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Section 60b of company law

Rohit (CA-Final) (1485 Points)

23 September 2012

Can anyone please explain - What is Prospectus , Shelf Prospectus , Red-Herring Prospectus , Information Memorandum & Abridged Prospectus ???

And please dont write in language of Law ... Use Easy Language...

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 23 September 2012

Dear Rohit,

Prospectus:- A company prospectus is a document that provides comprehensive information about a company. This information can be used by prospective investors to decide whether they want to invest and what kinds of investment products they want to buy. Companies make their prospectuses available on request to anyone who asks for them and many host versions on their websites to make them easy to access.

Shelf Prospectus :- It means a prospectus issued by any financial institution or bank for one or more issues of the securities or class of securitites specified in that prospectus.

Red-Herring Prospectus:- It is a type of Prospectus which is not having a registration or Dating from ROC. The day when company file a copy with ROC for registration and on same day if company issue prospectus on the stock exchange it is called as RED HERRING PROSPECTUS.

Abridge Prospectus or Information Memorandum:- It is the type of Prospectus which contains all the Salient features of Memorandum of Association.

Regards,

RAJESH CHOUDHARY

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Rohit (CA-Final) (1485 Points)
Replied 24 September 2012

Thankx for such vauable answer :

Are Abridged Prospectus and Information Memorandum same thing ??

Because Abridged Prospectus is defined u/s 2(1) and Information Memorandum is defined u/s 2(19B) of Companies Act , 1956.

So I thought they might be different things ....

And can You please explain Red-Herring Prospectus more .... I still have doubts in Red-Herring Prospectus ...

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 24 September 2012

Dear Rohit,

You refer some good Law book ( G.K Kapoor) you will understand in better way.

Regards,

RAJESH CHOUDHARY

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Jay (Student) (200 Points)
Replied 01 October 2012

I suggest for for AMIT KARIA's LAW ETHICS & COMMUNICATION by BHARAT PUBLICATIONS, NEW DELHI.

Section 60B means Book Building method.

In the said book, Book Building method is explained with the hhelp of a tabular example, with price band (in this method, actual price is not disclosed, hence, its called red herring prospectus)
. Even my all doubts relating to Corporate Laws have been solved using the book...
Trust me, its the most precise & best book especially for Company Law.

Go for AMIT KARIA's LAW BOOK.

Rohit (CA-Final) (1485 Points)
Replied 01 October 2012

I have already purchased Munish bhandari Sir's Book....

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Jay (Student) (200 Points)
Replied 01 October 2012

Even I have both books.

But on comparing, you'll come to know that Karia's book is very personalised and contians a balanced flow of basics & advanced provisions, with real book building tables.

Some striking features in Amit Karia's book not found in other books are:

1. Book Building Table alongwith practical example including price band.

2. Manner of writing case laws - Facts, Decision, Principle (sequence)

3. 67 case laws covered

4. Bonus Act - Set on , Set off table covered

5. List of important case laws & section numbers at the end of each chapter.

6. Concise coverage of Ethics & Communication

7. Best Drafts of Agreements covered in Communication.

8. Latest Stock Exchange notifications included

9. Last 6 exams solved papers.

10. It is concise yet comprehensive

Go for AMIT KARIA's LAW ETHICS & COMMUNICATION - 2012 3rd edition.

You'll come to know the difference... ALL THE BEST

Deepak Gupta (CA Student) (15922 Points)
Replied 04 October 2012

Originally posted by : Rohit
	Are Abridged Prospectus and Information Memorandum same thing ?? Because Abridged Prospectus is defined u/s 2(1) and Information Memorandum is defined u/s 2(19B) of Companies Act , 1956. So I thought they might be different things .... And can You please explain Red-Herring Prospectus more .... I still have doubts in Red-Herring Prospectus ...

The prospectus is a bulky document and to supply prospectus with each application form is economically not feasible. In order to reduce the cost of public issue abridged prospectus was introduced. The contents of abridged prospectus are limited.
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A company cannot supply application forms for shares or debentures unless the form is accompanied by abridged prospectus.

Information memorandum serves the purpose of an offer document but cannot be called a prospectus as it does not contain the price structure or the offer price of securities being offered. It contains all other major information’s as may be necessary to make investment decisions. It can be circulated to the public as a notice, circular, advertisement or document to ascertain the demand for the issue of securities and the price at which such securities could be issued.
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An information memorandum can be issued by a public company which is already listed or which intends to be listed after the issue. The Information memorandum shall be issued to public prior to filing of prospectus before the opening of subscripttion list. It has to be followed by the prospectus. It carries the same obligations as those of a prospectus.

A prospectus is said to be a red-herring prospectus if it contains all information as per prospectus contents but does not have complete particulars on the price of securities offered and the number of securities (quantum) offered through such document. This is used in book building issues only.
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It is a process of price discovery and the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with ROC in terms of the provisions of the Companies Act.
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[Note 1: Book building refers to the collection of bids from investors, based on a floor price, which is indicated before the opening of the bidding process. the issue price is fixed after the bid closing date.
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Note 2: Floor price is the minimum price at which bids can be made]