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CA Intermediate · Corporate and Other Laws · Prospectus and Allotment of Securities

Sunrise Agro Ltd, an unlisted public company, plans to invite the public to subscribe to its shares. Before issuing its prospectus to the public, the company must take one step as a condition for the prospectus to be valid. Which step is required?

A prospectus must be dated and a copy delivered to the Registrar for registration on or before the date of its publication. The Registrar registers it, but neither the Central Government, the tax department nor bankers approve it.

  1. AObtain approval of the prospectus from the Central Government
  2. BDate the prospectus and deliver a copy to the Registrar for registration on or before the date of publicationCorrect
  3. CFile the prospectus with the Income-tax Department
  4. DObtain a no-objection certificate from the company's bankers

Explanation

A prospectus must be dated, and a copy signed by the required persons must be delivered to the Registrar for registration on or before its date of issue. The Central Government does not approve prospectuses. Filing with the Income-tax Department or taking a bank NOC is not a statutory requirement.

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