{"id":39267,"date":"2022-01-13T12:12:21","date_gmt":"2022-01-13T06:42:21","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=39267"},"modified":"2022-01-13T12:12:23","modified_gmt":"2022-01-13T06:42:23","slug":"shelf-prospectus-as-per-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/","title":{"rendered":"Shelf Prospectus as per Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A shelf prospectus refers to a type of prospectus released by the company making various bond issues for raising funds. It primarily serves as an advertisement, notice, or any other document inviting the masses to subscribe for securities.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#Significance_of_Shelf_Prospectus_for_Public_Ltd_Company\" >Significance of Shelf Prospectus for Public Ltd Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#Entities_mandated_to_issue_shelf_prospectus\" >Entities mandated to issue shelf prospectus<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#Conditions_for_issuing_a_shelf_prospectus\" >Conditions for issuing a shelf prospectus<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#What_is_the_role_of_the_Information_Memorandum\" >What is the role of the Information Memorandum?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#Shelf_prospectus_definition_and_applicability_as_per_Companies_Act_2013\" >Shelf prospectus definition and applicability as per Companies Act, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/shelf-prospectus-as-per-companies-act-2013\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significance_of_Shelf_Prospectus_for_Public_Ltd_Company\"><\/span>Significance of Shelf Prospectus for Public Ltd Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>It is mandatory for public limited companies to release a prospectus prior to issuing securities. Such document can be released by any public ltd company raising funds via multiple issues of bonds. Entities that issue such a document must file an Information Memorandum via form PAS-2. Shelf prospectus prevents companies from issuing new prospectus every time they issue securities.<\/li><li>A max of four issues of securities can be made by a <a href=\"https:\/\/corpbiz.io\/public-limited-company-registration\"><strong>public ltd company<\/strong><\/a> using a shelf prospectus.<\/li><li>A shelf prospectus should be used by the company within a maximum of one year.<\/li><li>A shelf prospectus can be fled only by entities issuing non-convertible debt bonds. As the name suggests, these bonds are non-convertible in nature and hence cannot be later converted into share capital.<\/li><li>The process of procuring funds via a shelf prospectus is the same as procuring debt funds. The only additional requirement is to file an Information Memorandum.<\/li><li>A considerable amount of public funds is involved when an entity goes for a public issue of binds. Thus, any public issue is regulated by the rules drafted by the Securities and Exchange Board of India (SEBI)<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Entities_mandated_to_issue_shelf_prospectus\"><\/span>Entities mandated to issue shelf prospectus <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The following kinds of entities have the\nauthority to issue a shelf prospectus:<\/em><\/strong><\/p>\n\n\n\n<ul><li><strong><em>Public\nFinancial Institutions (PFIs):<\/em><\/strong>\nPublic Financial Institutions are entities whose paid-up share is acquired by\nthe Central Gov. to the extent of more than 51%. Life Insurance Corporation of\nIndia, Industrial Finance Corporation of India, and Industrial Finance\nCorporation of India are some examples of Public Financial Institutions<\/li><\/ul>\n\n\n\n<ul><li><strong><em>Public Sector Banks<\/em><\/strong>: Public sector banks those banks where the direct holding of State\/Central Gov. or other Public sector banks is 51 per cent or more.<\/li><\/ul>\n\n\n\n<ul><li><strong><em>Non-banking Finance Companies<\/em><\/strong>: <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs<\/strong><\/a> are referred to a financial avenues that facilitate array of banking services but do not possess a banking license.<\/li><\/ul>\n\n\n\n<ul><li><strong><em>Listed companies:<\/em><\/strong> A listed company is a type of company whose securities are listed with the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and <strong>Calcutta Stock Exchange (CSE)<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Calcutta_Stock_Exchange\"><strong>[1]<\/strong><\/a><\/sup>.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_issuing_a_shelf_prospectus\"><\/span>Conditions for issuing a shelf prospectus<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are the conditions that the\ncompany must adhere to for issuing a shelf prospectus:<\/p>\n\n\n\n<ul><li>The\nnet worth of the entity must be over Rs.500 crores.<\/li><li>The\nentity should have had generated profit during the last three years.<\/li><li>The\nentity should have an arrangement for the dematerialization of securities with\na SEBI-registered depository.<\/li><li>The\nentity must have a SEBI-registered merchant banker in place for the\nsubscription of securities.<\/li><li>The\nentity should have appointed a debenture trustee in case debentures are issued.<\/li><li>An\nentity should have secured a credit rating of AA or more from SEBI registered\nagencies for securities.