Note on company law Essay

A Simple note on Prospectus:-

According to Section 2(36) of the Companies Act,1956, a Prospectus 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 debenture of, a body corporate.
In the Companies Act, 1956, Schedule II, Part I and Part II enumerates the contents of a prospectus. Part III of the Schedule contains certain provisions which apply to Part I and II such as who is a vendor, when the expression lessor in the prospectus means a vendor, an year means a financial year, the term ‘officer’ in the prospectus includes a ‘proposed Director’ but not an ‘auditor’ etc.

A broad outline of the contents of the prospectus ( as required by the Companies Act,1956):-

Schedule II (Part I)
1) General Information like a) name of the Company b) address of Regd. Office, c) Stock exchanges where listing applied, f) statement on refund if minimum subscription is not received or stock exchange listing is not made or denied or of over subscription, g) dates of opening, closing, and the earliest closing of the issue, names and addresses of Auditors, and lead managers, debenture trustee, underwriters to the issue, whether rating of Crisil or any other rating agency obtained underwriting, etc.
2) Capital structure of the Company
3) Terms of the present issue, like terms of payment etc.
4) Particulars of the issue, like objects, projects cost, means of finance etc.,
5) Company management and project.

(PartII)
1) General Information:- on Directors, Auditors, Solicitors, Advocates, Managers to the issue, Registrars to the issue, bankers to the Company, bankers to the Issue etc.
2) Financial Information:- a) report of Auditors as to Profit & Loss Account and Assets & Liabilities, b) report on subsidiaries, c) a detailed report on how the proceeds or part of proceeds of the issue of shares or debentures are or is to be applied directly or indirectly to various purposes.
3) Statutory and other information;- a) minimum subscription b) expenses of the issue like fees payable to Advisers, Registrars to the issue, Managers to the issue, debenture trustee , underwriting commission and brokerage, previous public or rights issue, issue of shares otherwise than for cash, debentures, redeemable preference shares and other instruments issued by the company outstanding on the date of the prospectus.

Certain Statutory requirements as to prospectus:-
- A prospectus issued by a Company shall be dated and that date (unless contrary is proved) be taken as the date of the publication of prospectus. S.55 of the Companies Act.
- On or before the date of its publication, a copy of the 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, is to be delivered to the Registrar of Companies (ROC) for registration. Certain documents like expert’s consent, copies of every contract referred to in the prospectus etc., are to be attached with the prospectus.
- According to Section 60(4) of the Companies Act, 1956, no prospectus shall be issued more than 90 days after the date on which a copy thereof is delivered to the ROC for registration. If a prospectus is issued more than 90 days after the date on which a copy thereof is delivered to the ROC for registration, it shall be deemed to be a prospectus, a copy of which has not been delivered to the ROC. The Company and every person knowingly a party to the above shall be punishable with fine which may extend to Rs.50,000/-

Mis-statements in a prospectus and their consequences:- The prospective shareholders are entitled to true and

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