Document containing offer of securities for sale to be deemed prospectus :

Section 25 of the Companies Act, 2013 seeks to provide that any document by which the offer for sale of shares or debentures to the public is made shall for all purpose be treated as prospectus issued by the company.

Act lays down the following provisions-

(i) Document by which offer for sale to the public is made: According to the given provision where a company allots or agrees to allot any securities of the company to all or any of those securities being offered for sale to the public, then any document by which the offer for sale to the public is made- shall be deemed to be a prospectus issued by the company.

(ii) Contents of prospectus and the liability: All enactments and rules of law as to the contents of prospectus and as to liability in respect of mis-statements, in and omissions from prospectus, or otherwise relating to prospectus, shall apply with the modifications [as specified in sub- sections (3) and (4)] and shall have effect as if the securities had been offered to the public for subscription and as if persons accepting the offer in respect of any securities were subscribers for those securities.

The liability, if any, of the persons by whom the offer is made in respect of misstatements contained in the document or otherwise in respect thereof, remains same as that in the case of a prospectus.

(iii) Securities must be offered for sale to the public: For the purposes of this Act, it shall be evident that an allotment of, or an agreement to allot, securities was made with a view to the securities being offered for sale to the public if it is shown—

(a) that an offer of the securities or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or

(b) that at the date when the offer was made, the whole consideration to be received by the company in respect of the securities had not been received by it.

(iv) Effect of application of section 26 on this section: Section 26 relating to the matters stated in the prospectus, as applied by this section shall have effect, as if

(I) it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus—

(a) the net amount of the consideration received or to be received by the company in respect of the securities to which the offer relates; and

(b) the time and place at which the contract where under the said securities have been or are to be allotted may be inspected;

(II) the persons making the offer were persons named in a prospectus as directors of a company.

(v) Person making an offer is a company or firm: Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document, that is deemed to be prospectus, is signed on behalf of the company or firm by- (i) two directors of the company, or (ii) by not less than one-half of the partners in the firm, as the case may be.