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Unit 7: Prospectus

(viii) Whether rating from CRISIL or any rating agency has been obtained for the proposed Notes
debentures/preference shares issue. If no rating has been obtained, this should be answered
as ‘No’. However, if ‘Yes’, the rating should be indicated.
(ix) Names and addresses of the underwriters and the amount underwritten by them together
with declaration by the Board of directors that the underwriters have sufficient resources
to meet their respective obligations.
(x) Consent of the Central Government about the present issue as also particulars of letter of
intent/industrial licence making clear in the statement that the Central Government does
not undertake any responsibility for financial soundness or correctness of the statement(s).
(xi) Punishment if application for shares is made in a fictitious name (under s. 68A).

(xii) Names and addresses of trustees of the debenture trust deed, in case of issue of debentures.

Task A company issued a prospectus advertising that the company has a great Potential
with “turnover of a million bags of cement in a year”. It is discovered later that while the
company has the installed capacity of one million bags, it had never produced more than
6 lac bags of cement in a year. A buyer of shares seeks remedy against the misleading
statement. Would he succeed? [Hint: Yes, he would succeed.]
2. Capital Structure of the Company:
(i) Authorised, issued, subscribed or paid-up capital.
(ii) Size of the present issue, giving separately reservation for preferential allotment to
promoters and others.
3. Terms of the Present Issue:
(i) Terms of Payment.
(ii) How to apply i.e., making use of the application form, on the basis of study of
prospectus and mode of payment.
(iii) Any special tax benefits for the company and its shareholders.
(iv) Rights of the instrument holders, such as they will get dividends for the whole year
or for the period of holding only.

4. Particulars of the Issue:
(i) Object(s) of the issue.
(ii) Project cost.
(iii) Means of Financing (including contribution of promoters).
5. Company Management and Project:
(i) History and main objects and present business of the company, as also name and
address of subsidiary, if any.
(ii) Promoters and their background.
(iii) Location of the project.
(iv) Collaborations, if any, with details of any performance guarantee or assistance in
marketing.
(v) Nature of the product(s) export possibilities, export guarantee.

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