Page 192 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 9: Prospectus

9.28 Self Assessment Notes

Fill in the blanks:

1. A ................................... limited by shares, generally issues shares to the pubic for which it
has to issue a prospectus.
2. .............................. lays down that the matters and reports stated in Schedule II to the Act
must be included in a prospectus.
3. .................................. requires that no one shall issue any form of application for shares in
or debentures of a company unless the same is accompanied by a memorandum (Known
as ‘Abridged Prospectus‘) containing such salient features of prospectus as may be
prescribed.

4. ................... requires making public the draft prospectus filed with it.

5. A .................... may contain a statement purporting to be made by an expert.
6. ............................ has been designed to check the by-passing of the provision of s.56 as given
above by making an offer of sale of shares or debentures through the medium of issue
houses.
7. .............................. makes provisions for a self-prospectus in certain situation.

8. A company inviting subscription by an .................................... is bound to file a prospectus
prior to the opening of the subscription lists and the offer as a redherring prospectus, at
least three days before the opening of the offer.

9. The invitation and acceptance of public deposits by companies were brought within the
jurisdiction of Companies Act in .....................
10. .......................... provides that a penal rate of interest of 18 percent shall be paid for the
overdue period in case of public deposits matured and claimed but remaining unpaid.

9.29 Review Questions

1. What is a prospectus? Who are liable for misstatements in a prospectus?
2. Explain the extent of civil and criminal liability for such misstatements.
3. Write a short note on statement in lieu of prospectus.

4. State the restrictions and limitations on inviting and accepting deposits by companies.
5. What is a misstatement in a prospectus?
6. What are the defences available to a director for any misstatement in a prospectus
7. Discuss the remedies available to an allottee who had applied for shares on the faith of a
false prospectus.

Answers: Self Assessment

1. public company 2. Section 56
3. Section 56(3) 4. SEBI
5. prospectus 6. Section 64
7. Section 60A 8. information memorandum

9. 1974. 10. Rule 8A

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