Companies Act Section 31 — Shelf prospectus
CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES
Commercial / Corporate
Summary
Sub-section (1) allows certain classes of companies, as specified by the Securities and Exchange Board through regulations, to file a shelf prospectus with the Registrar at the time of their first offer of securities. This prospectus must state a validity period not exceeding one year, starting from the date the first offer opens. During that validity period, if the company makes a second or subsequent offer of the same securities, it does not need to file a new prospectus.
Sub-section (2) requires a company that has filed a shelf prospectus to also file an information memorandum with the Registrar before making any second or subsequent offer of securities under that shelf prospectus. This memorandum must contain all material facts about new charges created, changes in the company's financial position that occurred between the first or previous offer and the upcoming offer, and any other changes as may be prescribed. It must be filed within the prescribed time. The proviso to this sub-section states that if the company or any other person has already received applications for securities along with advance payments before such a change is made, the company or person must inform those applicants of the changes. If an applicant then wishes to withdraw their application, the company or person must refund all subscription money received from that applicant within fifteen days.
Sub-section (3) states that whenever an information memorandum is filed under sub-section (2) for an offer of securities, that memorandum together with the shelf prospectus is considered to be a prospectus for that offer.
The explanation clarifies that a "shelf prospectus" is a prospectus under which the securities included in it are offered for subscription in one or more issues over a certain period, without requiring a further prospectus for each issue.
Official Text
(1) Any class or classes of companies, as the Securities and Exchange Board may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein which shall indicate a period not exceeding one year as the period of validity of such prospectus which shall commence from the date of opening of the first offer of securities under that prospectus, and in respect of a second or subsequent offer of such securities issued during the period of validity of that prospectus, no further prospectus is required.
(2) A company filing a shelf prospectus shall be required to file an information memorandum containing all material facts relating to new charges created, changes in the financial position of the company as have occurred between the first offer of securities or the previous offer of securities and the succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus:
Provided that where a company or any other person has received applications for the allotment of securities along with advance payments of subscription before the making of any such change, the company or other person shall intimate the changes to such applicants and if they express a desire to withdraw their application, the company or other person shall refund all the monies received as subscription within fifteen days thereof.
(3) Where an information memorandum is filed, every time an offer of securities is made under sub-section (2), such memorandum together with the shelf prospectus shall be deemed to be a prospectus.
Explanation.—For the purposes of this section, the expression “shelf prospectus” means a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus.