Compliance with Respect to Prospectus

The Companies Act, 2013 (the Act) requires companies to comply with certain requirements when issuing a prospectus. These requirements are designed to protect investors and ensure that they have the information they need to make an informed investment decision.

The following are the key compliance requirements for prospectuses:

  • The prospectus must be filed with the Registrar of Companies (ROC).
  • The prospectus must be in a prescribed format and must include certain specified information.
  • The prospectus must be signed by the directors of the company.
  • The prospectus must be dated.
  • The prospectus must be made available to the public.

Penalties for non-compliance

Companies that fail to comply with the requirements for prospectuses may be subject to penalties. These penalties can include fines, imprisonment, or both.

Multiple choice questions (MCQs) on compliance with respect to prospectuses

  1. Which of the following is not a requirement for a prospectus?
    • It must be filed with the ROC.
    • It must be in a prescribed format.
    • It must include certain specified information.
    • It must be signed by the promoters of the company.
    • It must be dated.
    • The answer is (c). The prospectus must be signed by the directors of the company, not the promoters.
  2. A company is issuing a prospectus for an initial public offering (IPO). What is the minimum time period that must elapse between the filing of the prospectus with the ROC and the opening of the subscription for the IPO?
    • 21 days
    • 30 days
    • 45 days
    • 60 days
    • The answer is (b). The minimum time period that must elapse between the filing of the prospectus with the ROC and the opening of the subscription for the IPO is 30 days.
  3. A company is issuing a prospectus for a private placement of securities. What are the requirements for the prospectus?
    • The prospectus must be in a prescribed format and must include certain specified information.
    • The prospectus must be signed by the directors of the company.
    • The prospectus must be dated.
    • All of the above
    • The answer is (d). All of the above requirements apply to prospectuses for private placements of securities.

Answers

  1. (c)
  2. (b)
  3. (d)