The prospectus is a legal document, which outlines the

company’s financial securities for sale to the investors.

Ex- a printed booklet advertising a school or university

to potential parents or students or giving details of a
share offer for the benefit of investors.
The prospectus contents are specified in the Companies Act. The
prospectus must touch over the following content points:

> Registered office of the company

> name and addresses of the CEO, CS, legal adviser, etc
> date of opening and closing of the issue , including
declaration, about the issue of allotment letter and
refund in a given time
> A statement by BOD about seperate bank account
> the authority to issue and the details of the resolution
passed thereof
> Procedure and time schedule for allotment and issue of
securities
>
> Main objects and present business of the company
Minimum subscription , amount payable by way of
premium, issue of shares otherwise that on cash.
> Financial statement of the company
> details of directors , including their appointments,
remuneration, DIN, age address etc
> particulars of
a. management perception of risk factors
b. gestation period of project
c. deadlines
> reports of profit and loss from auditors
> time and place at which the contracts together
with documents will be available for inspection
> details of any inquiry, inspection or investigation
conducted under company Act in last five years
> the prospectus must be dated and issued within 90
days of date of delivery to the registrar .
Types
• Shelf prospectus –
> Type of prospectus which is planning for multiple
issues of bonds for raising funds from public.
> it is valid for 12 months from the date of issue
> before second issue , company is supposed to file
an information memorandum with the registrar
• Red Herring - Also known as offer document ,
Important information regarding the company's
promoters, business operations, growth prospects,
and financials.
Liability of mis-statement in
prospectus
• Sec 35- civil liability- against the company
• Sec 34- criminal liability- action against directors,
promoter, experts
- 447- punishment for fraud ( 6 months -10 years )(not less
that amount involved in fraud)
- 448 – Punishment for false statement ( 3 - 7 years) (upto 5
times )
- 449 Punishment for false evidence ( 3 - 7 years) (may
exceed 10 lakh

> Defences of directors

A private placement is a sale of securities to a pre-
selected number of individuals and institutions.

Private placements are relatively unregulated

compared to sales of securities on the open market.

Private sales are now common for startups as they

allow the company to obtain the money they need
to grow while delaying or foregoing an IPO.

The sale of a bond or other security directly to a limited number

of investors.
who can become member ?

> Individual
> Partnership Firm
> HUF
> company
> LLP
> Minor
> trade union
>
how to become member?
> Subscriber to MOA
> who agrees in writing and who’s name is in register
> who is a beneficial owner in the record of
depository .
Rights of members
> right to transfer shares
> rights to inspect certain books
> right regarding meetings
> right to obtain copies
Liabilities
> to pay price of shares
> liability in unlimited company
> liability in company limited by guarantee
Difference between member and
shareholder
Board Meeting
Every company shall hold the first meeting of the
Board of Directors within
30 days of the date of its incorporation and
thereafter hold a minimum number of 04
meetings of its Board of Directors every year in such a
manner that not more than 120 days shall intervene
between two consecutive meetings of the Board