Incorporation of

Company Organization

Prof Dr Sanjay Bang

Associate Professor Law
CHRIST University, Pune Lavasa
Company Act-2013
 The Companies Bill was passed by the Lok Sabha
Lower House of the Parliament of India on 18
December 2012.
 In the Rajya Sabha (the Upper House of the
Parliament of India) on 8 August 2013.
 It received Presidential Assent on 29th August
2013 thereby creating the Companies Act 2013.
 On 30th August it was published in Official Gazette
and came into operation.
The Beginning
 Your idea about the Word “Law”
 Why we require law?
 Is Law old concept or new one?
 Whether Law and Rule are two synonymous
words?
 Is Law Universal like Science?
 Law is the matter of interpretation.
 E.g:- “Means” and “Includes”.
Incorporation of Company
Organization
 The Companies Act-2013 has come into existence at once
from the date of notification in the Official Gazette that is from
30th August 2013.
 This Act is applicable in all India.
 Structural comparison of Companies Act-1956 and Companies
Act-2013, is as, The Companies Act, 2013 has 470 Sections
(covered in 29 Chapters) and 7 Schedules as against 658
Sections (covered in 13 Parts) and 15 Schedules of the
Companies Act, 1956.
 A substantial part of this Act is in the form of Companies
Rules.
Aim of the Companies Act-2013
 To promote the development of the economy.
 To encourage transparency, accountability and
high standards of corporate governance.
 To recognize various new concepts and procedures
facilitating convenience of doing business.
 To enforce stricter action against fraud.
 To enforce Corporate Social Responsibility
concept.
Applicability of the Act
 I) Companies.
 II) Banking Companies.
 III) Insurance companies.
 IV)Companies producing. electricity/supplying
electricity.
 IV) Companies regulated by Special Act.
 V) Entities as notified by Central Government.
Historical aspects of Company
 The concept of ‘Company’ or ‘Corporation’ in business is
not new but was dealt with, in 4th century BC itself
during ‘Arthashastra’ days.
 Its’ shape got revamped over a period according to the
needs of business dynamics.
 Company form of business has certain distinct
advantages over other forms of businesses like Sole
Proprietorship/Partnership etc.
 It includes features such as Limited Liability, Perpetual
Succession etc.
Meaning of Company
 The word ‘company’ is derived from the Latin word
(Com=with or together; panis =bread), and it
originally referred to an association of persons who
took their meals together.
 In the leisurely past, merchants took advantage of
festive gatherings, to discuss business matters.
 Thus in, popular parlance, a company denotes an
association of likeminded persons formed for the
purpose of carrying on some business or undertaking.
Definition of Company
 A Company is an incorporated association, which is an
artificial person created by law, having a separate entity with a
perpetual association.
 The Companies Act, 2013 Section 2(20) : A “company” means
a company incorporated under this Act or under any previous
company law.
 Chief Justice Marshall defines Company as, “a person
artificial, invisible, intangible and existing only in the eyes of
the law. Being mere creature of law, it possess only those
characters which the creator confers upon expressly or as
incidental to its very existence”.
Continued
 According to Prof. Lindley, company is defined as, “An
association of many persons who contribute money or
money’s worth to a common stock, and employ it in some
common trade or business (i.e., for a common purpose), and
who share the profit or loss (as the case may be) arising
therefore. The common stock so contributed is denoted in
money and it the capital of the company. The persons who
contribute it, or to whom it belongs, are members. The
proportion of capital to which each member is entitled is his
share. Shares are always transferable although the right to
transfer them is often more or less restricted”.
Nature and Characteristics of
Company
 1. Separate legal entity.
 Lee vs Lee, Salmon vs Salmon
 2. Limited liability.
 3. Perpetual Succession.
 4. Separate Property.
 5. Transferability of Shares.
 6. Common Seal.
 7. Capacity to sue and be sued.
 8. Separate Management.
 9. Voluntary Association for Profit.
Food for Brain
 A private company was having 4 members. All of
them were going in a car. Suddenly the car met
with the accident and all of them died on the spot.
Whether the company also died(wound up) with
the death of all 4 members? Why? What is the
possible consequences?
Kinds of Company
 The Companies Act, 2013 provides for the types of
companies that can be promoted and registered under
the Act.
 The three basic types of companies which may be
registered under the Act are:
 • Private Companies.
