Share and Debentures

published by admin on Tue, 03/06/2012 - 12:46

36. A prospectus issued by or on behalf of a company or in relation to a company to be formed shall bear a date, and such date shall unless the contrary is proved, be taken as the date of publication of such prospectus.

 

37. (1) Every prospectus issued by or on behalf of a company or by or on behalf of any person who is or has been engaged or interested in the formation of the company, shall contain the information specified in Part I of the Fourth Schedule hereto and set out the reports specified in Part II of that Schedule. The provisions of Parts I and II shall have effect, subject to the provisions contained in Part III of that Schedule.

(2) A condition requiring or binding an applicant for shares in or debentures of a company, to waive compliance

with any requirement of this section, or purporting to affect him with notice of any contract, document, or matter not

specifically referred to in the prospectus, shall be void.

(3) It shall not be lawful to issue any form for application for shares in or debentures of a company, unless the form

issued with a prospectus which complies with the requirements of this section :

Provided that the provisions of this subsection shall not apply, where it is shown that the form for application was

issued either—

(a) in connection with a bona fide invitation to a person to enter into an under-writing agreement with respect to the shatres or debentures ;

(b) in relation to shares or debentures which were not offered to the public ; or

(c) in relation to issuance of commercial papers by a company listed on a stock exchange and offered to the public.

(4) Subject to the provisions of subsections (1) and (2), any person who acts in contravention of the provisions of subsection (3) shall be guilty of an offence and be liable on conviction to a fine not exceeding two hundred thousand

rupees.

 (5) In the event of non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the issue of the prospectus shall not incur any liability by reason of such non-compliance or contravention, if—

(a) as regards any matter not disclosed he proves that he was not cognizant thereof ;

(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part ; or

(c) the non-compliance or contravention was in respect of any matter which in the opinion of the court was immaterial or was otherwise such as ought, having regard to all the circumstances of the case, reasonably

to be excused :

Provided that, in the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 17 of the Fourth Schedule hereto, no director or other person shall incur any liability in respect of the failure, unless it be proved that he had knowledge of the matters not disclosed.

(6) The provision of this section shall not apply to the issue to existing shareholders or debenture holders of a company, of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures shall or shall not have the right to renounce in favour of other persons. Save as aforesaid, theprovisions of this section shall apply to a prospectus or aform of application whether issued on or with reference to the formation of a company or subsequently.

(7) Nothing in this section shall limit or diminish any liability which a person may incur under any written law or under this Act (other than this section).

(8) Where a prospectus has been sent for registration inaccordance with the provisions of section 40 and has been

registered by the Registrar, nothing in the preceding provisions of this section shall be deemed or construed to prohibit the issue or publication of any notice, circular oradvertisement stating that the prospectus has been registered and issued and that copies thereof are available on application, if such notice, circular or advertisement does not contain any invitation to the public to subscribe for or purchase any shares in or debentures of a company.

 

38. (1) A prospectus inviting persons to subscribe for shares in or debentures of a company and including a statement purporting to be made by an expert, shall not be issued, unless—

(a) such expert has given and has not before delivery of a copy of the prospectus for registration, withdrawn

his written consent to the issue thereof with the statement included in the form and context in which it is included ; and

(b) a statement appears in the prospectus that such expert has given and has not withdrawn his consent as referred to in paragraph (a).

(2) Where any prospectus is issued in contravention of the provision of this section, the company and every person who is knowingly a party to the issue thereof, shall be guilty of an offence and be liable on conviction to a fine not

exceeding two hundred thousand rupees.

(3) For the purpose of this section, the term “expert” includes an engineer, a valuer, an auditor, an accountant and

any other person having similar professional qualifications.

 

39. (1) No bank shall be named as a company’s banker in any prospectus inviting persons to subscribe for shares in

or debentures of the company, unless such bank has given and has not before delivery of a copy of the prospectus for registration, withdrawn its written consent to the inclusion in such prospectus of its names as the company’s banker :

Provided that a bank shall not be deemed for the purposes of this Act to have authorised the issue of a prospectus, by

reason only of it having given the consent to the inclusion in such prospectus of its name as the company’s bankers.

(2) No attorney-at-law shall be named as a company’s lawyer in a prospectus inviting persons to subscribe for shares

in or debentures of the company, unless such attorney-at-law has given and has not before delivery of a copy of the

prospectus for registration, withdrawn his written consent to the inclusion in such prospectus of his name as the company’s lawyer :

Provided that an attorney-at-law shall not be deemed for the purposes of this Act to have authorised the issue of a

prospectus, by reason only of his having given the consent to the inclusion in such prospectus of his name as the

company’s lawyer.

