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    What are the matters to be stated in prospectus?

    Posted By : Sarah Bhandari / Published on : 06-Oct-2018 11:28 PM / View : 7018 / Comment : 1

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    What are the matters to be stated in a prospectus to be as per SEBI regulations?
    Read more on : prospectus stated matters

    • CS Shiriti Kumari

      Dear Sarah,

      Please find as asked:

      Matters to be stated in a prospectus

      Under the Companies Act, 2013

      • According to Section 26 of the Act, every prospectus issued by or on behalf of a company must be dated and that date shall unless the contrary is proved, be regarded as the date of its publication.
      • It shall state such information and set out such reports on financial information as may be specified by the SEBI in consultation with the Central Government.
      • A copy of the prospectus shall be signed by every director or proposed director or by his agent must be delivered to the registrar on or before the date of publication.
      • Every prospectus issued to the public should mention that a copy of the prospectus along with the specified documents has been filed with the registrar.
      • If prospectus includes a statement made by an expert, the expert must not be engaged or interested in the formation or promotion or in the management of the company. A written consent of the expert should also be obtained before the issue of prospectus with the statement.
      • 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 issued it will be deemed to be a prospectus a copy of which has not been delivered to the registrar.
      • A prospectus shall make a declaration about the compliance of the provisions of the act and nothing contained in the prospectus is in contravention of the provisions of the Companies Act, Securities Contracts (Regulation) Act, 1956 and Securities Exchange Board of India Act, 1992.
      • Section 27 of the Act states that a company can vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, subject to the approval of an authority given by the company in general meeting by way of special resolution. The details of the notice in respect of such resolution to shareholders shall also be published in the newspapers in the city where the registered office of the company is situated.

      Under the Companies (Prospectus and Allotment of Securities) Rules, 2014

      • Rule 3 states that every prospectus issued shall contain the following information—

      1. the 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;
      2. the dates of opening and closing of the issue;
      3. a declaration made by the Board or the Committee authorized by the Board in the prospectus that the allotment letters shall be issued or application money shall be refunded within fifteen days from the closure of the issue or such lesser time as may be specified by SEBI;
      4. a statement by the Board of Directors of separate bank account;
      5. the details of all the utilized and unutilized monies out of the monies collected in the previous issue made by way of a public offer;
      6. the details of the underwriters and the amount underwritten by them;
      7. the consent of trustees, advocates, merchant bankers, registrar, lenders, and experts;
      8. the authority for the issue and the details of the resolution passed, therefore;
      9. the capital structure of the company in the prescribed manner;
      10. procedure and time schedule for allotment and issue of securities;
      11. main objects of the issue, the purpose for requirements of funds, funding plan, the summary of the project appraisal report and such other particulars as may be prescribed;
      12. minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash;
      13. the details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the issuer company during the last five years immediately preceding the year of the issue of the prospectus;
      14. the details of pending litigation;
      15. the details of default and non-payment of statutory dues;
      16. the details of directors including their appointment and remuneration, and particulars of the nature and extent of their interest in the company;
      17. the disclosure for sources of promoters’ contribution;
      • The reports that the company needs to set out in the prospectus, are given in Rule 4, which are as under
      1. Reports by the auditors with respect to profits and losses and assets and liabilities of the company.
      2. Reports relating to profits and losses for each of the five financial years.
      3. Reports about the business or transaction to which the proceeds of the securities are to be applied.
      • Other matters and reports which are to be stated in the prospectus, are given in Rule 5. They are as under
      1. Proceeds or any part of the proceeds, of the issue of the shares or debentures, are applied directly or indirectly in the purchase of any business, profits or losses of the business, assets, and liabilities of the business, in purchase or acquisition of any immovable property.
      2. Acquisition by the company of shares in any other body corporate.
      3. Matters relating to terms and conditions of the term loans including re-scheduling, prepayment, penalty, default.
      4. The aggregate number of securities of the issuer company and its subsidiary companies purchased or sold by the promoter group and by the directors of the company.
      5. The Related Party Transactions(RPTs) entered during the last five financial years.
      6. The details of acts of material frauds committed against the company.

       

      09-10-2018 / 08:18:55 AM
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