 • Public Companies; and
 • One Person Company (to be formed as Private
Limited).
Kinds of Companies
Types of Company
 Companies are divided into different categories
bases upon
 1) On the basis of Incorporation.
 2)On the basis of Liability.
 3) On the basis of membership.
 4) On the basis of control.
 5) On the basis of access of capital.
 6) On the basis of ownership(Other Companies)
On the basis of Incorporation
 Statutory Companies
 These are the companies which are created special
act of the Parliament or State Legislature, e.g., the
Reserve Bank of India, the State bank of India, the
Life Insurance Corporation, etc. these are mostly
concerned with public utilities, e.g., railways,
tramways, electricity companies and enterprise of
national importance.
Continued
 Registered Companies
Companies which are registered under the Companies
Act, 1956, or were registered under any of the earlier
companies Acts are called registered companies. A
vast majority of companies we come across belong to
this category. Tata Motors Limited, Reliance
Telecommunication Limited, EID Parry Limited, etc
belong to this category.
 Chartered Company:- Registered as per the Charter
granted by King or Queen of the country.
On the Basis of liability
 1) Company limited by shares:-Section 2(22),
company limited by shares is a registered company
having the liability of its members limited to the amount,
if any, unpaid on the shares respectively held by them.
 If his shares are fully paid - up, he has nothing more to
pay.
 E.g:- The Company at the time of wound up had liability
of 1 Crore, but Mr. A was having liability by shares of
1lakh only. He will be asked to pay up to 1 Lakh.
Continued
 2) Company limited by guarantee:-Section
2(21), "guarantee company" is a company having
the liability of its members limited to such an
amount as the members may respectively thereby
undertake, by the memorandum of association of
the company, to contribute to the assets of the
company.
 Members can not be called upon to contribute
beyond their liabilities.
E.g.
 One Company limited by Guarantee at the time of
winding up was having liability of 1 Crore. Mr. A
had taken the guarantee of 2 lakhs. He will be
asked to pay the guaranteed amount .
 This will be applicable only at the time of winding
up.
Continued
 3) Unlimited Company:- As per Section 2(92),
unlimited company is a company not having any
limit on the liability of its members.
 In such a company the liability of a member
ceases when he ceases to be a member.
 Thus, the maximum liability of the members of
such a company could extend to their entire
personal property to meet the debts and
obligations of the company.
On the basis of Nationality
 1) Domestic company:- Any company registered under
Company Act-1956 or the Act before that or in 2013 Act.
 2) Foreign Company According to Section 2 (42) of the
Companies Act, 2013, ‘foreign company’ means any company
or body corporate incorporated outside India which: (a) has a
place of business in India whether by itself or through an agent,
physically or through electronic mode.
 During the time of war it is important to access the
Nationality of company.
 (b) conducts any business activity in India in any other
manner.
On the basis of members
 1) Private Company:- It restricts the right to transfer
its shares; limits the number of its members to two
hundred (except in case of One Person company).
 There should be at least two persons to form a private
company i.e., the minimum no. of members in a
private company is two.
 A private company should have at least two directors.
The name of a private limited company must end
with the words "Private Limited".
Continued
 2) Public Company:- : As per Section 2(71), It is not a
private company. There must be Seven or more members are
required to form the company.
 Shares are freely transferable.
 A private company which is a subsidiary of a public company
shall also be deemed to be a public company for the purposes
of this Act, even where such subsidiary company continues to
be a private company in its articles.
 A public company should have at least three directors. The
name of a public limited company must end with the word
"Limited
Continued
 One Person Company:- [Sec 2(62)]:- Only one
person as a member. This is a new concept and
was not available in any of the previous Company
Acts.
 There is no minimum prescribed limit given for
the capital.
 The MOA will give the name of Nominee in case
of death or incapacity to contract will become the
member of the company.
Continued
 No member can incorporate more than one OPC.
 Such company can be converted into private or public
company only in few situations as per section 8 of the
Companies Act-2013.
 One member will be the sole member and Director of the
company.
 As regards the name of a One Person Company, the Act
provides that the words "One Person Company" or 'OPC'
shall be mentioned in brackets below the name of such
Company, wherever its name is printed, affixed or engraved.
On the basis of control
 Holding company and Subsidiary company
‘Holding’ and ‘Subsidiary’ Companies are relative
terms.
