• Rashi Srivastava

Section 33 Issue of Application forms for Securities - Indian Companies Act 2013

Updated: Mar 13

#prospectus #abridgedprospectus #redherring #shelfprospectus #section33ofcompaniesact #applicationform #issueofshares #equity #debenture


Section 33 Issue of Application forms for Securities - Indian Companies Act 2013

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Section 33 Issue of Application forms for Securities


As per Section 33 of the Indian Companies Act, 2013 no form of application for the purchase of any of the company's securities shall be issued unless an abridged prospectus accompanies such condition, a provision in the Companies Act 2013 related to issue of application forms for Securities is as under.

Here you are going to absorb about :

  1. Prospectus of A Company

  2. Red Herring

  3. Shelf Prospectus

  4. Abridged Prospectus

  5. Section 33 of Companies Act 2013


1. PROSPECTUS OF A COMPANY


Section 2(70) of Companies Act 2013


Prospectus means any document described or issued as a prospectus and includes red herring as referred to in section 32 or shelf prospectus referred in section 31 or any notice, circular, advertisement, or other document inviting deposits from the public or inviting offers from the public for subscription or purchase of any securities of a body corporate

In Layman's terms - Any document inviting deposits from the public or inviting offers from the public for subscription of shares in or debentures of a company is called Prospectus.


2. RED HERRING


Section 32 of Companies Act 2013


For this section, the expression "red herring prospectus" means a prospectus that does not include complete particulars of the quantum or price of the securities contained therein.

In Layman's terms - A red herring is a preliminary prospectus filed with the SEC, usually in connection with an IPO—excludes vital details of the issue, such as price and number of shares offered. Information in a red herring is subject to change and the SEC merely ensures all proper information is disclosed.


3. SHELF PROSPECTUS


Section 31 of Companies Act 2013


Shelf prospectus – Shelf prospectus is stated under section 31 of the Companies Act, 2013. A shelf prospectus is issued when a company or any public financial institution offers one or more securities to the public. A company shall provide a validity period of the Prospectus, which should not be more than one year.


4. ABRIDGED PROSPECTUS


Section 33(1) of the Companies Act, 2013

Abridged Prospectus - It is defined as the brief summary of the Prospectus, which includes all useful and materialistic information filed before the registrar. As per Section 33(1) of the Companies Act, 2013, an abridged prospectus must be included with the documents for the purchase of securities issued by a company.


Abridged Prospectus means the memorandum as prescribed in Form 2A under sub-section (3) of section 56 of the Companies Act, 1956. It contains all the salient features of a prospectus. It accompanies the application form of public issues.


Basically, it's a gist of material information that should be accompanied by the company with the application form. It's just a substitute to the lengthy Prospectus of the company.


5. Section 33 of Companies Act 2013


(1) No form of application for the purchase of any of the securities of a company shall be issued unless such form is accompanied by an abridged prospectus:

Provided that nothing in this sub-section shall apply if it is shown that the form of application was issued

(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to such securities; or


(b) in relation to securities that were not offered to the public.


(2) A copy of the Prospectus shall, on a request being made by any person before the closing of the subscription list and the offer, be furnished to him.


(3) If a company makes any default in complying with the provisions of this section, it shall be liable to a penalty of fifty thousand rupees for each default.


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