Page 190 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 9: Prospectus

Signing of advertisement. The advertisement should be signed by a majority of the Notes
directors in the Board of the company, as constituted at the time the Board approved the
advertisement, or their duly authorised agents, in writing and a copy of the same should
be delivered to the Registrar of companies for registration. Even a letter of authority is
sufficient for this purpose and power of attorney is not necessary. [Circular No. 23/75

(1)/14/75-CL (IV)] dated 25-9-1975 issued by the Department of Company Affairs].
Period of validity of advertisement and delivery of the text to the registrar. The advertisement
shall remain valid for a period of 6 months from the date of the closure of the fi nancial year
in which it is issued or until the date the balance sheet is laid before the company in general
meeting or where the Annual General Meeting is not held, the latest date on which the
meeting should have held, whichever is earlier. A fresh advertisement has to be made in
each succeeding financial year for inviting deposits thereafter.

Statement in lieu of advertisement (Rule 4A). Where a company intends to accept deposits
without inviting or allowing or causing any other person on its behalf, to invite such

deposits, it need not issue the advertisement. It is, however, required to file with the
Registrar a statement in lieu thereof containing all the particulars required to be included
in the advertisement under the Rules and signed (in the same manner as the advertisement
for deposits is to be signed) before accepting any deposit.
The statement in lieu of advertisement shall be valid until the expiry of 6 months from the
date of closure of the fi nancial year in which it is so delivered or until the date on which
the balance sheet is laid before the company in the annual general meeting, or, where the
annual general meeting for any year has not been held, the latest day on which that meeting
should have been held in accordance with the provisions of the Act, whichever is earlier.
20. Acceptance of deposits in joint names [Rule 8(2)]. Where depositors so desire, deposits
may be accepted in joint names not exceeding three, with or without any one of the clause
namely “either or survivor”.

21. Return of deposits (Rule 10). Every company is required to file with the Registrar on
or before 30th June every year, a return of deposits in the prescribed form furnishing

information contained therein as on 31st of March of that year duly certified by the auditors
of the company. A copy of the return is required to be simultaneously furnished to the
Reserve Bank of India.

9.26 Summary

A public company may also decide not to invite public to subscribe to its share capital and
arrange its capital privately as in the case of private company. Under such circumstances,
the public company is required to submit a statement in lieu of prospectus with the
Registrar of Companies at least three days before the allotment of shares is made.
The payment must be strictly by way of ‘commission‘ and not merely a device to issue
shares at a discount.

The rate of commission and the number of shares and debentures which the underwriters
have agreed to subscribe for a ‘commission‘ should be disclosed in the prospectus.
The names of the underwriters and the opinion of the directors that the resources of

the underwriters are sufficient to discharge their obligations must be disclosed in the
prospectus.
The amount of authorised capital and its subdivision into equity and preference share
capital is given in the Memorandum of Association which is prepared before the certifi cate
of incorporation is obtained.

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