 A company is a holding company of another if the
other is its subsidiary.
 According to Section 2 (46) of the Companies Act,
2013 'holding company', in relation to one or more
other companies, means a company of which such
companies are subsidiary companies.
Subsidiary Company
 According to Section 2 (87) of the Companies Act,
2013 'subsidiary company' or 'subsidiary', in relation to
any other company (that is to say the holding company),
means a company in which the holding company :
 (a) controls the composition of the Board of Directors,
Or
 (b) exercises or controls more than one-half of the total
share capital either at its own or together with one or
more of subsidiary company
Associate Company
 (c) Associate Company According to Section 2 (6) of the
Companies Act, 2013, 'associate company' in relation to
another company, means a company in which that other
company has a significant influence.
 (d) Dormant company Where a company is formed and
registered under this Act for a future project or to hold an
asset or intellectual property and has no significant
accounting transaction, such a company or an inactive
company may make an application to the Registrar in such
manner as may be prescribed for obtaining the status of a
dormant company.
Government Company
 Section 2(45) defines a “Government Company”
as any company in which not less than fifty-one
per cent. Of the paid-up share capital is held by the
Central Government, or by any State Government
or Governments, or partly by the Central
Government and partly by one or more State
Governments, and includes a company which is a
subsidiary company of such a Government
company.
Registration of Company
 1) Reservation of name by filling e-application.
 2)Drafting and signing of Memorandum of
association and Articles of Association and its
submission to Registrar of company.
 3) These documents have to be e-filled and e-
stamped.
Continued
 4) consent of persons who have been nominated to act as
directors to be submitted electronically.
 5)Submission of “statutory declaration of compliance” and
other declarations.
 6) Pay Fee.
 7) To obtain the certificate of incorporation digitally signed
by Registrar of Company.
 8)Certificate of Incorporation and allotment of Corporate
Identity Number
 9) File declaration about Registered Office.
Continued
 9. Effect of Registration [Sec. 9]
 10. Commencement of Business [Sec. 11]
 But by sec 10A- All subscribers have paid the
value of the share and Registered Office has to be
verified is inserted.
 Earlier within 30 days the Registered Office
address need to be informed.
Promoter
 The term, ‘promotion’ refers to the process by
which the idea of forming a company takes a
definite shape resulting in its incorporation.
 It is in fact the first stage in the formation of
company.
 The Promoter is the person who does the
necessary preliminary work incidental to the
formation of the company.
Incorporation/Formation of Company
 For registering the company with the registrar of companies,
the promoter has to initiate a number of steps as follows
 1. Approval for the proposed name :-A company can
choose any name but it should not closely resemble the
name of an existing company, national name, national hero
name etc.
 Hence the promoter has to get the approval from the
registrar for the proposed name of the company.
 Lakme vs Likeme. ( Deceptive similarity)
 WWF vs WWE.
Continued
 2. Filing of Documents:-The promoter has to get
prepared the following documents and file them
with the registrar of companies of the State in
which the registered office of the company is
situated.
 i) Memorandum of Association:- 2(56)
 This document which is of fundamental
importance defines the scope of activities of the
company.
Memorandum of Association
 1) Name Clause
 2) Domicile Clause
 3) Object Clause
 4) Liability Clause.
 5) Capital Clause.
 6) Subscription Clause.
 It should be stamped, signed and witnessed.
 In case of private company minimum 2 and in case of Public 7
members should sign.
 In case of Corporation MOA is not required.
 Succession Clause (But only in OPC)
Purpose of Memorandum
 The purpose of memorandum is two-fold.
 1. The Prospective shareholder who contemplates the investment
of his savings, should know the field in, or the purpose for which
it is going to be used and what risk he is taking in making the
investment.
 2. Outsiders or Creditors dealing with the company will know
without reasonable doubt whether the contractual relation into
which he contemplates entering with the company is one relating
to a matter within its corporate objects.
 It should be divided into paragraph and printed.
 Alteration is difficult, SR plus approval in General meeting.
Article of Association
 ii) Article
of Association :-This contains the
regulations connected with the internal
management of the company.
 This document must also be duly stamped and
signed by the signatories to the memorandum and
witnessed.
 Alteration is possible by Special resolution.
