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CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Instruments, Laws and Procedures

Which statement about issuing application forms for securities of a foreign company to persons in India is correct under the Companies Act, 2013?

An application form for securities of such a foreign company may be issued to persons in India only along with a prospectus that complies with the Chapter. The sole exception is a form issued for a bona fide invitation to enter into an underwriting agreement.

  1. AThe form may be issued separately before the prospectus is available
  2. BThe form must be issued with a prospectus complying with the Chapter, subject to a proviso for bona fide invitations to enter into an underwriting agreementCorrect
  3. CThe form may be issued without a prospectus if the company has a place of business in India
  4. DThe form is exempt from any prospectus rule if the issue is below one year in duration

Explanation

Section 387(3) bars issuing an application form unless it accompanies a compliant prospectus and the issue does not contravene section 388. The only stated exception is a form issued in connection with a bona fide invitation to enter into an underwriting agreement.

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