1. HOW TO PREPARE A PROSPECTUS ?by :DR. T.K. JAIN AFTERSCHO OLcentre for social entrepreneurshipsivakamu veterinary hospital road bikaner 334001 rajasthan, india FOR PGPSE PARTICIPANTSmobile : 91+9414430763

2. WHAT IS A PROSPECTUS?WHEN A PUBLIC COMPANY ISSUES SHARES / DEBENTURES / ANY OTHER SECURITY, IT HAS TO ISSUE PROSPECTUS / RED HERRING PROSPECTUS / STATEMENT IN LIEU OF PROSPECTUS. 3. CAN A PRIVATE COMPANY ISSUE PROSPECTUS?NO 4. CHARACTERISTICSSigned by directors + CSmust bear a datemust be as per SEBI guidelines + companies act must be registered with ROC it is a public invitation 5. Attachments to prospectusSchedule IIExpert consent (if they have given any statement) (sec. 56)copy of contracts consent of auditors / legal advisors 6. Approval of prospectusLead financial institutionslead managers to issuestock exchanges (where the company is listed / proposed to be listed)vetting by SEBI 7. Submission to ROCBefore issue of prospectus, it should be submitted to ROC (sec. 60)from this date, prospectus has to be issued to public in 90 days.If issued without registration (with ROC), penalty on officer 50000 8. FormatClick the links below :http://www.moneycontrol.com/ipo/ipofaq.php http://www.sebi.gov.in/dp/usheragro.pdf http://www.sebi.gov.in/dp/power.pdf http://www.sebi.gov.in/dp/power.pdf 9. PART I OF SCHEDULE IICapital structure issue guidelines minimum subscription date of opening and closing of issuerisk perception of managementgeneral information & litigation mattersnames of stock exchanges etc. 10. PART II OF SCHEDULE IICONSENT OF EXPERTS CONSENT OF DIRECTORS REPORT OF AUDITORS & ACCOUNTANTS TERMS OF LOANS 11. Sebi guidelineshttp://www.sebi.gov.in/SectIndex.jsp?sub_sec_id=4 12. What is minimum subscriptionIt must be mentioned in prospectus as per SEBI guidelines : 90% is minimum subscription 13. Issue normsIssue norms must be given in prospectus. Issue must be made in 30 days of public issue closure(otherwise penal interest @15%)refund orders (if any must be despatched in 78 days).Allotment must be made by board of directors / proper authority 14. GOLDEN RULEKindersely : in Brunswick etc. v/s Muggeridge (1860) :the person issueing prospectus must give every informationstricktly and scrupulously and must not omit any material information 15. Important rulesExperts opinion only after obtaining written consent by expertsDirector names only after obtaining written consent by director to become the director the experts mentioned must not be connected to formation of the company(indemnify if there is false information) 16. When can registrar refuse to register a prospectusIt is not dated it is not signed it is not accompanied with documents it is not as per company law & SEBI guidelines 17. WHAT IS RED HERRING PROSPECTUSIT GIVES RATES IN RANGE IT IS NOT GIVING FINAL RATES OF ISSUES 18. SHELF PROSPECTUSSEC. 60 a (as per 2000 amendment of companies act) : when a bank / public financial institution repeatedly issues capital, it can issue shelf prospectusit is valid for 1 year during this time, the company can again and again go for public issue on the basis of same shelf prospectus, but each time it has to issue information memorandum (sec. 2(19B) 19. STATEMENT IN LIEU OF PROSPECTUS1. when a private company becomes a public company(within 30 days)2. when public company is not issueing shares to public, they have to issue this.3. when a public company doesnt allot shares to publicit must have contents similar to prospectus, penalty if untrue statement : 10000 http://www.vakilno1.com/bareacts/companiesact/s44.htm 20. BE A PROMOTOR A Promotor is a person who sets up a company.As a promotor, you have to think about the idea and convert this idea into a company. As a promotor, you have to set up initial contracts so that company becomes operational. 21. Steps ...... Prepare Memorandum of association (as per format) in at least 3 copes Prepare Articles of association (as per format) in at least 3 copes (or apply Table A of schedule I)Prepare agreements with directors Submit declaration to Registrar of company that all formalities have been fulfilled (by company secretary)prepare prospectusgo ahead for raising money for your dream ideas 22. LEGAL FORMSForm NO. 1 : declaration of all the formalities of company(to be filed with registrar of comapnies ). for other forms and their structure, click on the following link : http://www.mca.gov.in/MCA21/dca/downloadeforms/Download_eForm_choose.html http://www.vakilno1.com/froms_html/co_form.htm 23. INCORPORATION Registrar of companies will issue a certificate of incorporation. (Sec. 33, 34 of companies act) this is conclusive evidence that the company is registered. 24. Can you start a business ?Private company can start it immediately on getting certificate of incorporation, but a publiccompany will have to obtain a certificate of commencement of business to start business.See this link also :http://www.legalserviceindia.com/company law/company_formation_procedure.htm 25. Commencement of business Public company can start business only on fulfilling following formalities :1. directors have purchased qualification shares 2. prospectus / statement in lieu of prospectus has been prepared and submitted 3. minimum subscription has been obtained. 26. PRELIMINARY CONTRACTSThese contracts are made before a company has been given certificate of incorporation. These contracts have no legal validity against company and the contractor cannot sue the company. The promotors are personally liable for such contracts. 27. PROVISIONAL CONTRACTS (ONLY FOR PUBLIC COMPANY)These contracts are made before a company has been given certificate of commencement of business but after certificate of incorporation. These contracts have no legal validity against company until the company obtains certificate of commencement of business. Once the company obtains this certificate these contracts are enforceable against company. 28. FORMAT OF MEMORANDUM MOA must be in following format :Schedule I : Table B / C / D / E B : for limited by shares C : for guaranteeD : guarantee + share capitalE : for unlimited company 29. MOAMemorandum of association must have :NAME PLACE OBJECT LIABILITY CAPITALSIGNATURE AND ASSOCIATION CLAUSE 30. THANKS.... GIVE YOUR SUGGESTIONS AND JOIN AFTERSCHOOOL NETWORK / START AFTERSCHOOOL SOCIAL ENTREPRENEURSHIPNETWORK IN YOUR CITY[email_address] PGPSE WORLD'S MOST COMPREHENSIVE PROGRAMME IN SOCIAL ENTREPRENEURSHIP