PROSPECTUS, SHAREKunwar Atul SinghInstitute of Management Studies (FMS), BHUMBA III Sem.

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NEED OF PROSPECTUS To raise the capital from general public

company needs to prepare and issue a document known as ‘Prospectus’.

As per Sec. 70 of ICA 1956, public company that are confident of raising capital on there need to prepare a document known as ‘Statement of lieu of Prospectus’.

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PROSPECTUS [SEC 2(36)] A prospectus is a legal document that

contains all the material information investors need about the company.

According to Sec 2(36) ‘prospectus’ means any documents described or issued as a prospectus and includes any notice, circular, advertisement, or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate

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PROCESS OF ISSUING Any company making a public issue is

required to file its prospectus with the Securities and Exchange Board of India [SEBI].

A prospectus will notify the prospective shareholders why the company is coming out with a public issue, its financials and how the issue will be priced. Issu

e

IPO FPO Mliag..

TYPES OF PROSPECTUS

Prospectus

Draft Offer

Document

Red Herring

Prospectus

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Draft Offer Document This is the first file with the SEBI. The SEBI may specify the changes. After the changes made, it is filed with the ROC or the Stock Exchange. The draft offer document must be filed with the SEBI at least 21 days before the company files it with the ROC/ Stock Exchange.

Red Herring Prospectus This kind of prospectus is used in book

building issues. This does not have details of either price or

no. of shares or the amount the IPO aims to raise.

Final price or known only after the bidding.

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CONTENTS OF A PROSPECTUS

According to revised format of Schedule II of ICA 1956, the prospectus should be divided into three parts-Part One General Information

a) Name & address of the registered office.b) Name of stock exchange.c) Consent of central govt. for present issue.

a) Letter of industrial licensed) Provisions of Section 68A relating to

punishment for fictitious applications.e) Statement/ declaration about refund of issue.f) Declaration about issue of allotment

letters/refundMliag..

g) Date of opening of the issue.h) Date of Closingi) Name and address of lead managers & auditors.j) Name & address of trustee under debenture trust deed.k) Name of rating agency l) Name and address of underwriters.

Capital structure of the companya) Authorised,, issued, subscribed, paid-up capital.b) Size of present issue giving separately

reservation for promoters.c) Paid-up capital

i. After the present issueii. After conversion of debentures. Mliag..

Terms of the present issuea) Terms of paymentsb) Right of the instruments holdersc) How to applyd) Any special tax benefits for company &

shareholders.

Particulars of the issuea) Objects of the issueb) Project costc) Means of financing (including promotors

contribution)Mliag..

Company management and projecta) History & main objects & present businessb) Subsidiary(ies) of the companyc) Promoters and their backgroundd) Names, address & occupation of directorse) Location of projectf) Plant, machinery, technology etc.g) Collaboration, assistance in marketingh) Infrastructure facility for raw material, water etc.i) Schedule of implementation & progress of project.j) The products

i. Nature of the product(S)ii. Approach & proposed marketing set up.iii. Export possibilities, if any

k) Future prospectsMliag..

Following particulars in regard to the company and other listed companies under the same management within the meaning of Sec 370(1B), which made any capital issue during the last three years.a) Name of the companyb) Year of issuec) Amount of issued) Date of closure of issuee) Date of completion of delivery of share/

debenture certificatesf) Date of completion of the projectg) Rate of dividend paid

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a) Outstanding litigation pertaining to

i. Matters likely to affect operations and finance of company.

ii. Criminal prosecution launched against the company & the directors.

b) Particulars of defaultc) Any material development after the date of

the latest balance sheet and its impact on company

Management perception of risk factors.

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PART IIGeneral Information

1. Consent of directors, auditors/advocates, managers to issue, Registrar of issue, bankers to company, bankers to issue & experts.

2. Expert opinion obtained, if any.3. Change, if any, in directors &auditors during the

last three years.4. Authority for issue and details of resolution passed

for the issue.5. Procedure and time schedule for allotment & issue

of certificates.6. Name & address of CS, legal adviser, lead manager,

co-managers, auditors, bankers to the company, bankers to the issue & brokers to the issue.

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Financial information/ reports to be set out1. A report by the auditors of company with respect to

a) Profits & losses and assets & liabilitiesb) The rates of dividends, if any, paid by company

2. A report made by accountants upona) The profit or the losses of the other body corporate for each

of the 5 financial yearsb) The assets and liabilities of the other body corporate

3. Principal terms of loan and assets charged as security.

Statuary and other information1. Minimum subscription2. Expenses of the issue, fee payable to: (a) Advisers

(b)Registrar (c)Managers (d)Trustee for the debenture holders

3. Underwriting commission and brokerage4. Previous issue for cash

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5. Previous public or right issue (during last 5 years)a) Date of allotment, closing date, date of refund, listing dateb) Issue(s) at premium or discountc) Amount paid or payable by the way of premium

6. Commission or brokerage on previous issue7. Issue of shares other than cash8. Debenture & redeemable preference shares issued9. Option to subscribe10.Purchase of property11.Details of directors, proposed directors, whole time

directors, their remuneration, appointment and remuneration of MD, interest of directors, their borrowing powers & qualification shares

12.Right of members regarding voting, dividend, lien on share

13.Restrictions, if any, on transfer & transmission of shares/debentures

14.Revaluation of assets, if any (during last 5 years)Mliag..

Part III contains explanation to certain terms, expressions and provisions applying to Part I & Part II of the schedule

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SHARE CAPITALAuthorised Share

Cap.

IssuedShare Cap.

Subscribed

Share Cap.

Paid-upCapital

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SHARE

Share

Equity

IPO FPO

Right Bonus

Preference DVR

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Allotment of Shares

QIB Proportionately

HNI / NII

Proportionately

2L+

RII Below 2L

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Thank You….

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