CA Intermediate · Corporate and Other Laws · Prospectus and Allotment of Securities
Zenith Pharma Ltd issued a prospectus inviting the public to subscribe to its shares. Ms. Iyer applied after reading it. Which of the following statements about the prospectus is correct under the Companies Act, 2013?
A prospectus covers any document described or issued as a prospectus and any notice, circular, advertisement or other document inviting the public to subscribe to or purchase securities. It is not limited to a document titled prospectus, and it must be filed with the Registrar before issue.
- AA prospectus may be issued by a private company to invite the public to subscribe to its securities
- BA prospectus includes any document described or issued as a prospectus, and also a notice, circular, advertisement or other document inviting deposits or offers from the public for subscribing to securitiesCorrect
- CA prospectus must be registered with the Registrar only after the first allotment is made
- DA red herring prospectus is issued after the closing of the issue to disclose final pricing
Explanation
The definition of prospectus covers any document described or issued as a prospectus and any notice, circular, advertisement or other document inviting offers from the public to subscribe to securities. A private company cannot invite the public, a prospectus must be filed with the Registrar before issue, and a red herring prospectus is issued before the issue opens without complete price details.
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