Other Clauses
 iii) Original letter of approval :-Original letter of
approval of name be obtained from the Registrar and be
filed.
 iv) A list of directors:- A list of directors who have
consented to be its directors must be filed.
 v) Written consent to act as directors:-The directors have
to give their consent in writing to act as its directors.
 They should also undertake to take the necessary
qualification shares and pay for them.
Continued
 vi) Notice of the address of the registered office.
 vii) Statutory declaration :-A declaration stating that
all the requirements of law relating to registration
have been complied with is to be filed.
 This declaration must be given by an Advocate of
the Supreme Court or High Court, or by a Chartered
Accountant who is engaged in the formation of the
company or by a person named in the Articles as a
director or secretary of the company.
Continued
 viii) The registrar will scrutinize all the documents and if
he finds them in order, he will issue the certificate of
incorporation
 This certificate is a conclusive evidence of the fact that
the company has been duly registered.
 A private limited company can commence business on
getting the certificate of incorporation, but a public
company has to take some more steps for getting another
certificate known as certificate for commencement of
business.
Lifting of corporate veil
 Company enjoys a separate position from that of position of
its owners.
 It is artificial but yet a person in eyes of law.
 Problems arise when this position of the company is misused.
 It is not incorrect to say that, though the company is an
unreal person, but still it cannot act on its own.
 There has to be some human agency involved so that
company is able to perform its functions.
 But when the benefit is misutilised, the Court is not powerless
and it can lift the veil of Corporate personality.
Continued
 Meaning of corporate veil:- A company is a separate
legal entity and Corporate veil is a curtain between
company and its member.
 Corporate veil is a legal concept that separates the action
of an organisation to the action of the company’s
member or shareholders.
 Some members of the company sometime indulge in
fraudulent activities and their ingenuity ,dishonesty let
them take benefit of corporate personality or separate
legal entity of the company and earn their own profit.
Continued
 own profit. In this case , there is ignorance of
corporate veil concept and lifting or piercing of
corporate veil is done and look at the person
behind the company who are the real beneficiaries
of the corporate fiction.
 This doctrine has been established for business
efficiency, necessity and convenience .
Doctrine of the lifting the corporate
veil circumstances
1. Judicial interpretation. (At
discretion of Court )
2. Statutory provision:-
According to provision of
companies Act.
1. Judicial interpretation. (At
discretion of Court )

 1. Determination of character or nature of

company.
 Daimler Co. Ltd v. Continental Tyre and Rubber
Co.(1916).
 2. Benefits or protection of revenue: Tax evasion
 Case:-Sir Dinshaw Maneckjee Petit(1927)
Continued
 3. Evasion of personal and statutory
obligation/Prevention of fraud:-
 Case:-Gilford Motor co. v Horne (1933)
 Not to solicit the customers
 4. Avoidance of welfare Legislation: -
 Case:- Workmen of Associated Rubber Industry Ltd
v. Associated Rubber Industry Ltd. In
 Company was established to divide the profit and
give less bonus to workers
Continued
 5.Diversion of business opportunity: When
company is to divert the business to another
business.
 Case: Gencor ACP Ltd. v. Dalby (2002) –Dalby
was director of Gencor co. . He formed private
company and dishonestly transferred the capital of
public company to his private company.
Statutory provisions
 1.Reduction in members of the company:- As per
section 3A of Indian Companies Act2013 if
membership reduces.
 2.Fraudulent conduct of business:-(Sec 339).
 3. Misrepresentation in prospectus :- (sec 34, 35).
 4. Mis-description of name:- A person stated
company’s name and signed as “L R Agencies Ltd”
while the original name was “L&R Agencies Ltd”.
Continued
 5.Ultra vires acts :- Every company is bound to
perform in compliances of its memorandum of
association , articles of association, and the
companies Act, 2013.
 Action done outside purview of either is said to be
“Ultra vires “or improper or beyond the legitimate
scope.
 Ashbury Railway Carriage and Iron company ltd
vs. Hector Riche
Continued
 6. Liability under other statutes:- There are many other
provisions of the company law where directors of a
company are personally liable for the default in
complying with those provisions .
 Some of these are 1) non maintenance of proper books of
account; 2)default in holding of annual general meetings,
3)default in filing the annual returns ;4)default in paying
dividends after declarations; 5)false declaration of
solvency; 6)non cooperation with the company auditors
or with the liquidators (in the event of the winding up)
Continued
 ;7)non-compliance with the regulation of the
Securities and Exchange Board of India (SEBI).
