PROSPECTUS AND

ALLOTMENT OF
SECURITIES
CHAPTER 3
Lectures by Abin CA Inter Company Law
 PROSPECTUS AND ALLOTMENT OF SECURITIES

Definition of Prospectus:

As per Sec 2(70) of Companies Act 2013, It means any document described

or issued as a prospectus, which includes a shelf prospectus u/s 31 or a red herring

prospectus u/s 32 or any notice, circular, advertisement or other document inviting

offers from the public for the subscription or purchase of any securities

Public Offer Vs Private placement

Public offer Private placement

• Done by Public Company • Done by private company & public

company

• By way of Right issue or bonus • By way of Right issue or bonus

issue issue

Public offer (Sec 23(2)) = Initial public offer + Further public offer + offer for

sale of securities

When Prospectus is not required to be issued

▪ Where an offer or invitation is made to the existing members (whether or

not the members have the right of renunciation) or debenture holders of

the company.

▪ Where no offer or invitation is made to the public for issue of shares or

debentures.

▪ Where shares or debentures are issued by a private company.

Securities to be dealt with in Stock Exchange

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Every Company making public offer shall, before making such offer, make an

application to one or more stock exchanges and obtain permission

➢ The prospectus shall state the name of the stock exchanges in which the

securities are dealt with.

➢ All monies received on application from the public for subscription shall be

kept in a separate bank account in a scheduled bank

➢ All such monies shall be utilized only when:

o The securities have been permitted to be dealt with in the stock

exchange or such stock exchanges specified in the prospectus

o The securities have been allotted

➢ If for any reason the company is unable to allot securities, the company shall

repay all such monies as may be prescribed by SEBI

➢ Punishment for contravention:

o Company – Min fine Rs 5 lakh and a Max of Rs 50 lakh

o Officer - Min fine Rs 50,000 and a Max of Rs 3 lakh

Types of Prospectus

Shelf Prospectus Red Herring Prospectus Deemed Prospectus

Shelf Prospectus
Sec 31 Sec 32 Sec 25

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

According to section 31 of the Companies Act, 2013,

➢ Any class or classes of companies as prescribed by the Securities and

Exchange Board of India may file a shelf prospectus with the registrar of

companies at the stage of the first offer of securities for a period of one

year

➢ No further issue of prospectus is required in respect of a second or

subsequent offer of securities included in such prospectus for a period of 1

year

➢ Company shall also file information memorandum on new charges created, of

any change in the financial position with the registrar of companies prior to

the issue of a second or subsequent offer under shelf prospectus

➢ Where a company or any other person has received applications for the

allotment of securities along with advance payments of subscription before

the making of any such change, the company or other person shall intimate

the changes to such applicants. (Information Memorandum)

➢ Where an information memorandum is filed, every time an offer of

securities is made with all the material facts with the registrar, such

memorandum together with the shelf prospectus shall be deemed to be a

prospectus.

Red Herring Prospectus

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Red herring prospectus" means a prospectus which does not include complete

particulars of the quantum or price of the securities included therein.

➢ According to section 32 of the Companies Act, 2013, red herring prospectus

may be issued by a company prior to the issue of a prospectus and shall be

filed with the registrar at least 3 days prior to the opening of the

subscription list and the offer.

➢ Any variation between the red herring prospectus and the prospectus shall

be highlighted as variations in the prospectus. Upon closing of the offer of

securities, the details of information which are not included in the red

herring prospectus is to be filed with the registrar and the SEBI.

➢ Filing of final prospectus:-

▪ Filing with Whom:- Upon closing of the offer, a final prospectus shall be

filed:-

• In case of a listed company:- with SEBI and registrar

• In any other case:- with the Registrar

➢ The final prospectus shall state:-

• The total capital raised

• The closing price of the securities

• Any other details as were not complete in the red-herring prospectus

Deemed Prospectus

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

Any document by which the offer of sale to the public is made shall be

deemed to be a prospectus issued by the company and as to liability in respect of

mis-statements in and omission from prospectus or otherwise relating to

prospectus shall apply

➢ the concept of deemed prospectus becomes important when a company

intends to issue shares via an intermediary (merchant bank, another

company, or an issuing house)in order to bypass compliance regulations issued

by the SEBI

➢ The document of Offer for Sale is called a deemed prospectus If it

satisfies any one of the following two conditions:

➢ Condition 1: The Offer for Sale to the public by the intermediary was

made within 6 months from the allotment of shares to the

intermediary; or

➢ Condition 2: The company which allotted its shares to the

intermediary has not received any consideration for the shares till

the date the Offer for Sale was made by the intermediary.

