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THE COMPANY PROSPECTUS

Ritu Neha Nikita Vijaya

WHY PROSPECTUS ???

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?

Invitation Not Made To The Public


When offered shares are available to the offerees only[Sec.67(3)] When the offer or invitation is a domestic matter of persons making & receiving it.(Kith & Kin of Director of a Company)

Who Can Issue Prospectus?


By a Public company By any person On behalf of the company Any person or on behalf of a person who is or who has been engaged or Interested in the formation of a company

Registration of Prospectus(Sec.60) & Issue Of Prospectus


-required to draft a prospectus in the
1. Preparation Of Prospectus
prescribed format. State the matters specified in Part I of schedule II set out reports specified to Part II of schedule II

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.

remuneration of managerial personnel.

3. DATING OF PROSPECTUS taken as the Date of publication

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/-

Refusal for registration of prospectus


not dated does not comply with the requirements of section 56 reports of experts interested in formation of the company a statement purported to be made by an expert without a statement that he has given & has not withdrawn his consent to the manner of its inclusion therein. Not signed copy No necessary documents No consent in writing

Other important provisions as to prospectus


1. Issue by existing or intended company 2. not to be issued without experts consent 3. unconnected expert 4. right of director to indemnity 5. right of expert to indemnity 6. No variation in the terms of contract 7. newspaper advertisements of prospectus 8. reproduction relating to personation for acquisition etc. of shares

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

Contents as per part I of schedule ll


1. General information 2. capital structure of the company 3. terms of the present issue 4. particulars of the issue 5. company, management & project 6. particulars in regard to the company & other listed companies under the same management within the meaning of section 370 (1B), which made any capital issue during the last 3 years 7. Outstanding litigations 8. Management perception of risk factors

Contents as per part II of schedule II


1. General information 2. financial information report by auditors report by accountant principal terms of loans & assets 3. Statutory & other information

Provisions applying to part I & II


1. Inspection of documents
2. declaration

Contents as per SEBI guidelines


1. Cover pages 2. disclaimer clause 3. stock invest 4. buy-back arrangement 5. performance & promises relating to previous issue 6. statement relating to allotment & refund

The golden rule for framing prospectus

Misstatements

Remedies for misstatements

Shelf prospectus

Information memorandum

Statement in lieu of prospectus


1. Conditions of filing 2. contents 3. delivery to the registrar 4. signature 5. Penalty 6. liability for untrue statement 7. Not applicable to private company 8. terms of contract not to be varied 9. Allotment voidable