(3) No auditor shall be named as a company’s auditor in a prospectus inviting persons to subscribe for shares in or debentures of the company, unless such auditor has given and has not before delivery of a copy of the prospectus for

registration, withdrawn his written consent to the inclusion in such prospectus of his name as the company’s auditor:

Provided that an auditor shall not be deemed for the purposes of this Act to have authorized the issue of a prospectus, by reason only of his having given the consent to the inclusion in such prospectus of his name as the

company’s auditor.

(4) Where the name of any bank, attorney-at-law or auditor is included in any prospectus of a company in contravention of the provisions of this section, the company and every person who is knowingly a party to the issue thereof, shall be guilty of an offence and be liable on conviction to a fine not exceeding two hundred thousand rupees.

 

40. (1) No prospectus shall be issued by or on behalf of a company or in relation to a company to be formed, unless

on or before the date of its publication, there has been delivered to the Registrar for registration a copy of such

prospectus signed by every person who is named in suchprospectus as a director or proposed director of the company, or by his agent authorised in writing, and having endorsed thereon or attached thereto—

(a) written consent from an expert to the issue of the prospectus as required by section 38 ;

(b) a declaration made and subscribed to by every person who is named in such prospectus as a director or a proposed director of the company, to the effect that he has read the provisions of this Act relating to the issue of a prospectus and that those provisions have been complied with ; and

(c) in the case of prospectus issued generally, where the persons making any report required by Part II of the Fourth Schedule hereto have made or have without giving the reasons, indicated in such prospectus any such adjustments as are mentioned in paragraph 30 of that Schedule, and a written statement signed by such person setting out the adjustments and giving the reasons therefor.

(2) Every prospectus shall on the face of it—

(a) state that a copy has been delivered for registration as required by this section ; and

(b) set out or refer to statements included in the prospectus which specify any documents required by this section to be endorsed on or attached to the copy so delivered.

(3) The Registrar shall not register a prospectus—

(a) unless the copy thereof is signed in the manner required by this section ;

(b) unless it has endorsed thereon or attached thereto the documents (if any) specified as aforesaid ;

(c) unless it bears the date of the delivery of the copy thereof to the Registrar under this section, or it bears a future date to be inserted in such prospectus under the provisions of section 36 ; and

(d) where it bears a future date as hereinbefore provided, unless that date has been confirmed or altered by notice served on the Registrar.

(4) Where a prospectus is issued without a copy thereof being delivered under this section to the Registrar or without

a copy so delivered having been endorsed thereon or attached thereto the required documents referred to in subsection (1), the company and every person who is knowingly a party to the issue of the prospectus, shall be guilty of an offence and be liable on conviction to a fine not exceeding two hundred thousand rupees.

 

43. (1) Where a company allots or agrees to allot any shares in or debentures of the company with a view to offering

all or any of those shares or debentures for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the company, and provisions of any written law which relates to the contents of prospectuses, liability in respect of statements in and omission from prospectuses or otherwise generally relating to matters dealing with or connected to prospectuses, shall apply and have effect accordingly, as if the shares or debentures has been offered to the public for subscription and as if persons accepting the offer in respect of any shares or debentures were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made, in respect of untrue statements contained in the document or otherwise in respect thereof.

 (2) For the purposes of this Act, it shall, unless the contrary is proved, be deemed that an allotment of or an agreement to allot shares or debentures was made with a view to the shares or debentures being offered for sale to the public, if it is shown—

(a) that an offer of the shares or debentures for sale to the public was made within six months after the allotment or agreement to allot ; or

(b) that at the date when the offer was made, the whole consideration to be received by the company in respect of the shares or debentures had not been so received.

(3) The provisions of section 40 shall be applicable in relation to this section, as though the persons making the offer were persons named in a prospectus as directors of a company, and the provisions of section 37 shall be applicable

in relation to this section, as if it required a prospectus to state, in addition to the matters required by that section to be stated in a prospectus—

(a) the net amount of the consideration received by the company in respect of the shares or debentures to

which the offer relates ; and

(b) the place and time at which the contract under which the said shares or debentures have been or are to be

allotted, may be inspected.

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document aforesaid is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign through his agent authorised in writing.