➢ Where a person making an offer to which this section relates is a company or

a firm, it shall be sufficient if the document, that is deemed to be prospectus,

is signed on behalf of the company or firm by-

▪ two directors of the company, or

by not less than one-half of the partners in the firm, as the case may

be

Variation in terms of contract or objects in prospectus (Sec 27)

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Special Resolution is required:- A company shall not, at any time, vary the

terms of a contract referred to in the prospectus or objects for which the

prospectus was issued, except subject to the approval of an authority

given by the company in general meeting by way of special resolution

➢ Notice should be published in Newspapers:- Provided that the details, as

may be prescribed, of the notice (PAS 1) in respect of such resolution to

shareholders, shall also be published in the newspapers (one in English

and one in vernacular language) in the city where the registered office of

the company is situated

➢ Prohibition on utilisation of amount raised through prospectus:-Provided

further that such company shall not use any amount raised by it through

prospectus for buying, trading or otherwise dealing in equity shares of

any other listed company

➢ Opportunity for exit to dissenting Shareholders:-The dissenting

shareholders being those shareholders who have not agreed to the proposal

to vary the terms of contracts or objects referred to in the prospectus,

shall be given an exit offer by promoters or controlling shareholders at

such exit price, and in such manner and conditions as may be specified by

the Securities and Exchange Board by making regulations in this behalf

Offer of sale of shares by certain members of company (Sec

28)

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Where certain members of a company propose, in consultation with the

Board of Directors to offer part of their holding of shares to the public,

they may do so in accordance with such procedure as may be prescribed.

➢ Any document by which the offer of sale to the public is made shall, for all

purposes, be deemed to be a prospectus issued by the company and all

laws and rules made thereunder as to the contents of the prospectus

➢ Company will act on shareholders behalf:-The members, whether individuals

or bodies corporate or both, whose shares are proposed to be offered to

the public, shall collectively authorise the company, whose shares are

offered for sale to the public, to take all actions in respect of offer of

sale for and on their behalf and they shall reimburse the company all

expenses incurred by it on this matter

Public Offer of Securities in Dematerialized Form (Sec 29)

This section 29 of the Companies Act, 2013 seeks to provide that public company

making public offer and such other class or classes of companies, shall issue

the securities only through dematrialised form

➢ Issue of securities in dematerialized form: According to the provisions

▪ every company making public offer and

▪ such other class or classes of companies as may be prescribed,

Shall issue the securities only in dematerialised form by complying with the

provisions of the Depositories Act, 1996 and the regulations made

thereunder.

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ In case of other companies: Whereas other companies, may convert their

securities into dematerialised form or issue its securities in physical form in

accordance with the provisions of this Act or in dematerialised form in

accordance with the provisions of the Depositories Act, 1996 and the

regulations made thereunder.

Rule 9A of The Companies (Prospectus and Allotment of Securities) Rules, 2014:-

Issue of securities in dematerialised form by unlisted public companies

(1) Every unlisted public company shall –

(a) issue the securities only in dematerialised form; and

b) facilitate dematerialisation of all its existing securities in accordance

with provisions of the Depositories Act, 1996 and regulations made there under.

(2) Every unlisted public company making any offer for issue of any securities or

buyback of securities or issue of bonus shares or rights offer shall ensure that

before making such offer, entire holding of securities of its promoters,

directors, key managerial personnel has been dematerialised in accordance with

provisions of the Depositories Act, 1996 and regulations made there under

(3) Every holder of securities of an unlisted public company,-

(a) who intends to transfer such securities on or after 2nd October, 2018,

shall get such securities dematerialised before the transfer; or

(b) who subscribes to any securities of an unlisted public company (whether

by way of private placement or bonus shares or rights offer) on or after 2nd

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

October, 2018 shall ensure that all his existing securities are held in

dematerialized form before such subscription.

