Section 30 of the Companies Act, 2013: Advertisement of Prospectus

Section 30 of the Companies Act, 2013 prescribes the particulars that must appear when an advertisement of a company's prospectus is published. Its purpose is to ensure that an advertisement referring to a prospectus carries specified basic information about the company and its capital.

What does Section 30 require?

Where an advertisement of a prospectus is published, Section 30 requires the advertisement to specify information concerning the company's memorandum and capital structure. The statutory requirements include the following:

• the objects stated in the memorandum;
• the liability of the members;
• the amount of the company's share capital;
• the names of the signatories to the memorandum;
• the number of shares subscribed for by those signatories; and
• the company's capital structure.

Meaning of "prospectus"

For the Companies Act, 2013, the expression "prospectus" is defined in Section 2(70). In general terms, it covers a document described or issued as a prospectus and also specified notices, circulars, advertisements or other documents inviting offers from the public for subscription or purchase of securities of a body corporate. The statutory definition should be consulted when deciding whether a particular communication is governed by the prospectus provisions.

How Section 30 operates

Section 30 does not itself prescribe a particular newspaper, website or other medium in which a prospectus advertisement must be published. Instead, it states what information must be specified when an advertisement of a prospectus is published "in any manner". Public issues may also be subject to applicable securities-law requirements administered by the Securities and Exchange Board of India (SEBI).

Practical compliance points

Before publishing an advertisement connected with a prospectus, the company and its advisers should verify that the advertisement accurately reflects the prospectus and contains the particulars required by Section 30. Where the offer is regulated by SEBI, the applicable SEBI regulations, circulars and prescribed advertising or publicity requirements should also be checked for the relevant type of issue.

Related provisions of the Companies Act, 2013

Section 30 forms part of the statutory framework governing prospectuses and public offers. Readers may also refer to Section 26 - matters to be stated in a prospectus, Section 31 - shelf prospectus, Section 32 - red herring prospectus, Section 34 - criminal liability for misstatements and Section 35 - civil liability for misstatements.

Official legal resources

For the authoritative statutory text and current securities-law requirements, consult the Ministry of Corporate Affairs - Companies Act, 2013 and the SEBI regulations page. SEBI also publishes current master circulars relevant to regulated securities offerings.

This article is a general legal information resource. Applicable regulations, circulars and issue-specific requirements should be checked before acting on a securities offering or advertisement.