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Prospectus : Definition
Sec.2(36) defines a prospectus as Any document described or issued as a prospectus & includes any notice, circular, advertisement or other document inviting deposits from the public or offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate.
Characteristics/Features
A Document in writing. In the form of Notice, Circular, Advertisement Public Issue Only by Public Companies Invitation To Public
Date of publication[Sec55]
Signed By Directors or the proposed directors of the Co.[Sec.60] Issued to the public only After Registration with the registrar. Comply with the provisions of The Companies Act[Sec56] & the SEBI[Sec. 55A]
Invitation To Public
In this connection 2 things need to be defined: What constitutes Public?
What constitutes a Public Invitation?
2. ATTACHING THE DOCUMENTS Documents to be attached to the copy of the prospectus filed with the Registrar: Copy of every contract-relating to the appointments &
A written statement of adjustments,if any.(p&l,assets & liabilities or the rate of dividends.) A written consent of auditors, legal advisor, attorney,banker. Copy of resolution authorising issue of shares/debentures.
4. SIGNING OF PROSPECTUS: must be signed by every person who is named therein as a Director or Proposed Director of the Company.
5. APPROVAL BY VARIOUS AGENCIES Lead Managers to the issue. Stock Exchanges Lead Financial Institution-underwriting the issue 6. VETTING BY SEBI To ensure adequacy of disclosures Certify the contents of the prospectus. No responsibility to correctness of statements or opinions
7. DELIVERY TO THE REGISTRAR With all documents, Approvals & vetting certificate for its registration. 8. STATEMENT ON PROSPECTUS AS TO DELIVERY FOR REGISTRATION Every prospectus should mention- a Copy of it has been delivered for registration Also Specify if, any other Documents required to be endorsed/attached to the copy.
9. REGISTRATION OF PROSPECTUS Formalities done-prospectus get registered. 10. ISSUE OF PROSPECTUS WITHIN 90 DAYS-of the date on which copy was delivered for registration.
11. PENALTY IF ISSUED WITHOUT DELIVERING TO THE REGISTRAR Then the company and every person who is a party to the issue of the prospectus , shall be punishable with the fine. May extend upto Rs.50,000[Sec.60(5)as ammended in 2000]
Abridged Prospectus
A memorandum containing such salient features of a prospectus as may be prescribed. Form of application to be accompanied by abridged prospectus Exception Form issued in connection with a bona fide invitation Issued in relation to shares or debentures which were not offered to public Penalty 50,000/-
Contents of prospectus
1. Every prospectus shall state the matters specified in part I of schedule II 2. it shall set out the reports specified in part I of schedule II
Misstatements
Shelf prospectus
Information memorandum