Companies (Amendment) Act, 2000

22. Insertion of new section 60A and 60B.-

After section 60 of the principal Act, the following sections shall be inserted, namely:- '60A. Shelf prospects.-

1.   Any public financial institution, public sector bank or scheduled bank whose main object is financing shall file a shelf prospectus.

2.   A company filing a shelf prospectus with the Registrar shall not be required to file prospectus afresh at every stage of offer of securities by it within a period of validity of such shelf prospectus.

3.   A company filing a shelf prospectus shall be required to file an information memorandum on all material facts relating to new charges created, changes in the financial position as have occurred between the first offer of securities, previous offer of securities and the succeeding offer of securities within such time as may be prescribed by the Central Government, prior to making of a second or subsequent offer of securities under the shelf prospectus.

4.   An information memorandum shall be issued to the public along with shelf prospectus filed at the stage of the first offer of securities and such prospectus shall be valid for a period of one year from the date of opening of the first issue of securities under that prospectus: Provided that where an update of information memorandum is filed every time an offer of securities is made, such memorandum together with the shelf prospectus shall constitute the prospectus.

Explanation.-For the purpose of this section,-

a.   "financing" means making loans to, or subscribing in the capital of, a private industrial enterprise engaged in infrastructural financing or such other company as the Central Government may notify in this behalf;

b.   "shelf prospectus" means a prospectus issued by any financial institution or bank for one or more issues of the securities or class of securities specified in that prospectus. 60B. Information memorandum.-

1.   A public company making an issue of securities may circulate information memorandum to the public prior to filing of a prospectus.

2.   A company inviting subscription by an information memorandum shall be bound to file a prospectus prior to the opening of the subscription lists and the offer as a red herring prospectus, at least three days before the opening of the offer.

3.   The information memorandum and red herring prospectus shall carry same obligations as are applicable in the case of a prospectus.

4.   Any variation between the information memorandum and the red herring prospectus shall be highlighted as variations by the issuing company.

5.   Explanation.-For the purposes of sub-sections (2), (3) and (4), "red herring prospectus" means a prospectus which does not have complete particulars on the price of the securities offered and the quantum of securities offered. (5) Every variation as made and highlighted in accordance with sub-section (4) above shall be individually intimated to the persons invited to subscribe to the issue of securities.

6.   In the event of the issuing company or the underwriters to the issue have invited or received advance subscription by way of cash or post-dated cheques or stock-invest, the company or such underwriters or bankers to the issue shall not encash such subscription moneys or post-dated cheques or stock-invest before the date of opening of the issue, without having individually intimated the prospective subscribers of the variation and without having offered an opportunity to such prospective subscribers o withdraw their application and cancel their post-dated cheques or stock-invest or return of subscription paid.

7.   The applicant or proposed subscriber shall exercise his right to withdraw from the application on any intimation of variation within seven days from the date of such intimation and shall indicate such withdrawal in writing to the company and the under writers.

8.   Any application for subscription which is acted upon by the company or underwriters or bankers to the issue without having given enough information of any variations, or the particulars of withdrawing the offer or opportunity for cancelling the post- acted cheques or stock-invest or stop payments for such payments shall be void and the applicants shall be entitled to receive a refund or return of its post-dated cheques or stock-invest or subscription moneys or cancellation of its application, as if the said application had never been made and the applicants are entitled to receive back their original application and interest at the rate of fifteen per cent. from the date of encashment till payment of realisation.

9.   Upon the closing of the offer of securities, a final prospectus stating therein the total capital raised, whether by way of debt or share capital and the closing price of the securities and any other details as were not complete in the redherring prospectus shall be filed in a case of a listed public company with the Securities and Exchange Board of India and Registrar, and in any other case with the Registrar only.'.

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