December 19, 2023 at 06:13 AM
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 :
[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.
[Section 33(1) of the Companies Act, 2013]
An Abridged Prospectus as per the Companies Act 2013, 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. Other prospectuses include Red Herring (Section 32) and Shelf Prospectus (Section 31).
(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.
Why is abridged prospectus required?
What is shelf prospectus and abridged prospectus?
What are the different types of prospectus?