Section 31: Shelf prospectus
This section is for the rules and procedures governing the use of a shelf prospectus by certain companies to issue securities over a period of up to one year without needing a new prospectus for each issue.
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What the section says
In plain terms
(1)Any class or classes of companies, as the Securities and Exchange Board may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein which shall indicate a period not exceeding one year as the period of validity of such prospectus which shall commence from the date of opening of the first offer of securities under that prospectus, and in respect of a second or subsequent offer of such securities issued during the period of validity of that prospectus, no further prospectus is required.
Companies specified by the Securities and Exchange Board can file a shelf prospectus with the Registrar for the first offer of securities, which is valid for up to one year from the date of the first offer, and no further prospectus is needed for subsequent offers within that year.
(2)A company filing a shelf prospectus shall be required to file an information memorandum containing all material facts relating to new charges created, changes in the financial position of the company as have occurred between the first offer of securities or the previous offer of securities and the succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus: Provided that 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 and if they express a desire to withdraw their application, the company or other person shall refund all the monies received as subscription within fifteen days thereof.
A company with a shelf prospectus must file an information memorandum with the Registrar before making a second or subsequent offer of securities, detailing material changes such as new charges or financial position changes, and must refund subscriptions within 15 days if applicants wish to withdraw after being informed of changes.
(3)Where an information memorandum is filed, every time an offer of securities is made under sub-section (2), such memorandum together with the shelf prospectus shall be deemed to be a prospectus.
When an information memorandum is filed, it and the shelf prospectus together are considered a prospectus for each offer of securities made under it.
explanationExplanation.—For the purposes of this section, the expression “shelf prospectus” means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus.
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. The word “public” omitted by Act 22 of 2019, s. 7 (w.e.f. 15-8-2019).
- 2. Ins. by s. 7, ibid. (w.e.f. 15-8-2019).
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.