Tuesday, 24 May 2016

Prospectus

The Companies Act, 2013 (Act) clearly provides the manner in which securities can be issued by both public and private company. There is a specified mode by way of which a public company can issue securities. Under the act certain addition disclosures may be made by the company in the prospectus. Under the Act, a company which has varied the terms of contract referred to in prospectus or objects shall not deal in the equity of other listed company. The dissenting shareholder of a company who have not agreed to the proposal to vary the terms of contracts objects referred to in the proposal, shall be given an exit offer by promoters or controlling shareholders. Under the new Act, certain members of a company who intend to offer whole or part of their holding to public, they can do so in the manner prescribed, in consultation with the board of directors.

A company which makes a public offer shall do it in dematerialised form in accordance with the depositories Act, 1996. The scope of the section relating to issue of application forms for securities has been widened.  As per the new Act, companies may now issue global depository receipt by passing special resolution and subject to such conditions as may be prescribed. The Act makes provision relation to private placement of all the securities and not only shares. The Act also define private placement.

The advertisement of a prospectus shall include the contents of its memorandum. The memorandum as stated in the advertisement referred to above shall include the objects, liability of members and the amount of shares capital of the company. Under the new Act, there shall be civil as well as criminal liability for misstatements in prospectus covering all types of securities. There is a separate provision under the new Act in forms of a creation of Investor Education and protection fund in which gains received from disgorgement shall be deposited. There are separate provisions with regard to private placement of all kinds of securities. Under the new Act, a private placement of securities shall become a public offer in certain cases the provisions of the securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 have to be complied with. The amount received by way of private placement shall be kept in a separate bank account.

Please visit more info at http://www.nclt.in/act.php

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