Company law section series II - issue of securities

Capital for running a company is one of the critical aspect . It is very difficult to get abundant capital, so most of the company do capital budgeting and capital rationing. But still there are some companies who paint good picture about themselves, than the real picture, and take money from public and vanish.

Companies Act 2013, have some provisions which will ensure the transparency from the side of the company and connected responsibilities and penalties, so that the investor will have sufficient information to make investment. This will also make the person who make misrepresentation or misstatement in prospectus liable both civil and criminal.

Following are the sections in Companies Act which contain provisions relating to prospectus and issue of securities.

Sections related to prospectus and issue of shares

23. Public offer and private placement

24. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc

25. Document containing offer of securities for sale to be deemed prospectus

26. Matters to be stated in prospectus

27 .Variation in terms of contract in prospectus

28. Offer of sale of shares by certain members of company

29. Public offer of securities to be in demat form.

30. Advertisement of prospectus

31. Shelf prospectus

32. Red herring prospectus

33. Issue of application forms for securities

34. Criminal liability for misstatements in prospectus

35. Civil liability for misstatements in prospectus

36. Punishment for fraudulently inducing persons to invest money

37. Action by affected persons

38. Punishment for personation for acquisition

39. Allotment of securities by company

40. Securities to be dealt with in stock exchanges

41. Global depository receipt

42. Issue of shares on private placement basis.

Important sections are highlighted.