SPCC 2 Marks Each

Company Secretary, Chief Financial Officer, Auditor, Legal Advisers, Bankers, Trustees, Guarantor Brokers and Managers, Founders etc. are involved.

• Responsibilities for other offenses in the advertisement are as follows:
• The director or authorized person is liable if the advertisement is not of legal form or does not provide the required details.
• It can be issued only after filing with the Registrar. The advertisement should have the date and signature of the authorized persons.
• Failure to comply will result in the person issuing the advertisement being liable to a fine. Failure to comply with the provisions of the expert statement can result in fines and penalties for issuing advertisements.

Proposals for private appointment may be invited from qualified institutional buyers and employees, as well as a maximum of 50 or so individuals.

The advertisement requires the written consent of the administrators, auditors, payment banks, experts and all other concerned officials.

If the company does not have the minimum payment application: -
1. The company cannot allot shares.
2. The applicants have to repay the amount as per the instructions given by SEBI.
3. If a public company violates this provision, the responsible officers are liable to penalty.

The newly formed company enters into warranty agreements with brokers or intermediaries. In which such brokers assure the company that if the applications do not meet the minimum payment, the contracting brokers will buy the remaining amount of collateral.

The secretary has to arrange meeting, prepare minutes of such meeting and provide all such administrative helps to the committee which has assigned the work of preparing the prospectus. If this work is assigned to solicitor then the secretary should provide all administrative help by remaining in contact with them.

To give deliberate misrepresentation in the prospectus and cause financial loss is considered as criminal offence. In this type of liability the officers of the company can be punished with imprisonment or fine or both. The purpose of making misleading statement is to fraudulently tempt to invest or attempt to tempt the person to invest.

When any person who has invested in a company relying upon the published prospectus of a company sustain economic loss, the liability to give him compensation for loss is called civil liability.

If newly established company fails to receive the amount of Minimum Subscription then
(i) Its reputation comes in danger,
(ii) Possibilities of its future success get obstructed, and
(iii) Negative situation arise among the share market about the company

If the amount of Minimum Subscription is not received within 30 days from the date of issuing prospectus then such amount is required to be returned as per the directions of the SEBI. On violation of such rule the concerned officers are liable to pay fine.

If any person knowingly makes careless statements or false promise, conceals material facts, dishonestly hides something and thereby attract others to invest in the shares or debentures of a company, he can be held liable for the offences of Criminal Breach of trust or cheating.

The following persons are liable to compensate the financial loss if misrepresentation made in the prospectus.
(i) The person who were directors when prospectus was published.
(ii) The directors who have consented to put their name in the prospectus.
(iii) The promoters of the company.
(iv) The officer authorized by the company to publish the prospectus.
(v) Person whose name is mentioned as an expert in the prospectus.

When any misrepresentation, fraudulent advertisement or exaggerated statements are made in the prospectus then the authorized officials of the company held responsible for it.

The prospectus should be clear like mirror and transparent like water means, all the information mentioned in the prospectus must be correct and real. In addition to this, information regarding the possible risks of a project of a company is clearly mention in it. As a resultant effect the investor can take appropriate decision.

The following informations are mentioned in the prospectus regarding the project.
(i) The idea of promoters and risk factors in it.
(ii) Waiting period for the project.
(iii) The development in the project.
(iv) Time for completion of the project.

The officers to be included in the prospectus are - Company Secretary, Chief Financial Officers, Auditors, Legal advisors, Banker, Trustee, Guarantar, Brokers and other specified persons.

If the prospectus is not of the legal character or the necessary information are not provided therein, signature of authorized persons are not there or if it is published before getting it registered before the registrar then the person responsible for the publication of prospectus may be punished with fine.

In private placement the proposal is given to only those persons whose names have been registered by the company before giving invitation to public for Subscription.

The written consent of promoters, Auditors, Specific Bankers, Experts and all other concerned officers whose names are mentioned in the prospectus in necessary.

When a company fails to get minimum Subscription then—
(i) The company can not allot shares to the public.
(ii) The company has to refund money to the applicants as per the guidelines of SEBI.
(iii) When a public company violates suth provisions the concerned officers are liable to pay fine.

The company enters in to share underwriting contract with the shares brokers or mediators (Banks or non-banking financial company).

• Misrepresentation means -

1. The statement made in respect of the details of the advertisement is misleading.
2. The required details are not given in the advertisement with the intention of misleading the reader.
3. Tried to mislead the public by using ambiguous words in the advertisement.

• All proposals covered for private appointment will be given only to persons whose names have been registered before the company invites them for filling.
• A record of such proposals will be kept as prescribed and complete information in this regard will be submitted to the Registrar of Companies within 30 days after the passage of the relevant private appointment proposal.