Stock Market and Prospectus

2875 WordsOct 9, 201112 Pages
Chapter 5 PROSPECTUS DEFINITION [SECTION 2(36)] • Any document inviting deposits from the public for the subscription or purchase of any securities of a body corporate. Following types of documents are prospectus: - ❑ Any document described or issued as prospectus; including ❑ any notice, ❑ circular, ❑ advertisement or ❑ other document • Ingredient to constitute a “prospectus” i) There must be an “invitation to the public”; ii) The invitation must be made by or on behalf of the company or in relation to an intended company; iii) The invitation must be “to subscribe or purchase “ iv) The invitation must relate to securities or such other instrument. • Invitation to…show more content…
It must be noted that by virtue of powers under the SEBI Act 1992, every company making a public issue has also to get the Prospectus approval/vetted and obtain in-principal approval of the Central Listing Authority and subsequently obtain approval of the Stock Exchange where at the securities are proposed to be listed. • Section 56 mandates that every prospectus shall be as per Schedule II: - ❑ Part I of Schedule II - the matters specified in and ❑ Part II of Schedule II - the reports therein ❑ Part III of Schedule III – provisions effecting Part I and Part II • SEBI (DIP) Guidelines 2000 also contains provisions, which shall have to be complied with by every company making a public issue. The accountability and responsibility of the Abridged Prospectus is with the SEBI Registered Category I Merchant Banker. • Statements in prospectus should be true, accurate and fair. The Act as well as the SEBI Act 1992 prescribes stringent penal actions on untrue or misrepresentation in the prospectus. • The salient features of such requirements are given below: - |Companies Act 1956 |SEBI (DIP) Guidelines 2000 | |Cover

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