Page 255 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes Part II of Schedule II requires the company to give detailed information. This part is further sub-
divided into three parts viz., General Information, Financial Information Statutory and Other
Information.
General Information shall include information on matters like: (i) Consent of directors, auditors,
solicitors, managers to the issue, Registrars to the issue, Bankers of the Company, Bankers to the
issue and experts. (ii) Change, if any, in directors and auditors during the last 3 years and reasons
therefore. (iii) Procedure and time schedule for allotment and issue of certificates. (iv) Names
and address of Company Secretary, legal advisor, Lead Managers, Co-managers, Auditors,
Bankers to the issue. (v) Authority for the issue and details of resolution passed therefor.

Financial information includes: (i) reports of the auditors of the company with respect to its
profits and losses and assets and liabilities, and the dividends paid during the five financial
years immediately preceding the issue of prospectus; (ii) report by the accountants (who should
be named) on the profits or losses for the preceding 5 financial years and on the assets and
liabilities on a date which must not be more than 120 days before the date of the issue of the
prospectus.
Statutory and Other information includes information about: (i) Minimum subscription.
(ii) Expenses of the issue. (iii) Underwriting commission and brokerage. (iv) Previous public or
rights issue; if any, giving particulars about date of allotment, refunds, premium/discount, etc.
(v) Issue of shares otherwise than for cash. (vi) Commission or brokerage on previous issue.
(vii) Particulars about purchase of property, if any. (viii) Revaluation of assets, if any. (ix)
Material contracts and time and place where such documents may be inspected. (x) Debentures
and redeemable preference shares or other instruments issued but remaining outstanding on
the date of the prospectus and terms of their issue.
Part III of the Schedule gives explanations of certain terms and expressions used under Part I and
Part II of the Schedule.

11.1.10 SEBI Guidelines Relating to Disclosure on Prospectus

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.

11.1.11 Abridged Form of Prospectus

Section 56(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. Thus, instead of
appending full prospectus, an ‘abridged prospectus’ need only be appended to the application
form.
In order to provide for greater disclosure of information to prospective investors so as to enable
them to take an informed decision regarding investment in shares and debentures, Form 2-A
has been prescribed as a format of abridged prospectus. It is further required that the abridged
prospectus and the share application form should bear the same printed number and the two
should be separated by a perforated line. Accordingly, the investor may detach the application
form before submitting the same to the company or the designated bankers.
When ‘abridged prospectus’ not necessary. In the following circumstances, an ‘abridged prospectus’
containing the prescribed particulars as per Form 2A need not accompany the application forms:
(i) In the case of a bona fide invitation to a person to enter into an underwriting agreement with
respect to the shares or debentures. (ii) When shares or debentures are not offered to the public.

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