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Microlesson · 5-min read

Sections 387–389 – Prospectus by a Foreign Company (Disclosures, Expert Consent, Registration)

## Prospectus Issued by a Foreign Company in India

When a company incorporated outside India wants to invite Indian investors via a prospectus, three sections work together:

### Section 387 – Disclosures required

A prospectus by a foreign company must contain everything Section 26 requires of an Indian-company prospectus PLUS additional disclosures:

Normal (Section 26) disclosures, PLUS the prospectus must:

1. Be dated.

2. Be signed.

3. State the enactment under which the company is registered.

Additional disclosures unique to a foreign company:

  • Name of the country of incorporation and date of incorporation.
  • Particulars of the document defining the constitution of the company (e.g., its charter/memorandum).
  • Address of the registered office outside India.
  • Address of the place of business in India.
  • The place in India where these documents can be inspected.

### Section 388 – Expert's written consent

If the prospectus contains a statement made by an expert (whether by way of report, reference or direct statement), the company must obtain the expert's written consent before issuing the prospectus.

> Important: The company cannot use the expert's statement unless the consent is in writing and is given before the prospectus is registered.

### Section 389 – Registration of the prospectus with the Registrar

A foreign company that wants to issue/circulate/distribute a prospectus in India must register it with the Registrar. Conditions:

(a) The prospectus must be signed by at least 2 directors AND a chairperson.

(b) The following documents must be annexed:

i. The expert's written consent (Sec. 388).

ii. A copy of the power of attorney if the prospectus is signed by an agent in place of a director.

iii. A copy of the contract with the Managing Director / Manager.

iv. The underwriting agreement.

v. Any other material contract.

Worked example

### Example 1

Q. A US company wishes to issue a prospectus in India for the sale of securities. The prospectus contains a valuation report from a foreign valuer. List the procedural compliance required.

A.

1. Disclose all Section 26 information plus the additional Section 387 disclosures (country & date of incorporation, place of business in India, registered office outside India, location where the constitutional documents can be inspected in India).

2. Obtain the valuer's written consent before registration (Sec. 388).

3. Get the prospectus signed by at least 2 directors and the chairperson, attach the consent, any power of attorney, MD/Manager's contract, underwriting agreement and other material contracts, and register it with the Registrar before circulation (Sec. 389).

⚠️ Common exam mistakes

  • Forgetting the chairperson's signature on a foreign-company prospectus — Section 389 requires 2 directors PLUS the chairperson, unlike an Indian-company prospectus.
  • Using an expert's report without prior written consent and assuming it can be ratified later.
Bare-Act text Sections 387, 388 & 389 · Companies Act, 2013 · click to expand
Section 387 — No person shall issue, circulate or distribute in India any prospectus offering for subscription in securities of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will not establish, a place of business in India, unless the prospectus is dated and signed, and contains particulars with respect to the following matters, namely — (a) the instrument constituting or defining the constitution of the company; (b) the enactments under which the company is incorporated; (c) the address in India where the said instrument, enactments or provisions can be inspected; (d) the date on which and the country in which the company would be or was incorporated; and (e) whether the company has established a place of business in India and, if so, the address of its principal office in India.
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