(4) Every unlisted public company shall facilitate dematerialisation of all its

existing securities by making necessary application to a depository of the

Depositories Act, 1996 and shall secure International Security Identification

Number (ISIN) for each type of security and shall inform all its existing security

holders about such facility.

(5) Every unlisted public company shall ensure that –

(a) it makes timely payment of fees (admission as well as annual) to the

depository and registrar to an issue and share transfer agent in accordance with

the agreement executed between the parties

(b) it maintains security deposit, at all times, of not less than two

years’ fees with the depository and registrar to an issue and share transfer

agent, in such form as may be agreed between the parties and

(c) it complies with the regulations or directions or guidelines issued by

the Securities and Exchange Board or Depository from time to time with

respect to dematerialisation of shares of unlisted public companies and matters

incidental or related thereto.

(6) No unlisted public company which has defaulted in sub-rule (5) shall make offer

of any securities or buyback its securities or issue any bonus or right shares till

the payments to depositories or registrar to an issue and share transfer agent are

made.

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

(7) The Securities and Exchange Board of India (Depositories and Participants)

Regulations, 2018 and the Securities and Exchange Board of India (Registrars to

an Issue and Share Transfer Agents) Regulations, 1993 shall apply mutatis

mutandis to dematerialisation of securities of unlisted public companies.

(8) Every unlisted public company governed by this rule shall submit Form PAS-6

to the Registrar with such fee as provided in Companies (Registration Offices

and Fees) Rules, 2014 within 60 days from the conclusion of each half year duly

certified by a company secretary in practice or chartered accountant in

practice.

(8A) The company shall immediately bring to the notice of the depositories any

difference observed in its issued capital and the capital held in dematerialised

form.

(9) The grievances, if any, of security holders of unlisted public companies under

this rule shall be filed before the Investor Education and Protection Fund

Authority.

(10) The Investor Education and Protection Fund Authority shall initiate any action

against a depository or participant or registrar to an issue and share transfer

agent after prior consultation with the Securities and Exchange Board of India.

Power of Securities and Exchange Board to regulate issue

and transfer of Securities etc. (Section 24)

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

Provisions related to Administered by

▪ issue and transfer of securities; and Securities and Exchange Board of India

▪ non-payment of dividend, by listed

companies or those companies which

intend to get their securities listed on

any recognised stock exchange in India,

except as provided under this Act, be

administered by

▪ In any other case Central Government

Golden rule for framing the prospectus

Meaning of ‘untrue statement’ and ‘prospectus containing untrue statement’

▪ A statement included in a prospectus shall be deemed to be untrue, if the

statement is misleading in the form and context in which it is included.

▪ Similarly, if the omission from a prospectus of any matter is calculated to

mislead the investors, the prospectus is deemed to be a prospectus in which an

untrue statement is included.

Golden rule for framing the prospectus

▪ The prospectus must present the whole picture of the company.

▪ The prospectus must disclose all material facts truly, honestly and accurately.

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

▪ All facts which are likely to influence the decision regarding applying for shares

must be disclosed.

▪ The prospectus should not contain any untrue or misleading statement.

▪ No fact should be omitted, the existence of which might, in any degree, affect

the nature or quality of privileges and advantages disclosed by the prospectus

▪ Suppression of a fact, howsoever remote, will make a prospectus ‘misleading

prospectus’. If inclusion of such fact might have affected investor’s decision to

subscribe for the shares

Legal rules as to prospectus (Sec 26)

➢ Every propspectus issued by or on behalf of a public company shall be dated

and signed

➢ The date indicated in the prospectus shall be deemed to be the date of

publication

➢ A prospectus may be issued by a company only if the following 2 conditions

are satisfied

o A copy of the prospectus has been filed with the ROC on or before

the date of publication of the prospectus

o Such copy of the prospectus is signed by every person who is named in

the prospectus as a director or proposed director of the company or

by his duly authorized attorney

➢ A prospectus shall not be valid if it is issued more than 90 days aafter the

date on which a copy of the prospectus is filed with the ROC

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➢ A statement is to made by an expert may be included in the prospectus, only

if all the following conditions are satisfied:

o The expert is a person who is not and has not been engaged or

interested in the formation or promotion or management of the

company

o The expert has given his written consent to the issue of prospectus

o The expert has not withdrawn his consent before the date of fling of

a copy of prospectus with the ROC

o A statement is included in the prospectus that the expert has given

his written consent and has not withdrawn the same

Who is an Expert ?

