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Comprehensive Guide to Prospectus Types

A prospectus is a legal document that discloses information about a company's securities being offered for sale, including the company's operations and purpose of the offering. There are different types of prospectuses such as deemed, abridged, red herring, and shelf prospectuses. A prospectus must meet legal requirements regarding its contents, registration, and opening of the subscription list. It must include details like company names and addresses, dates of the issue opening and closing, consent of directors, and minimum subscription amount.

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189 views7 pages

Comprehensive Guide to Prospectus Types

A prospectus is a legal document that discloses information about a company's securities being offered for sale, including the company's operations and purpose of the offering. There are different types of prospectuses such as deemed, abridged, red herring, and shelf prospectuses. A prospectus must meet legal requirements regarding its contents, registration, and opening of the subscription list. It must include details like company names and addresses, dates of the issue opening and closing, consent of directors, and minimum subscription amount.

Uploaded by

RudraThakur
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Prospectus

A prospectus is a legal document describing a company’s


securities that have been put on sale. The prospectus
generally discloses the company’s operations along with
the purpose of the securities being offered.
 Section 2 (70)- Companies Act, 2013 .
Prospectus can be defined as “any document which is
described or issued as a prospectus”. This also includes
any notice, circular, advertisement or any other document
acting as an invitation to offers from the public. Such an
invitation to offer should be for the purchase of any
securities of a corporate body. Shelf prospectus and red
herring prospectus are also considered as a prospectus.
Types of Prospectus
Deemed Prospectus - As per Section 25(1) of the
Companies Act, 2013, a document will be deemed to be a
prospectus if the company agrees to allot or offer
securities to the public.
Abridged Prospectus (Section 2 (1) - A memorandum
containing such salient features of a prospectus as may be
specified by SEBI by making regulations in this behalf.
Red Herring Prospectus (Section 32) - It is the prospectus
that is required to be filed before the registrar prior to the
offer. The prospectus generally lacks information such as
the particular price or quantum of securities being
offered.

Shelf Prospectus (Section 31)- It is defined as the


prospectus issued by a company, bank or financial
institution for more than one class of securities.
Legal requirements in relation to Prospectus
⮚Drafting of prospectus (Sec. 26)
⮚Registration of prospectus -Sec. 27 (7)
- Time limit
- Signature
- Date of issue of prospectus
- Contents
- Enclosures
- Registration
- Penalty for non-registration
- Opening of subscription list
Contents of Prospectus
⮚ Matters in prospectus
- Names and address
- Dates of opening and closing of the issue
- Statement
- Details about underwritting
- Consent of the directors
- Authority for the issue
- Procedure and time, capital structure
- Main objects of public offer
- Minimum subscription, details of directors
⮚Reports in Prospectus

- By auditors
- Relating to profit and loss
- Reports about the business or transaction to which the
proceeds of the securities are to be applied directly or
indirectly
⮚Declaration
⮚Other matters

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