A particular kind of prospectus released by businesses that issue bonds in numerous issues is known as a shelf prospectus. Any announcement, advertisement, or other document urging the public to subscribe for securities is referred to as a prospectus. Public limited businesses are required to publish a prospectus prior to issuing securities. Any public limited business that plans to raise money through a series of bond offerings may do so by publishing a shelf prospectus. Companies that publish shelf prospectuses are required to submit an information memo using Form PAS-2.
A shelf prospectus has the benefit of preventing the requirement for a fresh prospectus to be published each time the company issues securities. The use of a shelf prospectus is limited to four securities issues. A shelf prospectus should only be used for up to a year.
Only businesses issuing non-convertible debt bonds are permitted to file a shelf prospectus (these are bonds which cannot later be converted into share capital). The process is the same for raising debt money as it is for raising funds through a shelf prospectus. The submission of an information memo is the sole additional requirement.
CASE
ORDER IN THE MATTER OF SPLASH MEDIA INFRA LIMITED
In order for the applicants to make an informed investment decision, (2) they must possess information that is true and sufficient. Without limiting the applicability of sub-regulation (1), however: (a) the shelf prospectus or red-herring prospectus… Only an Offer Document [as defined in regulation 2(1)(x)], such as a Red Herring Prospectus, Prospectus, or Shelf-Prospectus or Information, is subject to Schedule VIII of the ICDR Regulations. The prospectus must include the following information: I the disclosures listed in Schedule II of the Companies…
When a firm issues bonds publicly, a substantial sum of public money is at stake. As a result, the Securities and Exchange Board of India’s laws and regulations apply to any public issuance (SEBI).
APPLICABILITY
Companies that fall under the following categories may publish a shelf prospectus:
- Public Financial Institutions (PFIs) are businesses whose paid-up share capital is held to a greater extent than 51% by the Central Government. The Life Insurance Corporation of India, the Infrastructure Development Finance Company Limited, the Industrial Credit and Investment Corporation of India Limited, the Industrial Finance Corporation of India, and the Industrial Development Bank of India are a few examples.)
Publicly traded banks - Nonbank Financing Companies
Listed businesses A listed firm lists its securities on the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), or the Calcutta Stock Exchange (CSE)
CONDITIONS
The following conditions must be met by a business choosing to publish a shelf prospectus:
- The company should have a net value of more than 500 crores rupees.
The previous three years should have seen distributable earnings for the company.- Making plans for the dematerialization of securities is necessary. The agreement needs to be established with a depository that is SEBI-registered.
The issue requires the appointment of a merchant banker. The SEBI must have the merchant banker’s registration.
A debenture trustee should be chosen in the event that debentures are issued.
It is important to obtain credit ratings. The issued securities must have a credit grade of AA- or above (Credit ratings are accepted only from credit rating agencies registered with the SEBI).- Directors or promoters of the company shouldn’t have been subject to any regulatory action.
The corporation shouldn’t have fallen behind on deposit repayment over the three years prior.
The business was required to uphold its listing agreement for the previous three years.
INFORMATION MEMORAMDUM
MEANING
After the shelf prospectus is filed, the company’s financial situation may change. The Registrar of Companies should be informed of these modifications (ROC). A Form PAS-2 Information Memorandum should be submitted for this purpose. It is necessary to file Form PAS-2 with the ROC, SEBI, and the NSE or BSE.
APPLICABILITY
On the second, third, and fourth issues of securities made pursuant to the shelf prospectus, an information memorandum must be submitted.
TIME LIMIT
One-month before the issue.
FEES PAYABLE
The applicable MCA Notification states that Rs. 200 in fees are due.
OPTION FOR WITHDRAWAL
The applicants should be made aware of any changes if the company had received funding from the general public before those adjustments were made to its financial structure. After learning this, the applicants could request a refund of their money. The business must issue the reimbursement in those circumstances within fifteen days.
PROCEDURE TO FILL THE FORM PAS 2
- Download the PAS-2 form.
Enter the CIN in field 1. (a) of the PDF file after opening it, then select “Pre-Fill.” The question “Allow this PDF document to connect with mca.gov.in?” is displayed in a dialogue box. Tap “Yes.”- Fill the form with relevant information
- The areas that follow deal with modifications to the business’s financial status. The company’s financial executive’s recommendations should be followed when filling these.
- Attachments to this form are not required. Any attachments that are present should be added to the PDF file.
- The board resolution number and date should be included in the “Declaration” column. The board resolution needs to be relevant to the board meeting that was called to authorize the form-filer.
- Give the form’s filer’s name and position in the form. Whether the individual submitting the form is the manager, director, secretary, or authorized representative of the company is indicated by the designation. Put the form’s submitter’s digital signature there.
- Select whether the form is certified by a CA, CWA, or CS under the “Certificate by practicing professional” field. Select if the professional is a fellow (five years or less of experience) or an associate (more than five years of practice).
- Put the professional’s membership number, Certificate of practice [COP] number, and digital signature in the appropriate fields.
- Make any necessary adjustments and additions by selecting “PR scrutiny” and clicking. Save the PDF document.
PROCEDURE TO UPLOAD FROM PAS 2
- you can visit the MCA website.
- Fill out the captcha form, then click “Sign In.”
Enter the company’s CIN and jurisdictional information, then select “PAS-2” from the drop-down menu. - Select the saved PDF file by clicking “Attach,” then click “Open.” Next, click “Submit.”
Pay the 200 rupees in relevant fees. - Once the payment has been made via the electronic means, a challan is produced. The challan should be copied and kept for future use.
Select “Finish.” The creation of a Service Request Number (SRN). This needs to be noted for any future MCA form submissions.
REFERENCES
LIVELAW.IN
THE COMPANIES ACT 2013
https://www.indiafilings.com
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