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Unit 9: Prospectus

has been apprised or every past default of the company in repayment of deposits and for Notes
payment of interest thereon to the small depositors.
(iv) Every director of such a defaulting company sall be prohibited to be appointed as a director
of any public company for 5 years from the date of the default.

(v) No such defaulting company shall directly or indirectly make any loan to any body
corporate, give guarantee or provide security or acquire security of any body corporate till
such default continues.
(vi) Every non-compliance is punishable with imprisonment upto 3 years and also fine not less

than ` 500 for everyday.
(vii) An aggrived depositor is also entitled to make an application to Tribunal for redressal of
his grievance against the company.
Default in acceptance or refund of deposits to be cognizable (s. 58AAA). Every offence connected
with or arising out of acceptance of deposits under s. 58A or s. 58AA is a cognizable offence
under the Code of Criminal Procedure, 1973.
Dating of prospectus (s.55). Section 55 states that every prospectus must be dated and that date
is deemed to be the date of publication of the prospectus.
Powers of SEBI. Section 55A provides that the provisions contained in sections 55 to 58, 59 to 81,
108-110, 112-113, 116-122, 206, 206A and 207, so far as they relate to issue and transfer of securities
and non-payment of dividend shall be administered by SEBI in the following cases:
(a) in case of listed companies;
(b) in case of those public companies which intend to get their securities listed on any
recognised stock exchange in India. In any other, case, the Central Government shall be the
administering authority.

9.9 Contents of a Prospectus

Section 56 lays down that the matters and reports stated in Schedule II to the Act must be included
in a prospectus. The format of a prospectus is divided into three parts. In the first part brief

particulars are to be given about matters mentioned below:
1. General information. Under this head information is given about (i) Name and address of
registered office of the company. (ii) Name/(s) of stock exchange/(s) where application for

listing is made. (iii) Declaration about refund of the issue if minimum subscription of 90
per cent is not received within 90 days from closure of the issue. (iv) 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, under s.73. (v) Date of opening of the issue. (vi) Date
of closing of the issue. (vii) Name and address of auditors and lead managers. (viii) Whether
rating from CRISIL or any rating agency has been obtained for the proposed debentures/
preference shares issue. If no rating has been obtained, this should be answered as ‘No’. (ix)
Names and address of the underwriters and the amount underwritten by them.
2. Capital structure of the company. (i) Authorised, issued, subscribed and 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, (iii) Any special tax
benefi ts.
4. Particulars of the issue. (i) Objects, (ii) Project cost, (iii) Means of Financing (including
contribution of promoters).

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