THAN ONCE IN THE COURSE OF ONE YEAR PERIOD

2.       THE SHELF PROSPECTUS WILL BE VALID FOR A PERIOD OF ONE YEAR FROM THE DATE OF THE FIRST ISSUE OF PROSPECTUS

3.       SHELF PROSPECTUS MEANS A PROSPECTUS IN RESPECT OF WHICH THE SECURITIES OR CLASS OF SECURITIES INCLUDED THEREIN ARE ISSUED FOR SUBSCRIPTION IN ONE OR MORE ISSUES OVER A CERTAIN PERIOD WITHOUT THE ISSUE OF A FURTHER PROSPECTUS.

4.       PROVIDES THAT ANY CLASS OF CLASSES OF COMPANIES PRESCRIBED BY THE SEBI MAY FILE A SHELF PROSPECTUS WITH THE REGISTRAR OF THE COMPANIES AT THE STAGE OF THE FIRST OFFER OF SECURITIES FOR A PERIOD OF ONE YEAR. NO FURTHER  ISSUE OF PROSPECTUS IS REQUIRED FOR SUBSEQUENT OFFER FOR A PERIOD OF ONE YEAR

5.       SHALL ALSO FILE INFORMATION MEMORANDUM ON NEW CHARGES RELATED IF ANY CHANGE IN THE FINANCIAL POSITION WITH THE REGISTRAR PRIOR TO THE ISSUE OF  A SECOND OR SUBSEQUENT OFFER

6.       SHELF PROSPECTUS ( 31)

7.       WHERE AN INFORMATION MEMORANDUM IS FILED EVERY TIME AN OFFER OF SECURITIES IS MADE UNDER SECTION 31(2), SUCH MEMORANDUM TO GETHER WITH SHELF PROSPECTUS SHALL BE DEEMED TO BE PROSPECTUS.

·         RED HERRING PROSPECTUS ( SECTION 32)

1.       THE RED HERRING PROSPECTUS MEANS A PROSPECTUS WHICH DOES NOT INCLUDE COMPLETE PARTICULAR OF THE QUANTUM OR PRICE OF THE SECURITIES INCLUDED THEREIN.

2.       A COMPANY PROPOSING TO MAKE AN OFFER OF SECURITIES MAY ISSUE A RED HERRING PROSPECTUS PRIOR TO THE ISSUE OF PROSPECTUS.

3.       A COMPANY PROPOSING TO ISSUE RED HERRING PROSPECTUS FILE WITH THE REGISTRAR AT LEAST THREE DAYS PRIOR TO OPENING OF THE SUBSCRIPTION LIST AND THE OFFER

4.       CARRY THE SAME OBLIGATIONS AS ARE APPLICABLE TO PROSPECTUS AND ANY VARIATIONS BETWEEN THE RED HERRING PROSPECTUS AND A PROSPECTUS SHALL BE HIGHLIGHTED AS VARIATIONS IN THE PROSPECTUS.

•    UPON CLOSING OF THE OFFER OF THE SECURITIES UNDER THIS SECTION ,THE PROSPECTUS ALSO STATE:

