CA Intermediate · Corporate and Other Laws · Prospectus and Allotment of Securities
Suryoday Textiles Ltd, an unlisted public company, issued a prospectus on 1 June. Which of the following statements correctly describes the legal position regarding the prospectus under the Companies Act, 2013?
A prospectus is any document described or issued as a prospectus, and it also covers any notice, circular, advertisement or other document inviting offers from the public to subscribe to or purchase a company's securities. It is not limited to a filed printed document.
- AA prospectus is any document described or issued as a prospectus, including a notice, circular, advertisement or other document inviting offers from the public to subscribe to or purchase securitiesCorrect
- BA prospectus means only a printed document filed with the Registrar and does not include notices or advertisements
- CA prospectus can be issued only by a listed public company
- DA prospectus is required whenever a company allots shares to any person, including a private placement to select persons
Explanation
The Act defines a prospectus widely to include any document described or issued as a prospectus and any notice, circular, advertisement or other document inviting offers from the public for subscribing to or purchasing securities. Option B wrongly narrows the definition. Public companies, listed or unlisted, may issue a prospectus, and a private placement does not need one.
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