Section 25 of the Companies Act, 2013: Document Containing Offer of Securities for Sale Deemed to Be a Prospectus
Section 25 deals with an indirect public offer. Where a company first allots, or agrees to allot, securities with a view to those securities being offered for sale to the public, the document used for that public offer is treated by law as a prospectus issued by the company.
What is a deemed prospectus under Section 25?
A prospectus is generally the disclosure document used for an offer of securities to the public. Section 25 prevents the prospectus requirements from being avoided merely by placing securities first with an intermediary or another person who then offers those securities to the public. If the statutory conditions are satisfied, the offer-for-sale document itself is deemed to be a prospectus.
The practical consequence is that the legal rules governing the contents of a prospectus and liability for misstatements or omissions apply to the deemed prospectus, subject to the modifications contained in Section 25.
Section 25 explained
Sub-section (1): Offer-for-sale document treated as prospectus
Where a company allots or agrees to allot its securities with a view to all or any of them being offered for sale to the public, the document by which that public offer is made is deemed, for the purposes of the Act, to be a prospectus issued by the company.
Accordingly, the law concerning prospectus contents and liability for misstatements and omissions applies, with the modifications specified in Section 25. This does not remove any separate liability of the persons actually making the offer.
Sub-section (2): Statutory evidence of an intention to offer to the public
Unless the contrary is proved, an allotment or agreement to allot is evidence of an intention that the securities would be offered for sale to the public where either of these circumstances exists:
(a) an offer for sale to the public is made within six months after the allotment or agreement to allot; or
(b) when the public offer is made, the company has not received the whole consideration for the securities.
Sub-section (3): Additional information in the deemed prospectus
For the application of Section 26, the deemed prospectus must additionally state the net amount of consideration received or to be received by the company for the securities and the time and place where the allotment contract may be inspected. Section 25 also applies the relevant prospectus requirements on the basis that the persons making the offer are treated in the manner specified by the subsection.
Sub-section (4): Signature where the offeror is a company or firm
If the person making the offer is a company or firm, the document may be signed on its behalf by two directors of the company or by not less than one-half of the partners of the firm, as applicable.
Why Section 25 matters
Section 25 focuses on the substance of a public distribution rather than only its form. A company cannot necessarily avoid the statutory prospectus regime by making an initial allotment to another person and having that person conduct the public sale. When Section 25 applies, the offer document attracts the prospectus-related disclosure and liability framework under the Companies Act, 2013.
Related provisions and current regulatory framework
Section 25 operates within Chapter III of the Companies Act, 2013. It should be read with Section 23 on public offer and private placement, Section 24 on SEBI's regulatory powers, Section 26 on matters relating to a prospectus, and the provisions dealing with liability for misleading prospectus statements.
For public issues and other regulated securities offerings, the current SEBI framework may also be relevant, including the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and, for non-convertible securities, the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, as amended from time to time.
Quick summary
If securities are allotted with a view to a subsequent public sale, Section 25 can convert the offer-for-sale document into a statutory prospectus. The section creates evidentiary presumptions, adds disclosure requirements and specifies how an offer document is to be signed where the offeror is a company or firm.
Last reviewed: 16 September 2026. This page is a general legal information resource and should be read with the current statutory text, rules, notifications and applicable SEBI regulations.