1.       TOTAL CAPITAL RAISED ( WHETHER BY WAY OF DEBT OR SHARE CAPITAL)

2.       CLOSING PRICE OF THE SECURITIES AND ANY OTHER DETAILS NOT INCLUDED IN THE CASE OF THE LISTED COMPANY

3.       SHALL BE FILED WITH THE REGISTRAR AND SECURITY EXCHANGE BOARD OF INDIA.

•    OBJECTS OF THE PROSPECTUS

1.       TO BRING TO THE NOTICE OF PUBLIC THAT A NEW COMPANY HAS BEEN FORMED

2.       TO AROUSE INTEREST OF THE PUBLIC TO MAKE INVESTMENT IN THE COMPANY

3.       TO CREATE CONFIDENCE IN THE PUBLIC ABOUT THE COMPANY.ITS DIRECTORS AND ITS PROFITABILITY

4.       TO SECURE THAT THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITIES OF THE STATEMENT IN THE PROSPECTUS.

•    FEATURES OF PROSPECTUS

1.       MUST BE INVITATION OFFERING TO THE PUBLIC

2.       INVITATION MUST BE MADE BY OR ON BEHALF OF THE COMPANY OR IN RELATION TO AN INTENDED COMPANY

3.       THE INVITATION MUST BE TO SUBSCRIBE OR PURCHASE TO SHARES OR DEBENTURES

4.       IT SHOULD BE IN WRITTEN FORM

5.       AN ADVERTISEMENT OFFERING TO THE PUBLIC SHARES OR DEBENTURES OF THE COMPANY FOR SALE IS PROSPECTUS

6.       ISSUED T0 THE PUBLIC. PUBLIC IS GENERAL WORD. SECTION 42 OF THE COMPANIES ACT 2013.INCLUDES ANY SECTION OF THE PUBLIC WHETHER SELECTED AS MEMBERS OR DEBENTURES HOLDERS OF THE COMPANY OR CLIENTS OF THE COMPANY ISSUING PROSPECTUS.

•    PUBLIC ISSUE

1.       PUBLIC MEANS THE PEOPLE,THE GENERAL BODY OF MANKIND OR TO THE BELONGING TO THE PEOPLE,THE BODY OF THE PEOPLE AT LARGE

2.       IF A DOCUMENT INVITING TO BUY SHARE IS ISSUED TO ALL THE SHAREHOLDERS IN INDIA OR TO THE CLIENTS OF A PARTICULAR STOCK BROKER OR THE SHAREHOLDERS IN A PARTICULAR COMPANY, IT IS ISSUED TO THE PUBLIC.

3.       WHETHER THE PROSPECTUS HAS BEEN ISSUED TO PUBLIC DEPENDS ON THE CIRCUMSTANCES OF THE CASE:

4.       OFFERING OF THE SHARES TO THE KITH AND KIN OF DIRECTOR IS NOT AN INVITATION TO THE PUBLIC

5.       THE TEST IS NOT WHO RECEIVE THE CIRCULAR BUT WHO CAN ACCEPT THE OFFER PUT FORWARD.

•    SOUTH OF ENGLAND NATURAL GAS AND PETROLEUM COMPANY LTD”

•    300 COPIES OF PROSPECTUS HEADED FOR PRIVATE CIRCULATION ONLY WERE DISTRIBUTED TO SHAREHOLDERS OF GAS COMPANIES. IT WAS NOT PUBLIC ADVERTISED, HELD THAT PROSPECTUS WAS AN OFFER OF SHARES TO THE PUBLIC.

PUBLIC ISSUE

1.       NOT NECESSARY THAT A PROSPECTUS SHOULD BE ISSUED BY A COMPANY

2.       MAY BE ISSUED ON BEHALF OF THE COMPANY  BY AN AGENTS LIKE AN ISSUING HOUSE

3.       EVERY LISTED PUBLIC COMPANY MAKING INITIAL PUBLIC OFFER OF ANY SECURITY FOR A SUM OF RUPEES TEN CRORES OR MORE SHALL ISSUE THE SAME ONLY IN DEMAT FORM BY COMPLYING WITH THE REQUISITE PROVISIONS OF DEPOSITORY ACT,1996 AND THE REGULATIONS MADE THERE UNDER SECTION 68 B

•    PUBLIC OFFER AND PRIVATE PLACEMENT
( SEC 23)

•    A PUBLIC COMPANY MAY ISSUE SECURITIES :

1.       THROUGH PRIVATE PLACEMENT COMPLYING WITH THE PROVISIONS OF PART II OF THIS CHAPTER OR

2.       THROUGH PRIVATE PLACEMENT BY COMPLYING WITH THE PROVISIONS OF PART II OF THIS CHAPTER

3.       THROUGH A RIGHT ISSUE OR A BONUS ISSUE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND IN CASE OF LISTED COMPANY ALSO WITH THE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT ( 15 OF 1992)

•    A PRIVATE COMPANY BY WAY OF RIGHT ISSUE OR BONUS ISSUE IN ACCORDANCE WITH THE PROVISIONS OF ACT OR

•    THROUGH PRIVATE PLACEMENT BY COMPLYING WITH THE PROVISIONS OF PART II OF THE CHAPTER

•    MEANING OF PUBLIC OFFER HERE:

1.       INCLUDED INITIAL PUBLIC OFFER OR FURTHER PUBLIC OFFER

2.       OR AN OFFER FOR SALE OF SECURITIES TO THE PUBLIC BY AN EXISTING SHAREHOLDERS,THROUGH THE ISSUE OF THE PROSPECTUS

