1. PROSPECTUS, SHARE
Kunwar Atul Singh
Institute of Management Studies (FMS), BHU
MBA III Sem.
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2. 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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3. 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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4. 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.
Issue
IPO FPO Mliag..

5. TYPES OF PROSPECTUS
Prospectus
Draft Offer
Document
Red
Herring
Prospectus
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6. 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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7. 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 license
d) Provisions of Section 68A relating to punishment for
fictitious applications.
e) Statement/ declaration about refund of issue.
f) Declaration about issue of allotment letters/refund Mliag..

8. g) Date of opening of the issue.
h) Date of Closing
i) 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 company
a) Authorised,, issued, subscribed, paid-up capital.
b) Size of present issue giving separately reservation
for promoters.
c) Paid-up capital
i. After the present issue
ii. After conversion of debentures.
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9.  Terms of the present issue
a) Terms of payments
b) Right of the instruments holders
c) How to apply
d) Any special tax benefits for company &
shareholders.
 Particulars of the issue
a) Objects of the issue
b) Project cost
c) Means of financing (including promotors
contribution)
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10.  Company management and project
a) History & main objects & present business
b) Subsidiary(ies) of the company
c) Promoters and their background
d) Names, address & occupation of directors
e) Location of project
f) Plant, machinery, technology etc.
g) Collaboration, assistance in marketing
h) 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 prospects
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11.  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 company
b) Year of issue
c) Amount of issue
d) Date of closure of issue
e) Date of completion of delivery of share/ debenture
certificates
f) Date of completion of the project
g) Rate of dividend paid
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12. 
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 default
c) 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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13. PART II
General 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. Mliag..

14.  Financial information/ reports to be set out
1. A report by the auditors of company with respect to
a) Profits & losses and assets & liabilities
b) The rates of dividends, if any, paid by company
2. A report made by accountants upon
a) The profit or the losses of the other body corporate for each of the
5 financial years
b) The assets and liabilities of the other body corporate
3. Principal terms of loan and assets charged as security.
 Statuary and other information
1. Minimum subscription
2. Expenses of the issue, fee payable to: (a) Advisers
(b)Registrar (c)Managers (d)Trustee for the debenture
holders
3. Underwriting commission and brokerage
4. Previous issue for cash
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15. 5. Previous public or right issue (during last 5 years)
a) Date of allotment, closing date, date of refund, listing date
b) Issue(s) at premium or discount
c) Amount paid or payable by the way of premium
6. Commission or brokerage on previous issue
7. Issue of shares other than cash
8. Debenture & redeemable preference shares issued
9. Option to subscribe
10. Purchase of property
11. 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..

16. Part III contains explanation to certain
terms, expressions and provisions
applying to Part I & Part II of the schedule
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17. SHARE CAPITAL
Authorised
Share Cap.
Issued
Share Cap.
Subscribed
Share Cap.
Paid-up
Capital
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18. SHARE
Share
Equity
IPO FPO
Right Bonus
Preference DVR
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19. Allotment of
Shares
QIB Proportionately
HNI / NII
Proportionately
2L+
RII Below 2L
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20. Mliag..