ITR filing GST filing Accounting outsourcing services

shelf prospectus section 31

Shelf means ‘life’ or ‘validity’ of a prospectus. Shelf Prospectus is mostly used by Banking, Finance and Infrastructure Companies. As per Section 31 of Companies Act,2013, any class of companies, as prescribed by the Securities and Exchange Board may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein.

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.

Shelf prospectus has validity with a maximum of one year. Thus in respect of a second or subsequent offer issued during the period of validity of shelf prospectus, no further prospectus is required.

In general every time funds have to be raised from the public, they require approval from the Stock Exchange and Registrar of Companies(ROC). Also, every time a company wishes to raise funds again, they must file their prospectus to the regulators for approval. However if any company submits their Shelf prospectus, they don’t have to file the prospectus again and again while raising funds for that particular year.

A company filing a Shelf prospectus has to file an Information memorandum which must contain:

  • Any changes made by the company after the previous offer security.
  • Any new charges created if any
  • Any new material or facts created
  • Any change in Financial Position occurred between previous offer of securities and succeeding offer of securities.

In accordance with Rule 10 of Companies Prospectus and Allotment of Securities) Rules, 2014, the information memorandum shall be prepared in FORM PAS-2 and filed with the Registrar along with the fee within 1 month prior to the issue of second or subsequent offer of securities under the shelf prospectus.

Information Memorandum is to be filed before the issue of a second or subsequent offer of securities under the shelf prospectus

After the validity period is over, the company has to submit another prospectus which will be valid for maximum another one year.

The information memorandum along with Shelf prospectus shall be together, shall be deemed to be prospectus.

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. If the applicants express a desire to withdraw their application, the company or other person shall refund all the monies received as subscription within fifteen days thereof.

Benefits of Shelf Prospectus

The concept of shelf prospectus will save expenditure and time of the companies in issuing a new prospectus every time they wish to issue securities to the public within a period of one year.

Bare Act:

Section 31. Shelf prospectus.— (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 subsection (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

Sharing is best way to say thanks to author

ITR filing GST filing Accounting outsourcing services Hope this article helped you with information on shelf prospectus section 31. Feel free to ask query with a click of button.