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Microlesson · 5-min read

Section 33 - Abridged Prospectus

# Section 33 — Abridged Prospectus

## Definition [Section 2(1)]

"Abridged Prospectus" means a memorandum containing such salient features of a prospectus as may be specified by SEBI by regulations.

## Why It Exists

A full prospectus is bulky and expensive to print. Since every application form for shares/debentures must be accompanied by some form of prospectus, an abridged (summarized) version reduces publication cost while ensuring investors get the essentials.

## Provisions of Section 33

### Sub-section (1): Application Form Must Accompany Abridged Prospectus

Every application form for shares or debentures must be accompanied by an abridged prospectus.

### Exceptions to Sub-section (1)

The requirement does NOT apply when:

#Exception
aApplication form issued for a bona fide invitation to enter into an underwriting agreement
bIssue relates to shares/debentures not offered to the public
cOffer is made only to existing members of the company

### Sub-section (2): Right to Full Prospectus

  • A full prospectus must be made available to any person who requests for it.
  • Such request must be made before the closing of the subscription list and the offer.

### Sub-section (3): Penalty for Default

  • A company defaulting in compliance with Section 33: Penalty of ₹50,000 for each default.

## Memory Hook

"Abridged = Summary + Optional Full on Request + ₹50K per default"

Worked example

### Example 1

Example 1 — Underwriting Exception: A merchant banker is approached by ABC Ltd to underwrite their IPO. The bank receives an application form requesting underwriting commitment. Answer: The application form need NOT be accompanied by an abridged prospectus, since it is a bona fide invitation to enter into an underwriting agreement (Exception (a)).

### Example 2

Example 2 — Request for Full Prospectus: An investor applies for shares using an abridged prospectus but wishes to study the full prospectus. The subscription list is open till 15th July 2026 and the investor requests the full prospectus on 10th July 2026. Answer: The company must provide the full prospectus to the investor, as the request was made before the closing of the subscription list.

### Example 3

Example 3 — Penalty: XYZ Ltd issues 10,000 application forms without abridged prospectus for a public issue. Answer: The penalty is ₹50,000 for each default — exposing the company to significant penalty for non-compliance.

⚠️ Common exam mistakes

  • Believing the abridged prospectus is optional — it is mandatory with every application form (subject to 3 exceptions).
  • Confusing 'salient features' with full disclosure — abridged is only a summary.
  • Forgetting to provide the full prospectus when requested before subscription closure.
  • Missing one of the three exceptions — particularly the existing members exception.
  • Quoting the wrong penalty amount — it is ₹50,000 per default (not per day, not maximum).
Bare-Act text Section 33 of the Companies Act, 2013 · The Companies Act, 2013 · click to expand
Section 33 — Issue of Application Forms for Securities: (1) 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. Provided that nothing in this sub-section shall apply if it is shown that the form of application was issued (a) in connection with a bona fide invitation to a person to enter into an underwriting agreement; or (b) in relation to securities which were not offered to the public. (2) A copy of the prospectus shall, on a request being made by any person before the closing of the subscription list and the offer, be furnished to him. (3) If a company makes any default in complying with the provisions of this section, it shall be liable to a penalty of fifty thousand rupees for each default.
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