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Rule 5Chapter 4

Other matters and reports to be stated in the prospectus

The prospectus shall include the following other matters and reports, namely:—

(1)

If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly—

(a)

in the purchase of any business; or

(b)

in the purchase of an interest in any business and by reason of that purchase, or anything to be done in consequence thereof, or in connection therewith; the company shall become entitled to an interest in either the capital or profits and losses or both, in such business exceeding fifty per cent. thereof, a report made by a chartered accountant (who shall be named in the prospectus) upon—

(i)

the profits or losses of the business for each of the five financial years immediately preceding the date of the issue of the prospectus ; and

(ii)

the assets and liabilities of the business as on the last date to which the accounts of the business were made up, being a date not more than one hundred and twenty days before the date of the issue of the prospectus;

(c)

in purchase or acquisition of any immoveable property including indirect acquisition of immoveable property for which advances have been paid to even third parties, disclosures regarding—

(i)

the names, addresses, descriptions and occupations of the vendors;

(ii)

the amount paid or payable in cash, to the vendor and, where there is more than one vendor, or the company is a sub-purchaser, the amount so paid or payable to each vendor, specifying separately the amount, if any, paid or payable for goodwill;

(iii)

the nature of the title or interest in such property proposed to be acquired by the company; and

(iv)

the particulars of every transaction relating to the property, completed within the two preceding years, in which any vendor of the property or any person who is, or was at the time of the transaction, a promoter, or a director or proposed director of the company had any interest, direct or indirect, specifying the date of the transaction and the name of such promoter, director or proposed director and stating the amount payable by or to such vendor, promoter, director or proposed director in respect of the transaction.

(2)

(a)

If –

(i)

the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or are to be applied directly or indirectly and in any manner resulting in the acquisition by the company of shares in any other body corporate; and

(ii)

by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body corporate shall become a subsidiary of the company, a report shall be made by a Chartered Accountant (who shall be named in the prospectus) upon –

(A)

the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the prospectus; and

(B)

the assets and liabilities of the other body corporate as on the last date to which its accounts were made up.

(b)

The said report shall –

(i)

indicate how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the issuer company and what allowance would have been required to be made, in relation to assets and liabilities so dealt with for the holders of the balance shares, if the issuer company had at all material times held the shares proposed to be acquired; and

(ii)

where the other body corporate has subsidiaries, deal with the profits or losses and the assets and liabilities of the body corporate and its subsidiaries in the manner as provided in sub-clause (ii) of clause(a).

(3)

The matters relating to terms and conditions of the term loans including re-scheduling, prepayment, penalty, default.

(4)

The aggregate number of securities of the issuer company and its subsidiary companies purchased or sold by the promoter group and by the directors of the company which is a promoter of the issuer company and by the directors of the issuer company and their relatives within six months immediately preceding the date of filing the prospectus with the Registrar of Companies shall be disclosed.

(5)

The matters relating to –

(A)

Material contracts;

(B)

Other material contracts;

(C)

Time and place at which the contracts together with documents will be available for inspection from the date of prospectus until the date of closing of subscription list.

(6)

The related party transactions entered during the last five financial years immediately preceding the issue of prospectus as under –

(a)

all transactions with related parties with respect to giving of loans or, guarantees, providing securities in connection with loans made, or investments made ;

(b)

all other transactions which are material to the issuer company or the related party, or any transactions that are unusual in their nature or conditions, involving goods, services, or tangible or intangible assets, to which the issuer company or any of its parent companies was a party:

Proviso

Provided that the disclosures for related party transactions for the period prior to notification of these rules shall be to the extent of disclosure requirements as per the Companies Act, 1956 and the relevant accounting standards prevailing at the said time.

(7)

The summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of issue of prospectus and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remarks.

(8)

The details of any inquiry, inspections or investigations initiated or conducted under the Companies Act or any previous companies law in the last five years immediately preceding the year of issue of prospectus in the case of company and all of its subsidiaries; and if there were any prosecutions filed (whether pending or not); fines imposed or compounding of offences done in the last five years immediately preceding the year of the prospectus for the company and all of its subsidiaries.

(9)

The details of acts of material frauds committed against the company in the last five years, if any, and if so, the action taken by the company.

(10)

A fact sheet shall be included at the beginning of the prospectus which shall contain –

(a)

the type of offer document (“Red Herring Prospectus” or “Shelf Prospectus” or “Prospectus”).

(b)

the name of the issuer company, date and place of its incorporation, its logo, address of its registered office, its telephone number, fax number, details of contact person, website address, e-mail address;

(c)

the names of the promoters of the issuer company;

(d)

the nature, number, price and amount of securities offered and issue size, as may be applicable;

(e)

the aggregate amount proposed to be raised through all the stages of offers of specified securities made through the shelf prospectus;

(f)

the name, logo and address of the registrar to the issue, along with its telephone number, fax number, website address and e-mail address;

(g)

the issue schedule –

(i)

date of opening of the issue;

(ii)

date of closing of the issue;

(iii)

date of earliest closing of the issue, if any.

(h)

the credit rating, if applicable;

(i)

all the grades obtained for the initial public offer;

(j)

the name(s) of the recognised stock exchanges where the securities are proposed to be listed;

(k)

the details about eligible investors;

(l)

coupon rate, coupon payment frequency, redemption date, redemption amount and details of debenture trustee in case of debt securities.

Notes, amendments & references (1)

5. Other matters and reports to be stated in the prospectus.— Omitted Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018 dated 07.05.2018 . To view the notification, Click Here