 Beside these, directors may be held liable under
pollution laws, social security laws(Minimum
Wages Act ,ESI,EPF, Gratuity ), Competition Act ,
Foreign Exchange Management Act (FEMA),
taxation laws.
Doctrine of Ultra Vires
 The term ultra vires means “beyond the powers”.
 The rule of ultra vires is applicable to acts done in
excess of the legal powers of the doers.
 The fundamental rule of Company Law is that the
objects of a company as stated in its memorandum
can be departed from only to the extent permitted
by the Act, thus far and no furhter.
Continued
 An act ultra vires the company - A company has
the power to do all such things as are –
 1. Authorized to be done by the Companies Act-
2013,
 2. Essential to the attainment of its objects
specified in the memorandum,
 3. Reasonable and fairly incidental to its objects.
Continued
 A company has power to carry out the objects set
out in the memorandum and also everything which
is reasonably necessary to enable it to carry out
those objects.
 Any activities not expressly authorized by the
memorandum are ultra vires to the company.
 Otherwise, the term ultra vires means that the
doing of the act is beyond the legal power and
authority of the company.
Continued
 If an act is ultra vires the company i.e., it is outside the
scope of the scope of the company’s objects, it is wholly
void and inoperative and will not be binding on the
company.
 Even the whole body of shareholders cannot ratify it.
 In consequence, any act done or a contract made by the
company which travels beyond the powers not only of
the directors but also of the company is wholly void and
inoperative in law and is therefore not binding on the
company.
Continued
 A company can be restrained from employing its
fund for purposes other than those sanctioned by
the memorandum.
 Likewise, it can be restrained from carrying on a
trade different from the one it is authorised to
carry on.
 E.g- Ashbury Railway Carriage and Iron
Company V. Richie
Impact of Doctrine of Ultra Vires
 The impact of the doctrine of ultra vires is that a company can
neither be sued on an ultra vires transaction, nor can it sue on it.
 Since the memorandum is a “public document”, it is open to
public inspection.
 Therefore, when one deals with a company one is deemed to
know about the powers of the company.
 An act which is ultra vires the company being void, cannot be
ratified by the shareholders of the company.
 Sometimes, act which is ultra vires can be regularised by
ratifying it subsequently.
Doctrine of Constructive Notice
 This doctrine is in favour of a company i.e., it
creates a presumption in favour of a company.
 Once registered MOA and AOA becomes the
public documents for public inspection on
payment.
 Therefore, any person dealing with company is
presumed to have read the Memorandum and
Articles correctly.
Continued
 Everyone dealing with the company, whether a
shareholder or an outsider, is presumed to have
read the two documents.
 This deemed knowledge of the two
 The doctrine prevents any person dealing with a
company alleging that he did not read the
provisions contained in MOA and AOA.
 Kotla Venakataswarny v/s C Rammurthi
Doctrine of Indoor Management
 As per this doctrine, outsiders dealing with the
company are not required to enquire into the
internal management of the company.
 The outsiders dealing with the company are
entitled to assume that as far as the internal
proceedings of the company are concerned,
everything has been regular done.
Continued
 They are presumed to have read these documents
and to see that the proposed dealing is not
inconsistent therewith, but they are bound to do
more.
 They need not inquire into regularity of the
internal proceedings as required by the
memorandum and the articles.
 They can presume that all is being done regularly.
Continued
 Effect: If a contract is entered into on behalf of
company by any director or officer of company.
 It is enforceable against the company if provisions
contained in the MOA and AOA are fulfilled ,
even though while entering into a contract some
irregularity had arisen of which the outsider was
unaware.
 Royal British Bank v/s Turquand
Prospectus
 The Companies Act, 2013 defines a prospectus
under section 2(70). 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.
Continued
 Such an invitation to offer should be for the
purchase of any securities of a corporate body.
 Essentials for a document to be called as a
prospectus, it should satisfy following conditions.
 1) The document should invite the subscription to
public share or debentures, or it should invite
deposits.
Continued
 2) Such an invitation should be made to the public.
 3) The invitation should be made by the company
or on the behalf company.
 4) The invitation should relate to shares,
debentures or such other instruments.
