Prospectus: Issues, Under Companies Act, 2013

In Company Law, prospectus plays a significant role, where it contains all the material information (General, Financial & Statutory) of the company i.e., prices and shares detail of the specific company, which helps the public who wishes to buy a share in that specific company. As the prospectus is a legally mandated document it must be registered under Register of companies.

WHAT ARE ESSENTIALS FOR A DOCUMENT TO BE CALLED AS A PROSPECTUS:
To consider the certain document like a prospectus following essentials are must:
The document should invite the general public for the subscription of shares.

• It must be made to the general public.
• It must be made by the company..
• It should relate to shares, debentures, and such other information pertaining to the company

One important proposition here is, every public company must either issue a prospectus or file a statement in lieu of prospectus, whereas the private company it is not mandatory for issuing of the prospectus. But If a private company converted into the public company then it must issue the prospectus.

ISSUE OF PROSPECTUS: (Companies Act, 2013) The issue of the prospectus is defined under section 26 of Companies Act, 2013:

• If a company does not issue prospectus before 90 days from the date from which a copy was delivered before the registrar, then it is considered to be invalid.
• If a prospectus was issued in contravention under section 26 of Companies Act, 2013 then the company can be punished with a fine of 50,000/- which may exceed up to 3,00,000/-.