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umesh (Querist)

27 August 2013 what is the work of promoter?

and

when prospects is issue before incorporation or after incorporation??

Ajay Mishra

Ajay Mishra (Expert)

28 August 2013 Hi

The work of promoter is to promote the company.

Always prospectus is issued after the incorporation of the company.

The provisions contained in the Companies Act, 1956 regarding prospectus are applicable to both listed and unlisted public limited companies. A private company cannot invite public to subscribe for its shares in or debentures, therefore, it cannot issue prospectus. [Section 3(1)(iii)]

In case of companies which desirous to get listing of their securities on Stock Exchange(s), the SEBI has stipulated numerous disclosure requirements. However, the contents of this chapter have been confined only to the provisions regarding prospectus as contained in the Companies Act, 1956.

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Ajay Mishra

Ajay Mishra (Expert)

28 August 2013
Meanings of 'prospectus' and 'abridged prospectus':

The term 'prospectus' under section 2(36) means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting offers from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures securities of a body corporate.

The term 'abridged prospectus' under section 2(1) means a memorandum containing such salient features of a prospectus as may be prescribed.

Only a public company has power and privilege to issue prospectus to public for subscription of shares in or debentures of the company. The prospectus of a public company shall contain matters specified in Part I of Schedule II and shall set out the reports specified in Part II of Schedule II to the Companies Act, 1956. If a public company does not issue a prospectus with reference to its formation then it has to file a statement in lieu of prospectus with the concerned Registrar of Companies

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Ajay Mishra

Ajay Mishra (Expert)

28 August 2013
Prohibition on public companies for allotment of shares unless statement in lieu of prospectus has been delivered to the Registrar:

Section 70(1) provides that a company having a share capital, which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least three days before the first allotment of either shares or debentures, there has been delivered to the Registrar for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in Part I of Schedule III and, in the cases mentioned in Part II of that Schedule, setting out the reports specified therein, and the said Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.

Section 55 of the Act provides that a prospectus issued by or on behalf of a company or in relation to an intended company shall be dated, and that the date so stated in the prospectus shall be taken as the date of its publication.

Ajay Mishra

Ajay Mishra (Expert)

28 August 2013
Authority for issuance of prospectus:

In terms of the provisions of section 56(1) of the Act, a prospectus can be issued—
(i) by or on behalf of a company; or
(ii) by or on behalf of any person who is or has been engaged or interested in the formation of a company.
The prospectus can be issued on or with reference to the formation of a company.

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