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

Veda Textiles Ltd, an unlisted public company, issued a prospectus inviting the public to subscribe for its equity shares. One of the directors, Mr. Iyer, had consented to be named as a director but had not signed the prospectus's registration copy. Which statement reflects the legal position on the content of a prospectus under the Companies Act, 2013?

A prospectus must carry a date, and that date is treated as the date of its publication. It must also be filed with the Registrar before issue. Dating is mandatory, so the statement that a prospectus is dated and the date is deemed the date of publication is correct.

  1. AA prospectus must be dated, and that date is taken as the date of publication of the prospectusCorrect
  2. BA prospectus need not be dated if it is registered with the Registrar
  3. CA prospectus is valid only if every director personally signs it before issue
  4. DA prospectus may be issued by an unlisted public company without filing it with the Registrar

Explanation

Under the Act, a prospectus issued by or on behalf of a company must be dated, and that date is deemed to be the date of its publication. It must also be delivered to the Registrar for registration before issue. Options B and D contradict the requirement of dating and registration. Option C is wrong because the Act requires signature by the persons named as directors only in the sense of the copy delivered for registration, and it does not make the prospectus invalid if a particular director signature is missing in the manner described.

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