Page 191 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes A prospectus, as per s.2(36), means any document described or issued as prospectus and
includes any notice, circular, advertisement or other document inviting deposits from the
public or inviting offers from the public for the subscription or purchase of any shares in or
debentures of a body corporate.
Every prospectus submitted to Stock Exchange Board of India (SEBI) for vetting shall, in
addition to the requirements of schedule II to the Act, contain/specify certain particulars
as are announced from time to time.
Any variation between the information memorandum and the red-herring prospectus shall
be highlighted as variations by the issuing company.

Every variation as made and highlighted under (iv) is to be individually intimated to the
persons invited to subscribe to the issue of securities.

In the event of the issuing company or the underwriters to the issue have invited or received
advance subscription by way of cash or post-dated cheques or stock-invest, the company
or such underwriters or bankers to the issue shall not encash such subscription moneys or
post-dated cheques or stock invest before the date of opening of the issue, without having
individually intimated the prospective subscribers of the variation and without having
offered an opportunity to such prospective subscribers to withdraw their application and
cancel their post-dated cheques or stock-invest or return of subscription paid.

The prospective shareholders are entitled to all true disclosures in the prospectus. The
persons issuing the prospectus are bound to state everything accurately and not omit
material facts.

9.27 Keywords

Certain prescribed particulars: In regard to the company and other listed companies under the
same management which made any capital issue during the last 3 years.
Financial Information: reports of the auditors of the company with respect to its profits and losses

and assets and liabilities, and the dividends paid during the fi ve financial years immediately

preceding the issue of prospectus.

Outstanding litigations: relating to financial matters or criminal proceedings against the
company or directors under Schedule XIII.
Prospectus: A document shall be called a prospectus if it satisfies two things: 1. It invites

subscription to share or debentures or invites deposits. 2. The aforesaid invitation is made to the
public.
Shelf-prospectus: A shelf-prospectus means a prospectus issued by any financial institution or

bank for one or more issues of the securities or class of securities specified in that prospectus.

Small depositor: A small depositor is one who has deposited, in a financial year a sum not exceeding

` 20000 in a company and includes his successors, nominees and legal representatives.
Sub-underwriting: Every underwriter has a certain limit up to which he would go in for taking
risk by entering into an underwritting contract.
Underwriting: consists of an undertaking by some person or persons that if the public fails to take
up the issue, he or they will do so.

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