Companies acr 1956 sec. 67

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Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2012 If an offer or invitation is not calculated to results, directly or indirectly, in shares or debentures becoming available for subscription to person other than those receiving the offer or invitation. Can anybody explain me this in simple language ?

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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29 June 2012 Section 67(3) explain what is not to be trated as public offer or public invitation & laid down the tests therein which need to be satisfied.

These tests are ;

the offer or invitation can properly be regarded as not public offer or public invitation if they are available for subscription or purchase by person receiving the offer or invitation. if person other than those receiving the offer or invitation can subscribe or purchase the shares it would amounts to public offer.

Querist : Anonymous

Querist : Anonymous (Querist)

30 June 2012 Calulated reesults indirectly or directly what does it means ?

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Querist : Anonymous

Querist : Anonymous (Querist)

30 June 2012 Calculated results directly or indirectly,what does this line signifies ?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 Certainly! Section 67 of the Companies Act, 1956 deals with the prohibition on certain kinds of invitations or offers related to shares or debentures. Let me explain it in simpler terms:

### Understanding Section 67 of the Companies Act, 1956:

1. **Purpose of the Section**:
- The section aims to regulate how companies offer shares or debentures to the public or to specific groups of people.

2. **Key Phrase - "Calculated to Result"**:
- The phrase "calculated to result" means that the offer or invitation is designed or intended in a way that it could lead to a particular outcome. In this context, it refers to shares or debentures becoming available for subscription by individuals or entities other than those who were initially offered the opportunity.

3. **Directly or Indirectly**:
- **Directly**: If the offer or invitation clearly and immediately results in shares or debentures being available for subscription by parties other than the intended recipients.
- **Indirectly**: If the offer or invitation, though not immediately, eventually leads to shares or debentures being made available for subscription by others through subsequent actions or consequences.

4. **Example**:
- Suppose a company sends out an invitation to a specific group of investors, stating that they have the exclusive opportunity to subscribe to a new issue of shares. However, if this invitation somehow indirectly leads to shares being available for subscription by a wider group of people, not initially intended, it would violate Section 67.

5. **Prohibition Rationale**:
- The section aims to prevent misleading or deceptive practices where an offer or invitation, initially restricted to a certain group, ends up being accessible to a broader audience due to subsequent actions or unintended consequences.

### Conclusion:
Section 67 of the Companies Act, 1956 seeks to ensure that offers or invitations related to shares or debentures are clear and specific in their scope, intended only for the recipients mentioned in the offer. Any outcome where the offer indirectly or directly leads to wider availability of shares or debentures beyond the intended group is prohibited under this section.