Legal Law

Group 7

The prospectus of a company can be compared to the horoscope of an "Indian Bride"

Definition: A horoscope is a forecast of a person's future, typically including a delineation of character and circumstances, based on the relative positions of the stars and planets at the time of that person's birth. A document described or issued as a prospectus & includes any notice, circular, advertisement or other document inviting deposits from the public or the subscription or purchase of any shares in, or debentures of a body corporate

Red Herring Prospectus

The Bio Data contains only the basic info of the bride and not the full details. Red Herring Prospectus is a prospectus which does not have details of either price or number of shares being offered or the amount of issue.

In case of BrIdes Horoscope

A horoscope is just an invitation to a perspective groom. It is made only by the family of the bride or by any person in direct relation of the bride. The invitation is for asking the grooms hand in marriage..

The following ingredients may be saId to constItute a prospectus

(a) There must be an invitation to the public (b) The invitations must be made by or on behalf of the company or in relation to an intended company. (c) The invitation must be to subscribe or purchase (d) The invitation must refer to shares or debentures or such other instrument.

Dating and Registration of Prospectus

(1) Prospectus must be dated. (2) Similarly a horoscope also has a particular time limitation. (3) A copy of prospectus must be filled with the register on or before its publication- The experts consent ,a copy of every contract must be attached to the prospectus. (4) In that same way a horoscope of bride before making public should be approved and authenticated from the concerned party.

The following documents must be attached to the copy of prospectus filed with the registrar:

(a) The consent of the expert mentioned in the prospectus, if his report is included in the prospectus. (b) A copy of every contract relating to the appointment or remuneration of a managing director or manager. (c) A copy of every material contract not being a contract entered into in the ordinary course of business of the company entered into within two years of the issue of the prospectus.

CONT....
(d) A written statement relating to the adjustments ,if any, in respect of figures of any profits or losses ,and assets and liabilities. (e) The consent in writing of the person, of any, named in the prospectus as the auditor ,legal advisor,attorney,solicitor,issue house, banker managers to the issue or broker of the company to act in the capacity. (f) The consent of directors under section 266 in respect of new directors ,if any, named therein; (g) A copy of the underwriting ;agreement if any, should also be filed as required

BrIdes Horoscope
Just like a prospectus is used to make decision regarding the financial and longevity of the company, a horoscope is used to
get information about her character, attitude to life, and other aspects like whether her horoscope is likely to promote your longevity her own longevity whether she will be faithful to you whether your married life will be harmonious and successful

 Every prospectus issued by (a) by or behalf of a company, or (b) by or on behalf of any person engaged or interested in the formation of a company, shall
(1) State the matters specified in Part 1 of Schedule II ,and (2) Set out the reports specified in Part II Of Schedule II

Matters to be stated & Reports to be set out in Prospectus

Part 1 of Schedule II
General Information Capital structure of the Company Terms of the present issue Particulars of the issue Company, management and Project Particulars in regard to the company and other listed companies under the same management Outstanding Litigation Management Perception of Risk Factors

Part 2 of Schedule II
General Information Financial Information Statutory and other information

Deemed Prospectus-Offer of Sale of Existing Shares

Prospectus by implication Intention to offer shares or debentures to public Additional information Signing of a prospectus

MISSTATEMENT IN PROSPECTUS AND THEIR CONSEQUENCES

LIABILITY FOR MISSTATEMENTS IN PROSPECTUS

CIVIL LIABILTY

CIRIMINAL LIABILITY

AGAINST THE COMPANY

AGAINST THE DIRECTORS, PROMOTERS AND EXPERTS

RECESSION OF CONTRACT

CLAIM FOR DAMAGES

DAMAGES

COMPENSTATION

DAMAGES FOR NON COMPLIANCE

For fraudulent misrepresentation

For innocent misrepresentation

Civil Liability
Remedies against the company - Rescission of the contract The statement must be a material misrepresentation of fact. The statement must have induced the shareholder to take the shares. The statement must be untrue. The deceived shareholder is an allottee and he must have reited on the statement in the prospectus.

Cont..
The omission of material fact must be misleading before rescission is granted. The proceedings for recession must be started as soon as the allottee comes to know of a misleading statement in the prospectus. - Damages for deceit

Cont...
Remedies against the directors, promoters and experts. (1) Liability for damages for misstatement in prospectus Withdrawal of consent Absence of consent Ignorance of untrue statement Reasonable ground for belief Statement of expert.

Criminal Liability
Where a prospectus contains any untrue statement, every person who authorized the issue of the prospectus is punishable with imprisonment which may extend to 2 years ,or with fine which may extend to Rs. 5000 or with both. He will not be liable if he proves either.(1) That the statement was immaterial, or (2) That he had reasonable ground to believe that the statement was true.

In case of BrIdes Horoscope

No legal action can be taken except the offer can be rejected. Also at a later stage one can withdraw from the contract of marriage if any party feels so.

Who can be sued

1) The company 2) Every director 3) Every person whose name appeared in the prospectus as a proposed director 4) Every promoter 5) Every person who has authorised the issue of the prospectus

Onus for proof of misstatement

The misrepresentation was of fact It was in respect of a material fact He acted on the mis-representation;and He has suffered damages on consequence.

Issue & allotment of shares in fictitious names

A person shall be punishable with imprisonment for a term which may extend to 5 years if he, (1) Makes in a fictitious name an application to a company for acquiring ,or subscribing for ,any shares therein,or (2) Otherwise induces a company to allot,or register any transfer of shares therein to him,or any other person in a fictitious name.

for a BrIdes Horoscope

Many a times the brides horoscope instead of advertising is given to marriage agencies.

Statement in Lieu of Prospectus

Where a company does not invite public to subscribe for its share , but arranges to get money from private sources , it need not issue a prospectus to the public .In such a case the promoters are required to prepare a draft prospectus known as a statement in lieu of prospectus.