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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

A foreign company's prospectus offered in India includes a clause stating that every applicant waives compliance with the particulars required for such prospectuses. What is the legal effect of this clause?

The clause is void. Section 387(2) says any condition binding an applicant to waive compliance with the prescribed prospectus requirements, or imputing notice of matters not specifically referred to in the prospectus, has no legal effect, regardless of the applicant's signature.

  1. AIt is valid if the applicant signs the application form
  2. BIt is valid only for applicants who are qualified institutional buyers
  3. CIt is voidCorrect
  4. DIt is valid if disclosed in the Indian address of inspection

Explanation

Section 387(2) provides that any condition requiring or binding an applicant to waive compliance with the requirements of sub-section (1), or imputing notice of documents not specifically referred to in the prospectus, is void. Signing the form or investor type does not cure it.

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