Prospectus MBA PPT

7/31/2019 Prospectus MBA PPT

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PROSPECTUS

Definition :Prospectus means

any document described or issued as aprospectus &includes any notice , circular ,

advertisement or other document inviting

deposits from the public or inviting offers from

the public for the subscription of shares or

debentures of a co.


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Dating : must be dated

Signing : a. Intended coproposed

directors must be signed.

b. Existing coevery person

who is named as director.

Registration : a. must be registered on orbefore the date of publication.

b. penalty for non- registration:

Rs.50,000/- .


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CONTENTS OF

PROSPECTUSMatters to be stated and reports to be set out in

Prospectus. Important contents of prospectus areas follows

Part I of schedule II : General Information Capital structure of the co

Terms of the present issue

Particulars of the issue

Co , Management and Project


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Part II of schedule II :

General Information

Financial Information

Statutory and other Information


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MISSTATEMENTS IN PROSPECTUS &

THEIR CONSEQUENCES

If there is any mis-statement of a material

fact in a prospectus.

OR

If the prospectus is wanting in any material

fact ,there may arise-

a. Civil Liability

b. Criminal Liability


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Civil Liability

I. Remidies against the co

1. Rescission of the contract

- He should apply for rescission

- Gets back money paid by him with

interest

Case : Rex vs Lord Kylsant

2. Damages for deceit (MONEY,MENTAL

STRAIN)


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II. Remedies against the Directors , Promoters

and Experts

1. Liability for damages for misstatement in

prospectus

2. Liability under the General Law

sec 17 of Indian Contract Act, 1872 for

fraud


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Criminal Liability

Every person who is authorized to

issue prospectus is punishable with

Imprisonment which may extend to 2 yrs or

Fine with Rs.50,000/- or

With Both


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Statement In Lieu of Prospectus

Where a public co does not invite public to

subscribe for its shares , need no issue

prospectus to public, In such case the promoters

are required to prepare a draft prospectus known

as a statement in lieu of prospectus whichshould contain the information required to be

disclosed by Schedule III of the Act


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SHARES

The capital of a co is divided into certain

divisible units of a fixed amount. These units are

called Shares.

Types of Shares :

There are 2 kinds of shares

I. Preference shares

II. Equity shares


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PREFERENCE SHARES

They have a preferential right to be paid dividendduring the life time of the co.

They have a preferential right to the return ofcapital when the co goes into liquidation.

KINDS OF PREFERENCE SHARES :

1. Cumulative Preference Shares

Dividend goes on accumulating till it is fully paidoff.


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2. NonCumulative Preference Shares

3. Participating Prefrence Shares

Entitled fixed rate of dividend + share in thesurplus profits.

4. NonParticipating Preference Shares

Only a fixed rate of dividend

5. Convertible Prefrence Shares

Convertible into equity shares

6. NonConvertible Prefrence Shares

7. Redeemable Prefrence Sharesa. Articles should permit

b. Can be redeemed only out of profit


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EQUITY SHARES

Equity shares are those which are not

prefrence shares.


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DEBENTURES

A co needs money to finance its activitiesfrom time to time.

a. A part their requirement is met by issue

of shares.

b. For the rest the co may resort to

borrowing.

The co borrows money by issue ofdebentures.

Debenture is issued by the co and it isusually in the form of a certification which is anacknowledgement of indebtedness.


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The debenture of a co are moveable

property , transferable in the mannerprovided by the Articles.

A debenture holder does not have any rightto vote in the co meetings.

KINDS OF DEBENTURES :

Debentures may be of the following kinds


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1. Bearer Debentures :

Also known as Unregistered Debentures

payable to its bearer. And also these areregarded as Negotiable Instruments.

2. Registered Debentures :

Payable to registered holder whose nameappears both on certificate and in the cosregister. They are transferable.

3. Secured Debentures :

Debentures which create some charge on theproperty of the co.


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4. Unsecured Debentures

5. Redeemable Debentures

They may be redeemed after sometime.

6. Irredeemable or Perpetual Debentures

There is no period fixed for repayment of the

principal amount.7. Convertible Debentures

Can be converted into preference or equityshares.

8. NonConvertible DebenturesThey are to be duly paid as and when they

mature.


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DIRECTORS

A co is an artificial person. It cannot act in its ownperson. It acts through the Directors.

The Directors , who occupy very important

position in the co , are considered to be thebrain of a co.

No body corporate , association or firm can beappointed director of a co.only an individual can

be appointed as Director.


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Number of Directors :

Public cominimum 3

Private cominimum 2

APPOINTMENT OF DIRECTORS :

1. First Directors

Usually named in the article

Not namedsubscribers appoint

In the absence of (a) or (b)subscribers hold the

office until directors are duly appointed.


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2.Appointment of Directors by the co

In the case of a public co or a private co which is

subsidiary of a public co at least 2/3rd of the total

number of directors shall be liable to retire by

rotation.

Directors are appointed by shareholders ingeneral meeting.

3. Appointment of Directors by Directors

Prospectus MBA PPT

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