Company Registration in Salem
Application forms for securities; accompanied by abridged
prospectus [Section 33(1) of Companies Act, 2013]
Sub-section (1) of s. 33 of the 2013 Act stipulates that no application form for purchase of any securities shall be issued unless it is accompanied by an abridged prospectus. The term "abridged prospectus" has been defined in s. 2(1) of the 2013 Act, as the memorandum containing such salient features of a prospectus of the company as may be specified by SEBI pursuant to regulations made in that behalf. In the 1956 Act, the contents of an abridged prospectus were to be prescribed by the Central Government, whereas under the 2013 Act, it is to be specified by SEBI.
The requirement of sub-section (1) of s. 33 of the 2013 Act will not be attracted if it can be shown that the application form was issued in connection with a bona fide invitation to enter into an underwriting agreement in relation to the securities being offered. So also, an offer of securities not being made to the public need not comply with this provision.
Prospectus to be furnished on request (Section 33(2) of Companies Act, 2013)
Under sub-section (2) of section 33 of the 2013 Act, if any person were to request for copy of a prospectus before the subscription closed, such a copy would be required to be furnished to him. Such an obligation to furnish a copy would lie on the company whose securities form subject matter of the public offer. In an issuance, it is the company that would be issuing the securities on offer. In an offer for sale, the offer document is deemed to be a prospectus issued by the company although the company is not issuing the securities on offer, and all the provisions governing prospectus are to be applied as such even to an offer for sale.
Penalty for default (Section 33(3) of Companies Act, 2013)
Under sub-section (3) of s. 33 of the 2013 Act, a penalty of Rs. 50,000 for each default has been stipulated. The term "penalty" is a reference to civil penalty, contradistinguished from "fine", which can only be imposed by a Criminal Court. Penalties under the 2013 Act may be imposed under section 454 of the 2013 Act by "Adjudicating Officers". Imposition of civil penalty would involve a lighter standard of proof, as opposed to the standard of proof of "beyond reasonable doubt" applicable to criminal proceedings.
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