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CA Foundation · Business Laws · The Companies Act, 2013

Vikas Ltd wants to raise funds from the public through a prospectus that does not include complete particulars about the price of the securities or the quantum of securities offered. Which type of prospectus is this under the Companies Act, 2013?

This is a red herring prospectus, which is a prospectus that does not contain complete particulars of the price of the securities or the quantum of securities being offered. It is commonly used in book-building, unlike shelf or abridged prospectuses.

  1. AAbridged prospectus
  2. BShelf prospectus
  3. CDeemed prospectus
  4. DRed herring prospectusCorrect

Explanation

A red herring prospectus is one that lacks complete particulars about the price of securities offered or the quantum of securities. It is used mainly in book-building issues. An abridged prospectus is a memorandum containing salient features, and a shelf prospectus covers multiple issues over a period. A deemed prospectus arises from an issue of documents by allotment or sale to the public.

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