 For Public Company Prospectus is compulsory but
not for Private Company, but when it turns into
Public company then it is required.
Advertisement of prospectus
 Section30 of the Companies Act 2013 contains
the provisions regarding the advertisement of the
prospectus.
 This section states that when in any manner the
advertisement of a prospectus is published, it is
mandatory to specify the contents of the
memorandum of the company.
Kinds of Prospectus
1) Shelf Prospectus
2) Red Herring Prospectus
3) Abridged prospectus
4) Deemed Prospectus
Shelf Prospectus
 Shelf prospectus can be defined as a prospectus
that has been issued by any public financial
institution, company or bank for one or more
issues of securities or class of securities as
mentioned in the prospectus.
 The prospectus shall prescribe the validity period
of the prospectus and it should be not be exceeding
one year.
Red Herring Prospectus
 Red herring prospectus is the prospectus which
lacks the complete particulars about the quantum
of the price of the securities.
 A company may issue a red herring prospectus
prior to the issue of prospectus when it is
proposing to make an offer of securities.
 The obligations carried by a red herring prospectus
are same as a prospectus.
Abridged Prospectus
 The abridged prospectus is a summary of a prospectus
filed before the registrar.
 It contains all the features of a prospectus.
 An abridged prospectus contains all the information of the
prospectus in brief so that it should be convenient and
quick for an investor to know all the useful information.
 It contains all the useful and materialistic information so
that the investor can take a rational decision and it also
reduces the cost of public issue of the capital as it is a
short form of a propsectus.
Deemed Prospectus
 When any company to offer securities for sale to
the public, allots or agrees to allot securities, the
document will be considered as a deemed
prospectus through which the offer is made to the
public for sale.
 The document is deemed to be a prospectus of a
company for all purposes and all the provision of
content and liabilities of a prospectus will be
applied upon it.
Process for Filling and issuing
Prospectus
 Process for filing and issuing a prospectus is as
follows
 1) As stated under section 33, the application form
for the securities is issued only when they are
accompanied by a memorandum with all the
features of prospectus referred to as an abridged
prospectus.
 Exception to this is:-Application issued for the
securities not offered to the public.
Content of Prospectus
 For filing and issuing the prospectus of a public
company, it must be signed and dated and contain
all the necessary information as stated under
section 26 of the Companies Act,2013:
 1. Name and registered address of the office, its
secretary, auditor, legal advisor, bankers, trustees,
etc.
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 2. Date of the opening and closing of the issue.
 3. Statements of the Board of Directors about
separate bank accounts where receipts of issues are
to be kept.
 4. Statement of the Board of Directors about the
details of utilization and non-utilisation of receipts
of previous issues.
 5. Consent of the directors, auditors, bankers to the
issue, expert opinions.
Continued
 6. Authority for the issue and details of the
resolution passed for it.
 7. Procedure and time scheduled for the allotment
and issue of securities.
 8. The capital structure of the in the manner which
may be prescribed.
 9. The objective of a public offer.
 10. The objective of the business and its location.
Continued
 11. Particulars related to risk factors of the specific project,
gestation period of the project, any pending legal action and
other important details related to the project.
 12. Minimum subscription and what amount is payable on the
premium.
 13. Details of directors, their remuneration and extent of their
interest in the company.
 14. Reports for the purpose of financial information such as
auditor’s report, report of profit and loss of the five financial
years, business and transaction reports, statement of compliance
with the provisions of the Act and any other report.
Filing of copy with the Registrar
 As stated under sub-section 4 of section26 of the
Companies Act, 2013, the prospectus is not to be
issued by a company or on its behalf unless on or
before the date of publication, a copy of the
prospectus is delivered to the registrar for registration.
 The copy should be signed by every person whose
name has been mentioned in the prospectus as a
director or proposed director or the assigned attorney
on his behalf.
Punishment
 If a prospectus is issued in contravention of the provision
under section 26 of the Companies Act 2013, then the
company can be punished under section 26(9).
 The punishment for the contravention is:
 Fine of not less than Rs. 50,000 extending up to 3,00,000.

 If any person becomes aware of such prospectus after

knowing the fact that such prospectus is being issued in
contravention of section 26 then he is punishable with the
following penal provisions
 Imprisonment up to a term of 3 years, or
 Fine of more than Rs. 50,000 not exceeding Rs. 3,00,000.
Thank You
so much