Expert included an engineer, a valuer, a chartered accountant, a

company secretary, a cost accountant and any other person who has the

power or authority to issue a certificate of pursuance of any law for time

being in force

Punishment

Minimum fine: Rs 50,000

Maximum Fine: Rs 3 lakh

Criminal Liablility for mis statement in prospectus

If a prospectus includes any statement, which is misleading or

o Omission of any matter in the prospectus is misleading

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Then, every person who has authorized the issue of such prospectus shall be

liable u/s 447

➢ The person proves that the statement or omission is immaterial

➢ The person proves that:

o He had reasonable ground to believe that the statement was true and

o He had continued to believe upto the time of issue of the prospectus

that the statement was true or the omission was necessary

What is Sec 447?

Where any person is found guilty or fraud – Sec 447 is attracted

➢ Fraud involving an amount more than Rs 10 lakh or 1% of the turnover

of the company

Fraud involves public Any other case

interest

Min imprisonment 3 years 6 months

Max imprisonment 10 years

Min fine Amount involved in the fraud

Max Fine 3 times the amount involved in the fraud

➢ Fraud involving an amount less than Rs 10 lakh or 1% of the turnover

of the company which ever is lower, and the fraud doesnot involves

public interest, any person guilty of fraud shall be punishable with:

o Imprisonment upto 5 years or

o Fine upto Rs 20 Lakh or

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

o Both

Remedies against promoters, Directors and Experts (Civil

Liability for mis statement in prospectus)

➢ If – a prospectus includes any statement , which is misleading or

o Omission of any matter in prospectus is misleading and

o Any person subscribe for securities acting on any such

statement or omission and

o Such person sustains any loss as a consequence thereof

Then, Sec 35 is attracted

Who all are the persons liable?

▪ The company

▪ Director of the company at the time of issue of prospectus

▪ Every person who is authorized himself to be named in the

prospectus as a director of the company

▪ Promoter of the company

▪ Expert

Punishment:

o Payment of compensation to every person has sustained any loss

or damage

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

o Punishment for fraudently inducing any person to invest money

u/s Sec 36

Defences:

➢ No person shall be liable u/s 35, if he proves, having consented to

become a director of the company, he withdrew the consent before

the issue of the prospectus, and that it was issued without his

knowledge or consent

➢ No person shall be liable u/s 35, if he proves that the prospectus was

issued without his knowledge/ consent

➢ Expert shall not liable u/s 35, if it is proved that

o A statement made by such person was a correct and fair

representation of the statement made by the expert

o The expert was competent to make it

o The expert had given his consent

o The expert had not withdrawn his consent before filing a copy

of the prospectus with ROC

Securities to be dealt within the stock exchange (Sec 40)

➢ Every company making public offer shall, before making such offer,

make an application to one or more stock exchanges and obtain

permission from them

➢ The prospectus shall state the name of stock exchanges in which the

securities are dealt with

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ All monies received on application from the public for subscription

shall be kept in a separate bank account with a scheduled bank

➢ All such monies shall be utilized only when:

o The securities have been permitted to be dealt with the stock

exchanges

o The securities have been allotted

➢ If for any reason company is unable to allot securities repay the

monies as may be specified by SEBI

➢ Punsihment :

o For company : Min fine of Rs 5lakh and Max of Rs 50 lakh

o For officers : Min fine of Rs 50,000 and Max of Rs 3 lakh

Underwriting commission

A company may pay commission to any person in connection with the

subscription or procurement of subscription to its securities, whether absolute or

conditional, subject to the following conditions

➢ Authorized in Articles:-the payment of such commission shall be authorized

in the company’s articles of association;

➢ Sources:-the commission may be paid out of proceeds of the issue or the

profit of the company or both

➢ Maximum Rate:-the rate of commission paid or agreed to be paid shall not

exceed,

o ▪ in case of shares, five percent of the price at which the shares are

issued or a rate authorised by the articles, whichever is less, and

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

o ▪ in case of debentures, shall not exceed two and a half per cent of

the price at which the debentures are issued, or as specified in the

company’s articles, whichever is less

➢ Disclosure in Prospectus:- the prospectus of the company shall disclose - ▪

the name of the underwriters;

▪ the rate and amount of the commission payable to the underwriter; and ▪

the number of securities which is to be underwritten or subscribed by the

underwriter absolutely or conditionally.

