Amended and updated notes on section 32 of Companies Act 2013. Detail discussion on provisions and rules related to red herring 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 32 of CA 2013 provides for red herring prospectus.
Recently, we have discussed in detail section 31 (Shelf prospectus) of CA 2013. Today, we learn the provisions of section 32 of Companies Act 2013 read with the Companies (Prospectus and Allotment of Securities) Rules, 2014.
Section 32 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 2754(E) issued dated 12.09.2013. This notification was come into force from 12th September, 2013 i.e. the commencement date of section 32 is 12-9-2013.
| 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. | 32 |
| Section Name | Red herring prospectus |
| Monthly Updated Edition | Company Law PDF |
Section 32 of Companies Act 2013: Red herring prospectus
Section 32 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013.
(1) A company proposing to make an offer of securities may issue a red herring prospectus prior to the issue of a prospectus.
(2) A company proposing to issue a red herring prospectus under sub-section (1) shall file it with the Registrar at least three days prior to the opening of the subscription list and the offer.
(3) A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any variation between the red herring prospectus and a prospectus shall be highlighted as variations in the prospectus.
(4) Upon the closing of the offer of securities under this section, the 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 are not included in the red herring prospectus shall be filed with the Registrar and the Securities and Exchange Board.
Explanation: For the purposes of this section, the expression “red herring prospectus” means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.