Companies Act Section 388 — Provisions as to expert’s consent and allotment
CHAPTER XXII COMPANIES INCORPORATED OUTSIDE INDIA
Commercial / Corporate
Summary
Sub-section (1) sets out when a person is prohibited from issuing, circulating, or distributing in India a prospectus that offers securities for subscription in a company that is incorporated, or is to be incorporated, outside India. This applies whether or not the company has already established a place of business in India, and whether or not it will establish one when it is formed.
Under clause (a) of sub-section (1), the prohibition applies if the prospectus includes a statement said to be made by an expert, and that expert has not given his written consent to the prospectus being issued with that statement included in the form and context in which it appears. The prohibition also applies if the expert gave such consent but withdrew it before the prospectus was delivered for registration, or if the prospectus does not contain a statement saying that the expert has given his consent and has not withdrawn it.
Under clause (b) of sub-section (1), the prohibition applies if the prospectus does not have the effect of making all persons concerned bound by all the provisions of sections 33 and 40, so far as those provisions are applicable, when an application is made in pursuance of the prospectus.
Sub-section (2) explains that, for the purposes of this section, a statement is considered to be included in a prospectus if it is contained in any report or memorandum that appears on the face of the prospectus, or that is incorporated into it by reference, or that is issued along with it.
Official Text
(1) No person shall issue, circulate or distribute in India any prospectus offering for subscription in securities of a company incorporated or to be incorporated outside India, whether the company has or has not been established, or when formed will or will not establish, a place of business in India,—
(a) if, where the prospectus includes a statement purporting to be made by an expert, he has not given, or has before delivery of the prospectus for registration withdrawn, his written consent to the issue of the prospectus with the statement included in the form and context in which it is included, or there does not appear in the prospectus a statement that he has given and has not withdrawn his consent as aforesaid; or
(b) if the prospectus does not have the effect, where an application is made in pursuance thereof, of rendering all persons concerned bound by all the provisions of sections 33 and 40, so far as applicable.
(2) For the purposes of this section, a statement shall be deemed to be included in a prospectus, if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.