who will be liable in case of deemed prospectus?
issuing house
or
company
and why the act says that this section is applicable only if OFS is made within 6 months. what is logic behind 6months
the company and its officers will be liable in case that prospectus has any misstatement.
except :-
1) The OFS to public has been made after 6 months from the initial issue and
2) The company should have received the whole consideration for the securities which is issued to an issuing house at the time of its issue.
that 6 months logic has been given in that Act because ( who would want their crores of rupees blocked for 6 months, just in order to help a company and its officers to discharge from the liabilities and duties from certain stringent sections of the CA, 2013)
plus drafting a prospectus is a very time consuming and expensive project, so earlier companies used to issue its securities in the above mentioned manner.
i hope u found my answer helpful.
CAclubindia
