Capital for running a company is one of the critical aspect . It is very difficult to get abundant capital, so most of the company do capital budgeting and capital rationing. But still there are some companies who paint good picture about themselves, than the real picture, and take money from public and vanish.
Companies Act 2013, have some provisions which will ensure the transparency from the side of the company and connected responsibilities and penalties, so that the investor will have sufficient information to make investment. This will also make the person who make misrepresentation or misstatement in prospectus liable both civil and criminal.
Following are the sections in Companies Act which contain provisions relating to prospectus and issue of securities.
Sections related to prospectus and issue of shares
23. Public offer and private placement
24. Power of Securities and Exchange Board to regulate issue and transfer of securities, etc
25. Document containing offer of securities for sale to be deemed prospectus
26. Matters to be stated in prospectus
27 .Variation in terms of contract in prospectus
28. Offer of sale of shares by certain members of company
29. Public offer of securities to be in demat form.
30. Advertisement of prospectus
31. Shelf prospectus
32. Red herring prospectus
33. Issue of application forms for securities
34. Criminal liability for misstatements in prospectus
35. Civil liability for misstatements in prospectus
36. Punishment for fraudulently inducing persons to invest money
37. Action by affected persons
38. Punishment for personation for acquisition
39. Allotment of securities by company
40. Securities to be dealt with in stock exchanges
41. Global depository receipt
42. Issue of shares on private placement basis.
Important sections are highlighted.