Section 32 - Red Herring Prospectus

# Section 32 — Red Herring Prospectus

## Definition

A "red herring prospectus" is a prospectus which does NOT include complete particulars of the quantum or price of the securities included therein.

## Purpose

The Red Herring Prospectus (RHP) concept was introduced to facilitate the Book Building method for public issue of securities — where price/quantum is determined through bidding rather than fixed beforehand.

## Provisions of Section 32

### (1) Issue Prior to Prospectus

A company proposing to make an offer of securities may issue an RHP prior to the issue of a prospectus.

### (2) Filing with Registrar

The RHP shall be filed with the Registrar at least 3 days prior to the opening of the subscription list and the offer.

### (3) Same Obligations as Prospectus

• RHP carries the same obligations as a prospectus.
• Any variation between RHP and final prospectus shall be highlighted as variations in the prospectus.

### (4) Final Prospectus Post-Closure

Upon closing of the offer, a final prospectus must be filed with the Registrar and SEBI, stating:

• Total capital raised (whether debt or share capital), AND
• Closing price of securities, AND
• Any other details not included in the RHP.

## Comparison: RHP vs Prospectus vs Shelf Prospectus

## Memory Aid

RHP = "3-day Red Flag" — File 3 days before subscription opens, and any variations from final prospectus must be "red-flagged" (highlighted).