Non-Banking Finance Companies (NBFC) and Public Financial Institutions (PFI)

The stipulation laid down in Sec. 67 (3) ski11 not applies to Non-Banking Finance Companies (NBFC) and Public Financial Institutions (PFI) specified in Sec. 4A of the Companies Act [Sec. 67 (3A)].Subsection or Purchase. The word subscription means taking or agreeing to take the shares for cash. Hence. a circular by a company offering new shares to the shareholders of two existing companies in exchange for their shares in these companies was not an offer for subscription within the definition of Use term prospectus [Government Stock Investment Co Ltd. Vs.

The Legal adjournments as to the issue of Prospectus arc IS follows: I. The” guidelines for disclosure and investor protection” issued by SEBI (Securities and Exchange Board of India) as amended from time to time regarding capital issues to the public must have been complied with for The’ proposed issue of shares or debentures to the public, and a statement to that effect must be made in the. prospectus.2. A copy of the prospectus, duly dated and signed by all the directors must have been registered with the Registrar of Companies. The copy for registration must be accompanied with:

the consent in writing of the expert of his report is to be published in the prospectus. The expert should not be connected with the formation or management of the company.

a copy of every material contract and of every contract relating to

appointment and remuneration of a managing director or manager.

(ii) a written statement by the persons making any report relating to the adjustment. if any, as respects the figures of any profits or losses or assets and liabilities dealt with by the report set out ia the prospectus.

the consent in writing of the person, if any, named in the prospectus as the auditor, legal advisor, attorney, solicitor, banker or broker of the company to act in that capacity.

3. The prospectus must be issued within 90 days of the date on which a copy thereof is delivered for registration. If a prospectus is not issued within this period. it is deemed to be a prospectus, a copy of which has not been delivered to the Registrar Penalty for non-registration of Prospectus. If a prospectus is issued without a copy thereof being delivered to the Registrar for registration, or without the

necessary documents or the consent of the experts, the company and every person, who is knowingly a party to the issue of the propel;, shall be punishable with fine which may extend to Rs. 50,000. (Sec. (0)CONTENTS OF PROSPECTUS

Prospectus is the window through which an investor can look into the soundness of a company’s ycnture. The investor must, therefore. be given a complete picture of the company’s intended activities and its position. Section 56 oi the Companies Act lays down that the matters and reports stated in Schedule II to the Companies Act must be included in a prospectus.