➢ Commission only on public offered shares:-there shall not be paid commission

to any underwriter on securities which are not offered to the public for

subscription

➢ Filing with ROC:-a copy of the contract for the payment of commission is

delivered to the Registrar at the time of delivery of the prospectus for

registration.

Allotment of securities by a Company (Sec 39)

➢ Minimum Subscription:-It means the minimum amount stated in the

prospectus, which in the opinion of Directors, must be raised by the issue of

securities

➢ Conditions:-No allotment of any securities of a company shall be offered to

the public for subscription

▪ unless the minimum amount (stated in the prospectus) has been

subscribed.

▪ the sum payable on application in respect of minimum subscription is

received by the company in cheques or other instrument.

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Where no minimum amount is so received: Within a period of 30 days from

the date of issue of the prospectus, or such other period as may be

specified by the Securities and Exchange Board, the amount received shall

be returned within such time and manner as may be prescribed.

➢ Penalty in case of contravention:-In case of default, the company and its

officer who is in default shall be liable to a penalty, for each default, of one

thousand rupees for each day during which such default continues or one

lakh rupees, whichever is less

Rule 11 of The Companies (Prospectus and Allotment of

Securities) Rules, 2014:- Refund of Application Money

1. Refund within prescribed period:-If the stated minimum amount has not

been subscribed an the sum payable on application is not received within the

period specified therein, then the application money shall be repaid within a

period of fifteen days from the closure of the issue and if any money is not

so repaid within such period, the directors of the company who are officers

in default shall jointly and severally be liable to repay that money with

interest at the rate of 15% per annum

2. Refund to Bank Only:-The application money to be refunded shall be

credited only to the bank account from which the subscription remitted.

➢ Minimum Application amount:-The amount payable on application on every

security shall not be less than 5% of the nominal amount of the security, or

such other percentage or amount, as may be specified by the Securities and

Exchange Board.

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ Money shall be deposited in separate bank account:-All money received n

application from the public for subscription to the securities shall be kept in

a separate bank account in a Scheduled Bank.

➢ Utilisation of Money:-Money received on application shall be utilised for—

✓ adjustment against allotment of securities where the securities have

been permitted to be dealt with in the stock exchange or stock exchanges

specified in the prospectus; or

✓ the repayment of monies within the time specified by the Securities and

Exchange Board, received from applicants in pursuance of the prospectus,

where the company is for any other reason unable to allot securities.

Return of Allotment [Sec 39 (4)]

➢ Filing of return with ROC:-Wherever any company makes any allotment of

securities, it shall file with the registrar a return of allotment.

➢ Penalty in case of contravention:-In case of default, the company and its

officer who is in default shall be liable to a penalty, for each default, of one

thousand rupees for each day during which such default continues or one

lakh rupees, whichever is less.

Rule 12 of The Companies (Prospectus and Allotment of

Securities) Rules, 2014:- Return of Allotment

➢ Whenever a company having a share capital makes any allotment of its

securities, the company shall, within thirty days thereafter, file with the

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

Registrar a return of allotment in Form PAS-3, along with the fee as

specified in the Companies (Registration Offices and Fees) Rules, 2014.

