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Microlesson · 5-min read

Issue of Prospectus - General Requirements (Section 26)

# Issue of Prospectus — General Requirements (Section 26)

## 1. Timeline for Issue

  • A prospectus, once filed with the Registrar of Companies (ROC), must be issued to the public within 90 days of such filing.
  • Any issue of securities under a prospectus made beyond 90 days is deemed to be an issue without a prospectus — attracting penalties for non-compliance.

## 2. Main Contents of Prospectus

Every prospectus issued by or on behalf of a public company (whether at formation or later) — or by/on behalf of any person engaged or interested in the formation — shall:

RequirementDetail
(a) Date & signMust be dated and signed
(b) Information & financial reportsAs specified by SEBI in consultation with the Central Government
(c) Interim regimeUntil SEBI specifies, regulations made by SEBI under the SEBI Act, 1992 apply
(d) Declaration of complianceStatement that nothing in the prospectus is contrary to Companies Act, SCRA 1956, SEBI Act 1992, and rules thereunder

## 3. Exceptions — when (a) to (d) DO NOT apply

1. Issue to existing members or debenture-holders of a company (prospectus / form of application for shares or debentures of that company).

2. Issue of prospectus / form of application for shares or debentures which are in all respects uniform with shares/debentures previously issued and currently dealt in or quoted on a recognised stock exchange.

## 4. On the Face of the Prospectus

Every prospectus issued shall, on its face —

  • (a) State that a copy has been filed with the Registrar as required; and
  • (b) Specify documents required to be attached, or refer to statements in the prospectus that specify such documents.

## 5. Punishment for Contravention

  • Fine: Minimum ₹50,000 up to ₹3,00,000.

## Memory Hook

"90 days — Date, Sign, SEBI, Declare — File copy on the face — ₹50K to ₹3L."

Worked example

### Example 1

Example 1 — 90-day rule: ABC Ltd files its prospectus with ROC on 1 April. The company issues securities under that prospectus on 5 July (95 days later). Result: Since the issue is beyond 90 days, it is deemed to be an issue without a prospectus, exposing the company and officers to penalties.

### Example 2

Example 2 — Exception: XYZ Ltd is offering additional shares only to its existing members. The new shares are identical to previously issued shares listed on the BSE. Result: Requirements (a)–(d) of Section 26 do not apply, as both exceptions (existing members + uniform shares on a recognised exchange) are triggered.

### Example 3

Example 3 — Penalty: A company issues a prospectus without making the declaration required under Section 26(d). The minimum fine is ₹50,000 and maximum ₹3,00,000.

⚠️ Common exam mistakes

  • Confusing the 90-day window with a 60-day or 180-day window — it is exactly 90 days from filing with ROC.
  • Assuming the exceptions cover ALL existing-members offerings — the uniform-shares exception requires the shares to be uniform AND quoted on a recognised stock exchange.
  • Forgetting that the declaration of compliance must specifically reference Companies Act, SCRA 1956, and SEBI Act 1992 (not just one of them).
  • Treating the fine as imprisonment — Section 26 contravention attracts only a fine on the company.
Bare-Act text Section 26 · Companies Act, 2013 · click to expand
Section 26 — A prospectus issued by or on behalf of a public company shall be dated, signed, and shall state information and reports on financial information as specified by SEBI; shall make a declaration of compliance; and shall be issued within 90 days of filing with the Registrar. Contravention: fine of ₹50,000 to ₹3,00,000.
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