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CS Executive · Capital Market and Securities Laws · Issue and Listing of Non-Convertible Securities

Meghna Pharma Ltd issued application forms for its public offer of securities without attaching an abridged prospectus. The forms were not for an underwriting invitation and the securities were offered to the public. What is the consequence under the Companies Act, 2013?

The company is liable to a penalty of fifty thousand rupees for each default. Section 33 prohibits issuing application forms without an abridged prospectus, and the exceptions for underwriting invitations or securities not offered to the public do not apply here.

  1. ANo consequence, as the full prospectus was filed
  2. BPenalty of fifty thousand rupees for each defaultCorrect
  3. CAutomatic cancellation of the allotment
  4. DPenalty applies only if a person requests a prospectus

Explanation

Section 33(1) bars issuing application forms unless accompanied by an abridged prospectus. The provisos exempt only bona fide underwriting invitations and securities not offered to the public, neither of which applies. Section 33(3) imposes a penalty of fifty thousand rupees for each default.

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