Amended and updated notes on section 27 of Companies Act 2013. Detail discussion on provisions and rules related to variation in terms of contract or objects in prospectus.
Chapter III (Sections 23–42) of the Companies Act, 2013 (CA 2013) deals with the provisions related to prospectus and allotment of securities. Section 27 of CA 2013 provides for variation in terms of contract or objects in prospectus.
Recently, we have discussed in detail section 26 (Matters to be stated in prospectus) of CA 2013. Today, we learn the provisions of section 27 of Companies Act 2013 read with the Companies (Prospectus and Allotment of Securities) Rules, 2014.
Section 27 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 902(E) issued dated 27.03.2014. This notification was come into force from 1st April, 2014 i.e. the commencement date of section 27 is 1-4-2014.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | III |
| Chapter Name | Prospectus and Allotment of Securities |
| Section No. | 27 |
| Section Name | Variation in terms of contract or objects in prospectus |
| Monthly Updated Edition | Company Law PDF |
Section 27 of Companies Act 2013: Variation in terms of contract or objects in prospectus
Section 27 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) dated 27-03-2014.
(1) A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution:
Provided that the details, as may be prescribed, of the notice in respect of such resolution to shareholders, shall also be published in the newspapers (one in English and one in vernacular language) in the city where the registered office of the company is situated indicating clearly the justification for such variation:
Provided further that such company shall not use any amount raised by it through prospectus for buying, trading or otherwise dealing in equity shares of any other listed company.
See Rule 7 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 for variation in terms of contracts referred to in the prospectus or objects for which prospectus was issued.
(2) The dissenting shareholders being those shareholders who have not agreed to the proposal to vary the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or controlling shareholders at such exit price, and in such manner and conditions as may be specified by the Securities and Exchange Board by making regulations in this behalf.