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Prospectus

A documents through which public are solicited to subscribe to the share capital
of a corporate entity is called “prospectus”. The purpose of a prospectus, issued
under the provisions of the Companies Act, 1956, is to invite the public for the
subscription/purchase of any securities (shares/debentures) of a company. The
form and the contents of the prospectus are prescribed by Part I of Schedule II of
the Companies Act.

Contents:
The nature of contents of prospectus (offer document) varies with the nature of
issue made by the company take the following forms:

Regular prospectus:
The contents of a prospectus regular prospectus are presented in three parts:

PART 1
Part 1 of the prospectus should contain details about specific information about
the company. The are details furnished in this regard.
A. General information:
The prospectus in its part 1 shall contain such information as the following:
1. Name of address of the registered office of the company.
2. Consent of the Central Government (SEBI) for the present issue and
declaration of Central Government about non-responsibility for financial
soundness or correctness of statements and letter of intent/industrial
license.
3. Names of regional stock exchanges and other stock exchanges where
application has been made for listing of present issue.
4. Provisions of sub-section (1) of Section 68A of the Companies Act relating
to punishment for fictitious applications.
5. Statement/declaration about refund of the issue if minimum
subscription of 90 percent is not received within 90 days of closure of
the issue.
6. Declaration about the issue of allotment letters/refunds within a
period of 10 weeks and interest in case of any delay in refund at the
prescribed rate.
7. Date of opening and closing of the issue, and date, of earliest closing of
the issue.
8. Name and address of auditors and lead managers.

9. Name and address of trustee under debenture trust deed (in case of
debenture issue).
10. Whether rating from CRISIL or any rating agency has
been obtained for the prop debenture/preference shares issue.
11. Underwriting of the issue (names and addresses of the underwriters
and the amount them and declaration by board of directors that the
underwriters have sufficient resources to discharge obligations).

B.Capital Structure
Information about the company's capital structure such as authorized,
issued, subscribed, and paid-up should be furnished. In addition, information
about the size of the present issues giving separately, for preferential
allotment to promoters and others, paid-up capital after the present issue
and after conversion of debentures, if applicable.

C. Terms of the issue

Information about rights of the instrument holders, mode of application,
availability of forms and prospectus , mode of payment, and, any special tax
benefits available for the company and its shareholders shall be included.

D. Particulars of the issue.
Information about objects, project cost and means of financing (including
contributions of promoters) shall specified.

E. Company, Management and Project
Detailed information about the company, the management and the project
shall be provided in the prospectus Such information may pertain to the
following:

1. History and main objects, and present business of the company and
subsidiary of the company if any.
2. Promoters and their background.
3. Names, addresses and occupation of the manager, managing director
and other directors, including nominee director
4. Nominee directors, whole-time directors, (giving their directorship in other
companies).
5. Location of project, with details of plant and machinery, technology
process, etc.
6. Collaboration, any performance guarantee or assistance in marketing by the
collaborators.

7. Infrastructure facilities for raw material and utilities like water and
electricity.

8. Schedule for implementation of the project and progress so far, giving
details of land acquisition, civil works, installation of plant and machinery,
trial production, commercial production and etc.

9. The profile of the products mentioning such details as the nature of the
products/consumer/ industrial and end-users, approach to marketing and
proposed marketing set up, and export possibilities and export
obligations, if any.
10. Future prospects like capacity utilization during the first three years from
the date of commencement of production and the expected year when the
company would be able to earn cash profits and net profits.
11. Stock market data for shares/debentures of the company high/low
prices in each of the last 3 years and monthly high/low during the last six
months
F. Disclosure of Public Issues made by the Company:

Information about public issues that have been already made, listed under the
same management, within the same meaning of Section 370(1 B) shall be
furnished. The information required to be given includes year and type of .
amount of issue, date of closure of issue, date of completion of delivery of
share/debenture certificates, of completion of project where the issue was made
for financing a project and rate of dividend paid.

G. Disclosure of Oulstanding Litigation, Criminal Prosecution
and Defaults: Accordingly, matters that are likely to affect the
operation and finances of the company including disputed tax
liability of any nature, particulars of any criminal prosecution
launched against the company and directors. In addition,
particulars of default, if any in meeting statutory dues, institutional
dues and towards instrument holders like debentures, fixed deposit.

