Different Type of Prospectus
Prospectus
Meaning
The term Prospectus’ under Section 2 (36) means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in. or debentures of, a body corporate.
A private company under Section 3 (I) (iii) is prohibited from inviting the public to subscribe for its shares or debentures; and also prohibited to invite or accept deposits from persons other than its members, directors or their relatives. Accordingly, a private company has no power to issue prospectus. Only a public company has power and privilege to issue prospectus to public for subscription of shares in or debentures of the company or for inviting public deposits. If a public company not able to raise funds from its own resources and does not issue a prospectus with reference to its formation then it has to file a statement in lieu of prospectus with the concerned Registrar of Companies.
Elements of a Prospectus
(a) There must be an invitation to the public.
(b) The invitation must be made by or on behalf of the company,
(c) The invitation must to subscribe or purchase, and
(d) The invitation must relate to securities.
Statement in Lieu of Prospectus
As per Section 70 (I), a company (excluding a private company) having a share capital, which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar of Companies (ROC) for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorized in writing, in the form
Meaning
The term Prospectus’ under Section 2 (36) means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in. or debentures of, a body corporate.
A private company under Section 3 (I) (iii) is prohibited from inviting the public to subscribe for its shares or debentures; and also prohibited to invite or accept deposits from persons other than its members, directors or their relatives. Accordingly, a private company has no power to issue prospectus. Only a public company has power and privilege to issue prospectus to public for subscription of shares in or debentures of the company or for inviting public deposits. If a public company not able to raise funds from its own resources and does not issue a prospectus with reference to its formation then it has to file a statement in lieu of prospectus with the concerned Registrar of Companies.
Elements of a Prospectus
(a) There must be an invitation to the public.
(b) The invitation must be made by or on behalf of the company,
(c) The invitation must to subscribe or purchase, and
(d) The invitation must relate to securities.
Statement in Lieu of Prospectus
As per Section 70 (I), a company (excluding a private company) having a share capital, which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar of Companies (ROC) for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorized in writing, in the form