PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND OTHER SECURITIES

Prospectus Sec 57
o No prospectus shall be issued by or on behalf of a company unless on or before the
date of its publication, a copy thereof signed by every person who is named therein as
a director or proposed director of the company has been filed with the registrar.

o In case of any contravention of this section, the company and every person who is a
party to the issue, publication or circulation of the prospectus shall be liable to a
penalty not exceeding of level 2 on the standard scale.
Application for, and allotment of, shares and debentures. Sec 67
o An application for allotment of shares in and debentures of a company in pursuance
of a prospectus shall not be made for shares or debentures of less than such nominal
amount as the Commission may specify.
o The Commission may specify the form of an application which may contain such
declarations or verifications as it may, in the public interest, deem necessary.
o such form then shall form part of the prospectus.
o All certificates, statements and declarations made by the applicant shall be binding
on him.
o An application for shares in or debentures of a company which is made in pursuance
of a prospectus shall be irrevocable.
Repayment of money received for shares not allotted. Sec 68
o The company shall refund the money in the case of the unaccepted or unsuccessful
applications within fifteen days.
o If the refund required is not made, the directors of the company shall be jointly and
severally liable to repay that money with surcharge at the rate of 2% for every month
or part thereof from the expiration of the fifteenth day and shall be liable to a
penalty of level 3 on the standard scale.
Allotment of shares and other securities to be dealt in on securities exchange
Sec 69
o Where a prospectus states that application will be made for permission for the shares
or other securities to be dealt in on the securities exchange, any allotment made on an
application shall be void
i. if the permission has not been applied for before the seventh day after the first issue of
the prospectus or
ii. if the permission has not been granted before the expiration of 21 days from the date
of the closing of the subscription lists or
iii. such longer period not exceeding 42 days as may, within the said twenty-one days, be
notified to the applicants for permission by the securities exchange.

o All moneys received shall be deposited and kept in a separate bank account in a
scheduled bank so long as the company may become liable to repay it.
o Where the permission has not been applied for or has not been granted the company
shall forthwith repay without surcharge all money received from applicants.

o if any such money is not repaid within eight days after the company becomes liable to
repay it, the directors of the company shall be jointly and severally liable to repay that
money from the expiration of the eighth day together with surcharge at the rate of
two percent for every month or part thereof from the expiration of the eighth day and
in addition, shall be liable to a penalty of level 3 on the standard scale.

o if default is made the company and every officer of the company who authorizes or
permits the default shall be liable to a penalty of level 2 on the standard scale.
Return as to allotments Sec 70
A company having a share capital makes any allotment of its shares, the company shall,
within 30 days
o file with the registrar a return of the allotment, stating
i. the number and nominal amount of the shares comprised in the allotment
ii. such particulars as may be specified, of each allottee, and
iii. the amount paid on each share

o in the case of shares allotted as paid up in cash, submit along with the return of
allotment, a [declaration from its chief executive report from its auditor to the effect
that the amount of consideration has been received in full by the company and
shares have been issued to each allottee;:
o in the case of shares allotted as paid up otherwise than in cash, submit along with
the return of allotment, a copy of the document evidencing the transfer of non-cash
asset to the company, or a copy of the contract for technical and other services,
intellectual property or other consideration, along with copy of the valuation report
(verified in the specified manner) for registration in respect of which that allotment
was made.

o file with the registrar

(i) in the case of bonus shares, a return stating the number and nominal amount of
such shares comprised in the allotment and the particulars of allottees together
with a copy of the resolution authorising the issue of such shares;
(ii) in the case of issue of shares at a discount, a copy of the resolution passed by the
company authorising such issue and where the maximum rate of discount exceeds
ten 44 per cent, a copy of the order of the Commission permitting the issue at the
higher percentage.
o No return of allotment shall be required to be filed for the shares taken by the
subscribers to the memorandum on the formation of the company.