Different Type of Prospectus

1761 Words Sep 19th, 2012 8 Pages
Prospectus
Meaning
The term Prospectus’ under Section 2 (36) means any document described or issued as a 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.
A private company under Section 3 (I) (iii) is prohibited from inviting the public to subscribe for its shares or debentures; and also prohibited to invite or accept deposits from persons other than its members, directors or their relatives. Accordingly, a private company has no power to issue prospectus. Only a public company has power and privilege to issue prospectus to public for subscription of
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Risk Factors z The Department of Company Affairs (now Ministry of Corporate Affairs) circular no 1/92 dated 9th January, 1992 provides that
(I) Share application form should be a part of the abridged prospectus.
(ii) Abridged prospectus and application form (attached with) arc allowed to be same printed numbers. u SEBI requirements in respect of abridged prospectus will also have to be fulfilled.

Red-Herring Prospectus

The red-herring process is useful when the issuer company wants to test market before finalizing issue size and or issue price. u ‘Red-herring Prospectus’ means a prospectus which does not have complete particulars’ on the price of the securities offered and the quantum of securities offered. [explanation to Section 6oB]
A prospectus that does not have information of either number of shares being offered or the amount of issue or the issue price is called red-herring prospectus.
Since the price is not disclosed., only the upper and lower price bands are disclosed in such a prospectus.
When the red-herring prospectus and the draft offer document arc tilled with the Registrar without price band, the issuer company in that case will notify the floor price or a price band by way of advertisement one day prior to the opening of the issue. u Only on completion of bidding process. the details of final price are included in the offer document that is filled with the Registrar and is called a prospectus.
Shelf Prospectus

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