•    WHEN PROSPECTUS IS NOT REQUIRED TO BE ISSUED( SEC 26)

1.       BONAFIDE INVITATION TO ENTER INTO UNDERWRITING AGREEMENT

2.       NOT OFFERED TO PUBLIC

3.       ONLY TO EXISTING MEMBERS/DEBENTURE HOLDERS WITH OR WITHOUT RIGHT TO RENOUNCE

4.       UNIFORM WITH SHARES OR DEBENTURES PREVIOUSLY ISSUED AND DEALT ON QUOTED RECOGNIZED STOCK EXCHANGE

•    VARIOUS CATEGORIES PF PROSPECTUS

•    STATEMENT IN LIEU OF PROSPECTUS:-

1.       A PUBLIC COMPANY WHICH DOES NOT RAISE ITS CAPITAL FROM THE PUBLIC NEED NOT ISSUE A PROSPECTUS

2.       A STATEMENT IN LIEU OF PROSPECTUS MUST BE FILED WITH THE REGISTRAR 3 DAYS BEFORE THE ALLOTMENT OF SHARES AND DEBENTURES

3.       SHOULD BE DATED AND SIGNED BY EACH DIRECTOR OR PROPOSED DIRECTOR AND SHOULD CONTAIN THE SAME PARTICULARS REQUIRED UNDER PROSPECTUS,

•    ABRIDGED PROSPECTUS

1.       NO ONE SHALL ISSUE ANY FORM OF APPLICATION FOR SHARES OR DEBENTURES OF A COMPANY UNTIL UNLESS IT IS ACCOMPANIED BY ABRIDGED PROSPECTUS. IT IS MEMORANDUM CONTAINING SUCH SALIENT FEATURES OF PROSPECTUS AS MAY BE PRESCRIBED.

2.       APPLICATION FORM IS ACCOMPANIED BY GIST OF MATERIAL INFORMATION.

•    SHELF PROSPECTUS

1.       SHELF PROSPECTUS U/S 31,”MEANS PROSPECTUS IN WHICH SECURITIES AND CLASS OF SECURITIES ARE ISSUED FOR SUBSCRIPTION IN ONE OR MORE ISSUES OVER A CERTAIN PERIOD WITHOUT THE ISSUE OF A FURTHER PROSPECTUS.

2.       SHELF PROSPECTUS MEANS PROSPECTUS ISSUED BY ANY COMPANY PRESCRIBED BY SEBI (UNDER RULE 10) FOR ONE OR MORE ISSUES OF THE SECURITIES SPECIFIED IN THE DOCUMENT. IT ENABLES COMPANIES TO RAISE CAPITAL FROM THE PUBLIC MORE THAN ONCE WITHOUT ISSUE OF FRESH PROSPECTUS EVERY TIME.

3.       VALID FOR A PERIOD OF ONE YEAR.

4.       A COMPANY FILING A SHELF PROSPECTUS IS REQUIRED TO FILE INFORMATION MEMORANDUM TO THE REGISTRAR FOR THE SUBSEQUENT ISSUE.

•    DEEMED PROSPECTUS SEC 25

1.       A COMPANY MAY INSTEAD OF OFFERING ITS SHARES OR DEBENTURES FOR SALE TO THE PUBLIC ALLOT ITS SHARES OR DEBENTURES TO THE INTERMEDIARY CALLED ISSUE HOUSE. THEREAFTER THE ISSUING HOUSE OFFERS THEM FOR SALE TO THE PUBLIC BY ADVERTISEMENT OR CIRCULAR OF ITS OWN. THE DOCUMENT BY WHICH THE OFFER IS MADE TO THE PUBLIC BY THE ISSUING HOUSE IS DEEMED TO BE PROSPECTUS ISSUED BY THE COMPANY.

2.       ALL ENACTMENTS AND RULES AS TO THE CONTENTS OF THE PROSPECTUS AND THE LIABILITY IN RESPECT OF STATEMENTS AND OMISSIONS FROM THE PUBLIC SHALL APPLY TO SUCH A DOCUMENT. THE OBJECT OF THE PROVISIONS IS TO CHECK THE COMPANY FROM THE EVADING OF THE PROVISIONS.