H. Perception of Risk Factors:
The management perception of risk factors such as sensitivity to foreign
exchange rate fluctuations, difficulty in availability of raw materials or in marketing
of products, cost/time over-run, etc. should be specified in the prospectus.
Part 11
The information to be included under this part of the prospectus are as follows:
A. General Information
Following, general information shall be contained:

1. Consent of directors, auditors, solicitors/advocates, managers to
issue, registrar of issue. -Bankers to the company, bankers to the issue, and
experts and their opinions it any obtained.
2. Change, if any, in directors and auditors during the last three years and

reasons thereof.
3. Authority for the issue and details of resolutions passed for the issue.
4. Procedure and time schedule for allotment and issue of certificates.
5. Names and addresses of the company secretary, legal advisors, lead
managers, co-mangers, auditors, bankers to the company, bankers to the
issue. and brokers to the issue.

B. Financial Information:
Under this category report-based information relating to financial matters are to
be shown. Following information in this regard:
Auditors' report A report by the auditors of the company with respect to
the profits and losses the five financial years preceding the issue of
prospectus must be included in the prospectus. The report should contain
details about the rates of dividend paid on each class of shares in respect
of minimum aggregate period of five years. The report should also give
statement of assets and liabilities as on the last date of the latest financial
year. The report should indicate the nature of any losses, and assets and
liabilities. Assets and liabilities of the subsidiaries as on the last date to
which accounts of the company were made up, must be shown in a like
manner.

Chartered Accountant report: Where it has been proposed to acquire the
business, the prospectus must contain a report by a chartered accountant,
upon the profits and losses of the business for each of the five financial
years preceding the issue of prospectus and the assets and liabilities of
business,
C. Statutory and Other Information
The following statutory and other information shall be

mentioned in the prospectus:

• Minimum subscription

• Expenses of the issue giving separately fee payable

to advisors, registrars to the issue, managers to the issue

and trustees for the debenture holders

• Underwriting commission and brokerage
• Issue made previously for cash
• Previous public or rights issue, if any (during last five years)
• Date of alloment; closing date; date of refunds; date of listing oil the stock
exchange
• Shares issued at premium or discount and the amount thereof
• Commission or brokerage on previous issue
• Issue of shares otherwise than for cash
• Debentures and redeemable preference shares, and other
instruments issued by the company outstanding as or the date of
prospectus and the terms of issue, and the option to subscribe
• Details of directors, proposed directors, whole-time directors, their
remuneration, appointment and remuneration of managing directors,
interest of directors, their borrowing powers and qualification shares
• Every other material contract which is not required in the normal
circumstances by specifying full particulars of the nature and extent of
interest, if any, of every director or promoter in the promotion of the
company; or in any proper-t% acquired by the company within two years
of the date of the prospectus or proposed to be acquired by it.
• Right of the members regarding voting, dividend. Lien on shares , process
of modification of right and forfeiture of shares.

• Restrictions, if any, on transfer and transmission of shares/debentures
and on their consolidations splitting
• Revaluation of assets, if any (during the last five years)
• Material contracts and inspection of documents such as material
contracts, documents and the time and place at which the contracts
together with documents will be available for inspection, from the date of
prospectus until, the date of closing of the subscription list

PART III

The requirement of this section of the prospectus is that the report by the
accountants under Part II must be by qualified practicing chartered accountant.
The time and place at which copies of all balance sheets J!ld profits and loss
accounts, materials contracts and documents. etc. to be inspected should also
be specified under Part 111.

Declaration
Prospectus must contain a declaration by the directors that all the relevant
provisions of the Companies Act, 1956and guidelines issued by the Government
(SEBI) have been complied with.

ABRIDGED PROSPECTUS
A memorandum containing such salient features of a prospectus as may be
prescribed is called 'Abridged Prospectus'. The concept of abridged
prospectus was introduced by the Companies (amendment) Act of 1988 with a
view to make the public issue of shares an inexpensive proposition. Accordigly, a
document has to be sent along with the application forms showing a brief
version of the salient features of the prospectus. One abridged prospectus can
carry two application forms.
An abridged prospectus must contain the following particulars:

A. General Information
File general information to be provided in this type of prospectus includes
the name and address of the registered office of the cornpany -. Name of the
stock exchange where shares are to be listed , date of opening and closing of
issue.
1.