Explain the Abridged Prospectus.
Abridged Prospectus means a memorandum containing such salient features of a prospectus as may be specified by the Securities and Exchange Board of India by making regulations in this behalf. [Section 2(1)]. It is a brief version of the information contained in the ‘prospectus’ so that cost of public issue of capital may be reduced.
Section 33 (1) states that every application form for the purchase of any of the securities Of a company should be accompanied by an abridged prospectus. However, the full prospectus is to be made available to a person who makes a request for it before the closing of the subscription list. If a company violates this provision, it shall be punishable with a fine of fifty thousand rupees for each default.
Exceptions: There are, however, certain exceptions to the Above provision, where ‘an abridged prospectus’ containing all the prescribed details need not accompany the application forms sent out.
These exceptions are:
- In case of bonafide underwriting agreement;
- When shares or debentures are not offered to the public,
- In relation to rights issue of shares or debentures, .
- In respect of shares or debentures similar to those already issued and dealt in on a recognized stock exchange.