Introduction

• The Abridged prospectus is a summary of prospectus filed before the registration.
• It contains all the features of a prospectus.
• An Abridged prospectus contains all the information of prospectus in brief.
• Abridged prospectus is tell important information of  prospectus.
• The abridged prospectus is a convenient and quick investigation.
• The abridged prospectus is a short summary of prospectus .
• The abridged prospectus focus on only important information 
•  The abridged prospectus is a short version of 

Of the prospectus.

• The abridged prospectus includes all most key elements
• Every application form includes forms to contains a prospectus.
• The central government have prescribed that there should be one abridged prospectus with every two application form

DEFINATION

Section 2(1) of the Indian Companies Act, 201 defines an abridged prospectus as a memorandum that has all the salient features of the prospectus as specified by the SEBI.

Furthermore, a prospectus can be defined as a document that the company uses to communicate and invite the public to invest into it or purchase their securities. It contains exhaustive information about the financial position of the company, its directors and their details, the names of the signatories to the memorandum, the objects of public offer, additional charges created, changes in the finance etc.

Its primary goal is to protect the rights of investors. It has been made mandatory with the application form so that investors are aware of their rights, consequences, and outcomes when investing in a specific company.

Because it is shorter than a prospectus, it reduces the cost of a public capital issue.

It saves investors time by allowing them to glean the most important information from the detailed prospectus at a glance.

Section 33(1) of the Companies Act

 It is defined as the brief summary of the prospectus, which includes all useful and materialistic information filed before the registrar. As per Section 33(1) of the Companies Act, 2013, an abridged prospectus must be included with the documents for the purchase of securities issued by a company.

IMPORTANCE OF ABRIDGED PROSPECTUS

• A prospectus is a very voluminous document, and one cannot be expected to read it completely and invest in this fast-pacing world. One needs quick, relevant and crisp information about the company. To serve this purpose, an abridged prospectus is made. It is short in length (5 sheets) and contains all information in bullets. 

• Sec33 of The Companies Act 2013, lays down no form of application for the purchase of any of the securities of a company shall be issued unless such form is accompanied by an abridged prospectus. This implies that a company is barred from accepting offers from the public and the public is barred from investing into the company unless it has received an abridged prospectus. It has been made mandatory to enable the investors know about the nature and rights and repercussions which shall arise from investment and thus, protects the investor.
• It is impossible to read a prospectus fully in this fast-paced world. However, you cannot expect to invest without it. Getting information about a company quickly, accurately, and concisely is essential. An abridged prospectus serves this purpose. 
• Moreover, the abridged prospectus will contain only the most vital information needed to decide on your investment. It makes research much easier.
• Retail investors also benefit from this factor. A retail investor might not have the time to review an entire portfolio since investing isn’t their full-time job. A short, crisp and abridged portfolio can help you here as well. 
• Abridged prospectuses must accompany applications for purchasing securities under Section 33 of The Companies Act 2013. As a result, a company can’t accept offers from the public, and the public can’t invest in the company unless it receives an abridged prospectus. It’s mandatory to inform investors of the nature and rights of their investments and the consequences of their acquisitions to protect them.

According to the law, a company must file a prospectus before issuing or selling any kind of security to the public. This can become a problem for companies, especially if they are looking to raise funds quickly. If they fail to issue a prospectus before an offering, the company can be fined up to Rs.50,000 for each issue. But on the other hand, they can satisfy the mandate by filing an abridged mandate and saving time. Doing this could also save the company money and resources. Here, the critical thing to understand is that prospectus is not just a legal mandate but also an advertisement for the company’s offering. Hence, a shorter abridged prospectus can hamper their marketing efforts but can be helpful when the company needs urgent money. 

CONTENTS OF ABRIDGED PROSPECTUS

• The abridged prospectus should contain all the information about the company, which helps with identification. This includes the complete company name, brand names, logo etc. Doing this also allows investors to distinguish between companies and brands with similar names. 
• Details of their directors should also be in the prospectus. Usually, this information is already available to the public as a listed company is obliged to let the investors know about changes in the board of directors. But reaffirming the same through the prospectus helps investors evaluate their decision with the help of one document alone.
• The prospectus should also contain all the details about the security that is being offered. For instance, if it’s a stock offering, it should include information on the class to which the shares belong and their voting rights. On the other hand, if it’s a bond offering, the prospectus should contain information about its coupon rate, tenure, face value etc. In short, an abridged prospectus should be a one-stop-shop for all the technical information regarding the offering.
• Every offer will have a minimum offering amount as well. In the case of the stock offering, this may be the minimum number of shares that should be bought. Likewise, in a bond offering, this could be the minimum amount of bonds you should buy. 
• The prospectus should also contain details about application fees and other charges related to the offer. 
• Underwriters of the offering should also be mentioned in an abridged prospectus. 
• It will also contain reports regarding audited profits and losses of the company. This will help the investors decide on investing in the company.

Conclusion

A prospectus is meant to provide comprehensive information about a company’s offering. But often, the prospectus can be lengthy and complex. That is why SEBI has mandated that companies should provide investors with a much simpler abridged prospectus as well. Make sure you read them thoroughly to ensure your investments are in line with your investment horizon.

Henderson v. Lacon,^[8]

In the prospectus, it is contended that the directors and their friends have subscribed a large portion of and they now offer to the public remaining shares. But in reality, the directors had subscribed only 10 shares each. The court held that the subscribers can rescind the contract.

Derry v. Peek,^[7]

The prospectus of a company contained that the company has been authorized to use steam power in moving its trams. But, the authority that was authorized to approve the Board of Trade refuses its approval. The court held that there is no misstatement in the prospectus, the Board of Directors was not held guilty of fraud, because they were honest and they mentioned the statement in a good faith. They were not intended to deceive anyone.

 Reference