What are the matters to be stated in Prospectus? Section 26 of Indian Companies Act 2013. Contents of Prospectus. What is the provision for punishment against violation of law regarding issue of Prospectus?

 

 

Section 26 Matters to be stated in Prospectus - Indian Companies Act 2013

 

As per Section 26 of Indian Companies Act 2013 every prospectus should be dated, signed and contains the information listed in this section. Provision in the Indian Companies Act 2013 regarding Matters to be stated in Prospectus is as under.

 

(1) 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—


(a) state the following information, namely:—


(i) names and addresses of the registered office of the company, company secretary, Chief Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other persons as may be prescribed;


(ii) dates of the opening and closing of the issue, and declaration about the issue of allotment letters and refunds within the prescribed time;


(iii) a statement by the Board of Directors about the separate bank account where all monies received out of the issue are to be transferred and disclosure of details of all monies including utilised and unutilised monies out of the previous issue in the prescribed manner;


(iv) details about underwriting of the issue;


(v) consent of the directors, auditors, bankers to the issue, expert’s opinion, if any, and of such other persons, as may be prescribed;

 

(vi) the authority for the issue and the details of the resolution passed therefor;


(vii) procedure and time schedule for allotment and issue of securities;


(viii) capital structure of the company in the prescribed manner;


(ix) main objects of public offer, terms of the present issue and such other particulars as may be prescribed;


(x) main objects and present business of the company and its location, schedule of implementation of the project;


(xi) particulars relating to—


(A) management perception of risk factors specific to the project;
(B) gestation period of the project;
(C) extent of progress made in the project;
(D) deadlines for completion of the project; and
(E) any litigation or legal action pending or taken by a Government


Department or a statutory body during the last five years immediately preceding the year of the issue of prospectus against the promoter of the company;


(xii) minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash;


(xiii) details of directors including their appointments and remuneration, and such particulars of the nature and extent of their interests in the company as may be prescribed; and


(xiv) disclosures in such manner as may be prescribed about sources of promoter’s contribution;


(b) set out the following reports for the purposes of the financial information,namely:—


(i) reports by the auditors of the company with respect to its profits and losses and assets and liabilities and such other matters as may be prescribed;


(ii) reports relating to profits and losses for each of the five financial years immediately preceding the financial year of the issue of prospectus including such reports of its subsidiaries and in such manner as may be prescribed:


Provided that in case of a company with respect to which a period of five years has not elapsed from the date of incorporation, the prospectus shall set out in such manner as may be prescribed, the reports relating to profits and losses for each of the financial years immediately preceding the financial year of the issue of prospectus including such reports of its subsidiaries;


(iii) reports made in the prescribed manner by the auditors upon the profits and losses of the business of the company for each of the five financial years immediately preceding issue and assets and liabilities of its business on the last date to which the accounts of the business were made up, being a date not more than one hundred and eighty days before the issue of the prospectus:


Provided that in case of a company with respect to which a period of five years has not elapsed from the date of incorporation, the prospectus shall set out in the prescribed manner, the reports made by the auditors upon the profits and losses of the business of the company for all financial years from the date of its incorporation, and assets and liabilities of its business on the last date before the issue of prospectus; and


(iv) reports about the business or transaction to which the proceeds of the securities are to be applied directly or indirectly;


(c) make a declaration about the compliance of the provisions of this Act and a statement to the effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the rules and regulations made thereunder; and

(d) state such other matters and set out such other reports, as may be prescribed.


(2) Nothing in sub-section (1) shall apply—
(a) to the issue to existing members or debenture-holders of a company, of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant has a right to renounce the shares or not under sub-clause (ii) of clause (a) of sub-section (1) of section 62 in favour of any other person; or


(b) to the issue of a prospectus or form of application relating to shares or debentures which are, or are to be, in all respects uniform with shares or debentures previously issued and for the time being dealt in or quoted on a recognised stock exchange.


(3) Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus or a form of application, whether issued on or with reference to the formation of a company or subsequently.


Explanation.—The date indicated in the prospectus shall be deemed to be the date of its publication.


(4) 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 the Registrar for registration, 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.


(5) A prospectus issued under sub-section (1) shall not include a statement purporting to be made by an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion or management, of the company and has given his 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 Registrar for registration and a statement to that effect shall be included in the prospectus.


(6) Every prospectus issued under sub-section (1) shall, on the face of it,—


(a) state that a copy has been delivered for registration to the Registrar as required under sub-section (4); and


(b) specify any documents required by this section to be attached to the copy so delivered or refer to statements included in the prospectus which specify these documents.


(7) The Registrar shall not register a prospectus unless the requirements of this section with respect to its registration are complied with and the prospectus is accompanied by the consent in writing of all the persons named in the prospectus.


(8) 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 Registrar under sub-section (4).


(9) If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both.

 

Section 21 to 40 of Indian Companies Act 2013

How to authenticate documents, proceedings and contracts of a Company? Section 21 of Indian Companies Act 2013

How to execute bills of exchange etc? Section 22 of Indian Companies Act 2013

What are the methods to issue securities by Companies? Section 23 of Indian Companies Act 2013 - Public offer and Private Placement

What are the Powers of Securities and Exchange Board (S E B I) to regulate, issue and transfer of securities? Section 24 of Indian Companies Act 2013

Document containing offer of securities for sale to be deemed prospectus? Section 25 of Indian Companies Act 2013

What are the matters to be stated in Prospectus? Section 26 of Indian Companies Act 2013. Contents of Prospectus. What is the provision for punishment against violation of law regarding issue of Prospectus?

What is the effect of variation in terms of contract or objects in prospectus? Section 27 of Indian Companies Act 2013

Can members of a company offer shares for sale? Section 28 of Indian Companies Act 2013 - offer of sale of shares by certain members of the Company

Public offer of securities should be in dematerialized form. Section 29 of Indian Companies Act 2013

What are the methods to advertise Prospectus? What are the conditions? Section 30 of Indian Companies Act 2013

What is Shelf Prospectus? Who can file prepare and file it? What are the conditions? Section 31 of Indian Companies Act 2013

What is Red Herring Prospectus? Who can issue red herring prospectus? What are the terms? Section 32 of Indian Companies Act 2013

How to issue Application forms for Securities? What is the procedure? Section 33 of Indian Companies Act 2013

What is the criminal liability for mis statement in Prospectus? What is the punishment? Section 34 of Indian Companies Act 2013

What is the Civil liability for mis statement in the Prospectus? Who is punishable? Section 35 of Indian Companies Act 2013

What is the punishment for fraudulently inducing persons to invest money? Section 36 of Indian Companies Act 2013

How can the affected persons act against company for mis leading statements? Section 37 of Indian Companies Act 2013

What is the punishment for personation etc of securities? Section 38 of Indian Companies Act 2013

How to allot securities by Company? What the is process? Section 39 of Indian Companies Act 2013

How to dealt with Securities? Is it necessary to deal with Stock Exchanges? Section 40 of Indian Companies Act 2013. What is the punishment for violation?

 

 

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