Every prospectus must be dated. The date given in the prospectus shall be taken to be the date of its publication unless proved to the contrary. (Sec. 55) Date of filing of the prospectus with the Registrar is taken to be the date of its issue. Date of issue of the prospectus may, however, be different from the date of its publication.
3. It must be registered:
A copy of every prospectus must be signed by every director or proposed director and filed with the Registrar for registration before it is issued to the public. Subsequent issues of copies of the prospectus must state on their face that a copy has been so filed. The copy sent for registration must be accompanied with the following documents:
(a) If the report of an expert is to be published, his written consent to such publication;
(b) Written consent of all those persons whose names are mentioned in the prospectus as auditors, legal advisors, solicitors, bankers, etc.
(c) A copy of every contract relating to appointment and remuneration of managerial personnel and their consent to act as such;
(d) A copy of every material contract unless entered into in the ordinary course of business or two years before the date of the issue of the prospectus;
(e) Where the persons making any report required by Part II of Schedule II have made any adjustments as regards the “figures of profits or losses or assets and liabilities dealt with by the report”, without giving the reasons, a written statement signed by those persons setting out the adjustments and giving the reasons therefore.
The prospectus must be issued within 90 days after the date on which a copy thereof has been delivered for registration. If a prospectus is issued subsequently after the expiry of this period, it shall be deemed to be a prospectus a copy of which has not been delivered to the Registrar for registration.
This default will make the company, and every person who is knowingly a party to such an issue of prospectus liable, to a fine which may extend up to Rs. 50,000 (Sec. 60)
4. Expert to be unconnected with the formation or management of the company:
A prospectus must not include a statement purporting to be made by an expert such as an engineer, valuer, accountant, etc., unless the expert is a person who has never been engaged or interested in the formation or promotion or in the management of the company. (Sec. 57)
5. Expert’s consent to be obtained:
If the prospectus includes a statement purporting to be made by an expert, it must not be issued, unless the expert was an independent person competent to make such reports and had given his written consent to the issue thereof and has not withdrawn such consent before the delivery of a copy of the prospectus for registration and a statement to that effect appears in the prospectus. (Sec. 58)
6. Terms of the contract not to be varied:
The terms of any contract stated in the prospectus or statement in lieu of prospectus cannot be varied after registration of the prospectus except with the approval of the members in general meeting. (Sec. 61)
7. Every application form to be accompanied with a copy of prospectus or abridged prospectus:
Every form of application for subscribing the shares or debentures of a company shall not be issued unless it is accompanied by a prospectus or an abridged prospectus, unless the offer or invitation has not been made to the public.
8. Consequences of applying for shares in fictitious names to be prominently displayed:
According to section 58A (2), the following provisions of section 68A (1) must be prominently reproduced in every prospectus and every application form issued by the company to any person:
“Any person who —
(a) Makes in a fictitious name an application to a company for acquiring, or subscribing for, any shares therein, or
(b) Otherwise induces a company to allot, register any transfer of shares therein to him, or any other person in a fictitious name.
Shall be punishable with imprisonment for a term which may extend to five years.”
9. Disclosure Requirement and Contents as per Schedule II:
Every prospectus issued by a company must state the matters specified in Part I of the Second Schedule to the Act and contain reports specified in Part II of the Schedule, and that the said Parts I and II shall have effect subject to the provisions contained in Part III of the Schedule. (See Annexure 6.1 for the contents of Prospectus)
Besides the requirement of Schedule II, companies are required to comply with the disclosure requirements as given in the SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009.