Section 26: Matters to be stated in prospectus
This section sets out the requirements for the content and issuance of a prospectus by a public company, including the information to be included, the need for signing and dating, and the timing of delivery to the Registrar.
Penalty
(9) If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable 4*** with fine which shall not be less than fifty thousand rupees but which may extend to 5[three lakh rupees].
The section, clause by clause
What the section says
In plain terms
(1)Every prospectus issued by or on behalf of a public company either with reference to its formation or subsequently, or by or on behalf of any person who is or has been engaged or interested in the formation of a public company, shall be dated and signed and shall, 1[state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board in consultation with the Central Government:
Every prospectus issued by a public company must be dated and signed, and include specified information and reports on financial information as determined by the Securities and Exchange Board in consultation with the Central Government, as well as a declaration about compliance with the Act and relevant laws.
provisoProvided that until the Securities and Exchange Board specifies the information and reports on financial information under this sub-section, the regulations made by the Securities and Exchange Board under the Securities and Exchange Board of India Act, 1992 (15 of 1992), in respect of such financial information or reports on financial information shall apply]; — 1*
(1)(c)make a declaration about the compliance of the provisions of this Act and a statement to the effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the rules and regulations made thereunder; and 2*
(2)Nothing in sub-section (1) shall apply—
The requirements of sub-section (1) do not apply to the issue of a prospectus to existing members or debenture-holders of a company, or to the issue of a prospectus for shares or debentures that are uniform with previously issued ones and are listed on a recognised stock exchange.
(2)(a)to the issue to existing members or debenture-holders of a company, of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant has a right to renounce the shares or not under sub-clause (ii) of clause (a) of sub-section (1) of section 62 in favour of any other person; or
(2)(b)to the issue of a prospectus or form of application relating to shares or debentures which are, or are to be, in all respects uniform with shares or debentures previously issued and for the time being dealt in or quoted on a recognised stock exchange.
(3)Subject to sub-section (2), the provisions of sub-section (1) shall apply to a prospectus or a form of application, whether issued on or with reference to the formation of a company or subsequently.
The provisions of sub-section (1) apply to all prospectuses, whether issued on formation of a company or subsequently, unless exempted under sub-section (2).
explanationExplanation.—The date indicated in the prospectus shall be deemed to be the date of its publication.
(4)No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless on or before the date of its publication, there has been delivered to the Registrar for 2[filing], a copy thereof signed by every person who is named there in as a director or proposed director of the company or by his duly authorised attorney.
A copy of the prospectus must be delivered to the Registrar for filing, signed by every person named as a director or proposed director, before the date of its publication.
(5)A prospectus issued under sub-section (1) shall not include a statement purporting to be made by an expert unless 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 and has given his written consent to the issue of the prospectus and has not withdrawn such consent before the delivery of a copy of the prospectus to the Registrar for 1[filing] and a statement to that effect shall be included in the prospectus.
A prospectus cannot include a statement from an expert unless the expert has given written consent and is not engaged or interested in the company's formation, promotion, or management.
(6)Every prospectus issued under sub-section (1) shall, on the face of it,—
Every prospectus must state that a copy has been delivered to the Registrar and specify any attached documents or refer to statements in the prospectus that specify these documents.
(6)(a)state that a copy has been delivered for 1[filing] to the Registrar as required under sub-section (4); and
(6)(b)specify any documents required by this section to be attached to the copy so delivered or refer to statements included in the prospectus which specify these documents. 3*
(8)No prospectus shall be valid if it is issued more than ninety days after the date on which a copy thereof is delivered to the Registrar under sub-section (4).
A prospectus is not valid if it is issued more than 90 days after the date on which a copy is delivered to the Registrar.
(9)If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable 4*** with fine which shall not be less than fifty thousand rupees but which may extend to 5[three lakh rupees].
If a prospectus is issued in contravention of this section, the company is punishable with a fine of at least 50,000 rupees but not more than 3 lakh rupees, and every person knowingly involved is also punishable with a fine of at least 50,000 rupees but not more than 3 lakh rupees.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 1 of 2018, s. 8 (w.e.f. 7-5-2018).
- 1. Clauses (a), (b) and (d) omitted by Act 1 of 2018, s. 8 (w.e.f. 7-5-2018).
- 2. Subs. by Act 22 of 2019, s. 6, for “registration” (w.e.f. 15-8-2019).
- 3. Sub-section (7) omitted by s. 6, ibid. (w.e.f. 15-8-2019).
- 4. The words “with imprisonment for a term which may extend to three years or” omitted by Act 29 of 2020, s. 6 (w.e.f. 21-12- 2020).
- 5. Subs. by s. 6, ibid., for “three lakh rupees, or with both” (w.e.f. 21-12-2020).
This section refers to
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.