A document described or issued asprospectus and includes anynotice, circular, advertisement or other documentinviting deposits from the public or inviting theoffers from public for subscription or purchase ofshares or debentures of a company.
MEANING. LEGAL REQUIREMENTS OF PROSPECTUS. TYPES OF PROSPECTUS. CONTENTS OF PROSPECTUS. FORMALITIES IN ISSUING COMPANY PROSPECTUS STATEMENT IN LIEU OF A PROSPECTUS. RULES OF PUBLIC DEPOSITS.
MEANING Company prospectus is released bycompany to inform the public and investors of thevarious securities that are available. Thesedocuments describe about mutualfunds, bonds, stocks and other forms ofinvestments offered by the company. A prospectusis generally accompanied by basic performanceand financial information about the company.
A Prospectus is required to be issued only after the incorporation of company. The prospectus must contain all the particulars, listed in the schedule II of Companies act. The prospectus must be dated. Before a prospectus is issued, a copy of it must be registered with the registration of companies. Prospectus shall be issued within ninety days of its registration .
GENERAL INFORMATION – It contains (i)Name and address of registered office of company. (ii)Name of stock exchange where application for listing is made. (iii)Date of opening of the issue. (iv)Date of closing of the issue. (v)Name and address of companies manager and managing directors
CAPITAL STRUCTURE OF COMPANY--- i. Authorized, issued, subscribed, and paid-up capital. ii.Size of the present issue giving separately reservation for preferential allotments to promoters and others. PARTICULARS OF THE ISSUE- i.Objects. ii.Project cost. iii.Means of financing.
OUTSTANDING LITIGATION – Relating to financial matters or criminal proceedings against the company or directors under Schedule XIII. CERTAIN PRESCRIBED PARTICULARS- In regard to the company and other listed companies under the same management, which made any capital issue during the last 3 years.
Every prospectus issued by or onbehalf of a company must be dated and thatdate shall unless the contrary is proved, beregarded as the date of its publication.(section 55) A copy of the prospectus signed byevery director or proposed director or by hisagent must be delivered to the registrar on orbefore the date of publication. The prospectusissued to the public should mention that acopy of the prospectus along with thespecified documents have been filed with theregister.
Continued…………….. A prospectus must not be issued more than 90 days after the date on which a copy thereof is delivered for registration. If a prospectus is so issued it will be deemed to be a prospectus a copy of which has not been delivered to the registrar.
A public limited company, 1. which has notissued a prospectus.2.which has issued aprospectus, but has not proceeded to allot any of theshares, offered to the public for subscription, isrequired to deliver to Registrar a “statement in lieu ofprospectus” for registration, at least three days beforethe allotment of shares or debentures.
Continued.......... Schedule III contains the details of the particulars to be furnished. In case of private company becoming a public company, statement in lieu of the prospectus can be filed. Schedule IV contains the details of the particulars to be furnished for the same. Such a statement is required to be signed by every person, who is named therein as a director or a proposed director, of the company, or by his agent authorized in writing.
Continued………… If allotment of shares or debentures is made without filing the statements in lieu of prospectus, the allottee may avoid it within two months after the statutory meeting, or where no such meeting is to be held, within two months of the allotment. Contravention also renders the company and every director liable to fine up to rupees 10,000.
No deposit can be invited, without an advertisement specifying the financial conditions, management structure and other required particulars of the company. Declaration as to repayment of the deposit, in accordance with the terms and condition. Provision for nomination to be available.
No deposit payable on demand or repayable before three months can be accepted. A company cannot accept deposits, repayable after three years. A company cannot accept deposits beyond 10% of the paid-up capital.