The following are the moles for the issue of shelf prospectus

I. Any public financial institution, public sector banks, or scheduled banks whose main business is financing are eligible to issue shelf prospectus.

Financing as per explanation (a) to Sec. 60A(4) means making loans, to or subscribing in the capital of a private enterprise engaged in infrastmcture

financing or to such other company as may be notified by the Central Government. .

2. The Shelf Prospectus is to be filed with the Registrar of Companies.

3. The ‘Shelf Prospectus’ will be valid only for a year from the date of

opening of its first issue of shares or debentures, under the prospects and need not file a fresh prospectus each time when the company makes an issue.

4. At the time of subsequent offer of securities, the company shall file an information memorandum and also issue information memorandum along with

shelf prospectus.

5. An update ‘information memorandum’ is to be filed every time an offer of securities is made and such memorandum together with ‘shelf

prospectus’ shall constitute a prospectus. .

(D) INFORMATION MEMORANDUM [SEC. 60B]

Sec. GOB has also been added by the Companies (Amendment) Act 2000 making a provision for information memorandum.

As per Sec. 2 (19B), ‘information memorandum’ means “a process undertaken prior to the filing of a prospectus by which a demand for the securities

proposed to be issued to a company is elicited, and the price and the terms of issue for such securities is assessed by means of a notice, circular.

advertisement or docmnent”. The provisions regarding’ information memorandum’ are as follows:

1. A public company making an issue of securities may circulate the ‘information memorandum’ to the public prior to the filing of the prospectus. Since the

object of this document is to explore the demand for securities and the price offered for them, it should contain major information regarding the issuing

company.

T1lis memorandum is practically issued to qualified institutional buyers, financial institutions. large brokers, underwriters etc. at least in case oflisted

companies.

2. The company is required to file a prospectus. prior to the opening of subscription lists and th(.; offer, as a ‘red-herring prospectus’ at least three days

before the opening of the offer.A red-herring prospectus’ means a prospectus which does not have a

complete particular on the price orand the quantum of securities offered.

3. The red-herring prospectus should contain all particulars which are

required in the prospectus except that the exact size and issue price.

4. Any mis-statement or omission of fact in red-herring prospectus or the infoIDlation memorandum will attract the same civil and criminal liabilities as arc