<\/li><li>The\ncompany&#8217;s promoters or directors should have a clean track record when it comes\nto complying with regulatory compliances.<\/li><li>The\ncompany should not commit any error on account of the repayment of deposits\nduring the preceding three years.<\/li><li>The\ncompany should have maintained the integrity of its listing agreement in the\npast three years.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_role_of_the_Information_Memorandum\"><\/span>What is the role of the Information Memorandum?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Changes may occur in the company&#8217;s\nfinancial position post-filing of the shelf prospectus. These changes ought to\nbe disclosed before the Registrar of Companies (ROC) through the filing of the\nInformation Memorandum in form PAS-2. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Applicability of Information Memorandum<\/h3>\n\n\n\n<p>The company should file an information\nMemorandum on the 2nd, 3rd, and 4th of securities made under the shelf\nprospectus.<\/p>\n\n\n\n<p><strong><em>Time Limit<\/em><\/strong><\/p>\n\n\n\n<p>1 month prior to the issue.<\/p>\n\n\n\n<p><strong><em>Fees Payable<\/em><\/strong><\/p>\n\n\n\n<p>The fee payable is INR 200 as per the\nrelevant MCA notification<\/p>\n\n\n\n<p><strong><em>Option for Withdrawal<\/em><\/strong><\/p>\n\n\n\n<p>If the company had procured the money\nfrom the general public before changes were incorporated into its financial\nstructure, the applicants ought to be informed of such changes.<\/p>\n\n\n\n<p>Upon receiving this information, the\napplicants may wish their funds to be refunded. In those scenarios, the company\nshould complete the refunding process in fifteen days.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Shelf_prospectus_definition_and_applicability_as_per_Companies_Act_2013\"><\/span>Shelf prospectus definition and applicability as per Companies Act, 2013<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>(1) Any class or classes of companies, as\nper Securities and Exchange Board regulations, may file a shelf prospectus with\nthe Registrar at the instance of the first offer of securities enclosed\ntherein, which shall imply a timeline not surpassing one year as the duration\nof validity of such prospectus which shall state from the opening date of the\ninitial offer of securities listed in that prospectus, &amp; w.r.t second or\nsubsequent offer of such securities issued at the stage of the validity period\nof that prospectus, no further prospectus is required.<\/p>\n\n\n\n<p>(2) A company filing such a prospectus will\nbe mandated to file an information memorandum enclosing all practical facts\nw.r.t new changes created, changes in the company&#8217;s financial position as have\noccurred between the initial offer of securities or the erstwhile offer of\nsecurities and the succeeding offer of same and such other changes as\nprescribed, with the Registrar within the given duration, before to the\nissuance of a second or subsequent offer of securities listed in the shelf\nprospectus:<\/p>\n\n\n\n<p>Provided that where a company has\nreceived an application of securities&#8217; allotment along with the advance\npayments of subscription prior to the making of any said change, the company\nshall prompt the changes to such applicants &amp; if they intend to withdraw\ntheir application, the company shall refund all the received funds as a\nsubscription within fifteen days thereof.<\/p>\n\n\n\n<p>(3) Where the filing of information\nmemorandum is done, every time an offer of securities is made as per subsection\n(2), such memorandum in addition to the shelf prospectus shall be considered to\nbe a prospectus<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Given the purposes of Section 31, the term &#8220;shelf prospectus&#8221; refers to a prospectus in respect of which securities are issued for subscription in one or more issues over a certain timeline without the issuance of a further prospectus. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/penalty-for-non-filing-of-annual-return-with-roc-under-companies-act-2013\/\">Penalty for Non Filing of Annual Return with Roc under Companies Act 2013<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A shelf prospectus refers to a type of prospectus released by the company making various bond issues for raising funds. It primarily serves as an advertisement, notice, or any other document inviting the masses to subscribe for securities. Significance of Shelf Prospectus for Public Ltd Company It is mandatory for public limited companies to release [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":39268,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2074],"acf":{"service_id":"321"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":19377,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39267"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=39267"}],"version-history":[{"count":13,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39267\/revisions"}],"predecessor-version":[{"id":39282,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39267\/revisions\/39282"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/39268"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=39267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=39267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=39267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}