60B. Information memorandum.—(1)
A public company making an issue of securities may circulate
information memorandum to the public prior to filing of a
prospectus.
(2) A company inviting subscription by an information memorandum
shall be bound to file a prospectus prior to the opening of
the subscription lists and the offer as a red-herring prospectus,
at least three days before the opening of the offer.
(3) The information memorandum and red-herring prospectus
shall carry same obligations as are applicable in the case
of a prospectus.
(4) Any variation between the information memorandum and
the red- herring prospectus shall be highlighted as variations
by the issuing company.
Explanation.—For the purposes of sub-sections (2),
(3) and (4), “red-herring prospectus” means a
prospectus which does not have complete particulars on the
price of the securities offered and the quantum of securities
offered.
(5) Every variation as made and highlighted in accordance
with subsection (4) above shall be individually intimated
to the persons invited to subscribe to the issue of securities.
(6) In the event of the issuing company or the underwriters
to the issue have invited or received advance subscription
by way of cash or post-dated cheques or stock-invest, the
company or such underwriters or bankers to the issue shall
not encase such subscription moneys or post-dated cheques
or stockinvest before the date of opening of the issue, without
having individually intimated the prospective subscribers
of the variation and without having offered an opportunity
to such prospective subscribers to withdraw their application
and cancel their post-dated cheques or stock- invest or return
of subscription paid.
(7) The applicant or proposed subscriber shall exercise his
right to withdraw from the application on any intimation of
variation within seven days from the date of such intimation
and shall indicate such withdrawal in writing to the company
and the underwriters.
(8) Any application for subscription which is acted upon
by the company or underwriters or bankers to the issue without
having given enough information of any variations, or the
particulars of withdrawing the offer or opportunity for cancelling
the post-dated cheques or stock invest or stop payments for
such payments shall be void and the applicants shall be entitled
to receive a refund or return of its post-dated cheques or
stock- invest or subscription moneys or cancellation of its
application, as if the said application had never been made
and the applicants are entitled to receive back their original
application and interest at the rate of fifteen per cent.
from the date of encashment till payment of realisation.
(9) Upon the closing of the offer of securities, a final
prospectus stating therein the total capital raised, whether
by way of debt or share capital and the closing price of the
securities and any other details as were not complete in the
red-herring prospectus shall be filed in a case of a listed
public company with the Securities and Exchange Board and
Registrar, and in any other case with the Registrar only.
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