➢ There shall be attached to the From PAS-3 a list of allottees stating

their names, address, occupation, if any, and number of securities

allotted to each of the allottees and the list shall be certified by the

signatory of the Form PAS-3 as being complete and correct as per the

records of the company

➢ In the case of securities (not being bonus shares) allotted as fully or

partly paid-up for consideration other than cash, there shall be attached

to the Form PAS-3 a copy of the contract, duly stamped, pursuant to

which the securities have been allotted together with any contract of

sale if relating to a property or an asset, or a contract for services or

other consideration

➢ Where a contract is not reduced to writing, the company shall furnish

along with the Form PAS-3 complete particulars of the contract stamped

with the same stamp duty as would have been payable if the contract had

been reduced to writing and those particulars shall be deemed to be an

instrument within the meaning of the Indian Stamp Act, 1899 (2 of

1899), and the Registrar may, as a condition of filing the particulars,

require that the stamp duty payable thereon be adjudicated under

section 31 of the Indian Stamp Act, 1899.

➢ A report of a registered valuer in respect of valuation of the

consideration shall also be attached along with the contract as mentioned

in sub-rule (3) and sub-rule (4)

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ In the case of issue of bonus shares, a copy of the resolution passed in

the general meeting authorizing the issue of such shares shall be

attached to the Form PAS-3

➢ In case the shares have been issued in pursuance of clause (c) of sub-

section (1) of section 62 by a company other than a listed company whose

equity shares or convertible preference shares are listed on any

recognised stock exchange, there shall be attached to Form PAS-3, the

valuation report of the registered valuer

Offer or invitation for subscription of securities on Private

Placement (Sec 42)

➢ Sec 42 entitles a company to make private placement of securities

➢ Private placement shall comply with :

o The provisions as per sec 42 + Rule 14

➢ A company shall not make private placement unless passing a special

resolution in each of the offer

➢ In case of offer or invitation for non convertible debentures, it shall

be sufficient if :

o The Company passes SR once in year, if the proposed amount is

out of the limit, ie 100%( Paid up share capital + free reserves +

securities premium)

o The Company passes BR once in year, if the proposed amount is

with in the limit, ie 100%( Paid up share capital + free reserves

+ securities premium)

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➢ In case of offer of any securities to Qualified institutional Buyers, it

shall be sufficient if the company passes SR only once in a year for all

the allotment of securities

➢ Company shall issue private placement offer-cum application only after

the relavant SR or the BR has been filed with the ROC

➢ A private placement shall be made only to a select group of persons

who have been identified by the Board

➢ The private placement offer cum placement shall be addressed

specifically to the person to whom the offer is made

➢ The private placement offer cum application shall be :

o In form PAS 4

o Serially numbered

o Sent, either in writing or in electronic mode

➢ The details of those identified are to be recorded by the company

➢ The offer cum application has to be sent to those persons within 30

days of recording their names

➢ Company shall maintain a complete record of private placement in PAS

➢ The private placement shall not be made, during a FY, to more than,

o 50 persons

o Or such higher number as may be prescribed

➢ Two persons are excluded while computing the number of oersons to

whom private placement has been made :

o Qualified Institutional Buyers

o Employees of the company

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

➢ If a company

o Makes an offer or to allot securities or

o Invites subscription from public or

o Allot securities or

o Enters into an agreement to allots securities

To more than the maximum number of persons ( 200 persons ),

then it shall be deemed as public offer and the company have to

comply with the regulations of SEBI

o This provision shall not applies to NBFC & Housing finance

companies

➢ Every identified person going for private placement issue shall apply

through the above offer cum application

➢ Subscription money want to be collected not by cash, but through

cheque any online mode

➢ Allotment of securities is to be done within 60 days on receipt of

application money

➢ If not, repay the application money in next 15 days

➢ If company fails to repay in 15 days, pay 12% interest per annum on

the said amount

➢ Money collected as application money has to be kept in a separate

bank account in a scheduled bank, only can be utilized for allotment of

securities

➢ A company cannot use the money raised through private placement

unless;

o The securities have been allotted

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 PROSPECTUS AND ALLOTMENT OF SECURITIES

o The return of allotment is filed with the ROC

Return of allotment

➢ After the allotment the company shall file return of allotment

with the ROC within 15 days from the date of allotment in form

PAS 3

➢ Penalty of Rs 1000/ day will attract if default continues

subject to maximum of 25 lakh

Company cannot make any advertisement with respect to allotment of

securities such that it may points to contravention of the section

➢ The company and promoters shall be liable for penalty upto

o Amount raised through private placement or Rs 2 Cr

which ever us lower

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