Companies Act, 2013 - Prospectus and Allotment of Securities

Section 31 of the Companies Act, 2013: Shelf Prospectus

Section 31 provides the statutory framework for a shelf prospectus. It permits eligible classes of companies, as provided by the Securities and Exchange Board of India (SEBI) through applicable regulations, to use one shelf prospectus for more than one offer of securities during its period of validity, subject to the Act, the applicable rules and SEBI requirements.

Key point: A shelf prospectus can remain valid for a period not exceeding one year from the opening date of the first offer. A second or subsequent offer made during that validity period does not require a fresh prospectus under Section 31(1), but the company must comply with the information memorandum requirements for subsequent offers.

What is a shelf prospectus?

The Explanation to Section 31 defines a shelf prospectus as a prospectus relating to securities, or a class of securities, that may be issued for subscription in one or more issues over a certain period without issuing a further prospectus for every issue.

This mechanism is useful where securities are proposed to be offered in multiple tranches. The shelf prospectus provides the principal offer disclosures, while later material developments are addressed through the prescribed information memorandum and other applicable offer documents.

Section 31(1): Filing and validity of shelf prospectus

Under Section 31(1), any class or classes of companies that SEBI may provide by regulations may file a shelf prospectus with the Registrar at the stage of the first offer of securities included in it.

The shelf prospectus must state its period of validity. That period cannot exceed one year and begins on the date of opening of the first offer under the shelf prospectus.

For a second or subsequent offer of those securities made during the validity period, Section 31(1) provides that no further prospectus is required.

Who can issue a shelf prospectus?

Section 31 does not give every company an unrestricted right to use a shelf prospectus. It applies to the class or classes of companies provided by SEBI through the applicable securities regulations. For public issues of non-convertible securities, the current regulatory framework should therefore be read with the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, as amended from time to time.

Because SEBI regulations are amended periodically, an issuer should verify the current eligibility, disclosure, filing, listing and tranche requirements before making an offer.

Section 31(2): Information memorandum for subsequent offers

A company that has filed a shelf prospectus must file an information memorandum before a second or subsequent offer under that shelf prospectus. Section 31(2) requires disclosure of material developments occurring between the first offer, or the previous offer, and the succeeding offer.

The information memorandum includes material facts concerning:

Rule 10 and Form PAS-2

Rule 10 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 prescribes the procedural requirement for the information memorandum. It is to be prepared in Form PAS-2 and filed with the Registrar, together with the applicable fee under the Companies (Registration Offices and Fees) Rules, 2014, within one month prior to the issue of a second or subsequent offer under the shelf prospectus.

Form PAS-2 seeks particulars relating to the company, the shelf prospectus, securities being offered, charges created and material changes relevant to the succeeding offer. The current MCA form and filing instructions should be checked before filing.

Investor protection where material changes occur

The proviso to Section 31(2) protects applicants who have already submitted applications with advance subscription money before a material change occurs. The company or other person receiving the applications must intimate the change to those applicants.

If an applicant chooses to withdraw after being informed of the change, the subscription money received from that applicant must be refunded within fifteen days.

Section 31(3): Deemed prospectus for each subsequent offer

Where an information memorandum is filed and a further offer is made under Section 31(2), the information memorandum and the shelf prospectus are read together. Section 31(3) provides that they are deemed to be a prospectus for that offer.

Section 31 compliance at a glance

Requirement Section / Rule Key point
Eligibility Section 31(1) Applies to class or classes of companies provided by SEBI regulations.
First offer Section 31(1) Shelf prospectus is filed with the Registrar at the stage of the first offer.
Maximum validity Section 31(1) Not more than one year from the opening date of the first offer.
Subsequent offer Section 31(1) No further prospectus is required during the valid shelf period, subject to the statutory and regulatory framework.
Information memorandum Section 31(2) and Rule 10 Form PAS-2 is filed before a second or subsequent offer, within the period prescribed by Rule 10.
Applicant withdrawal Proviso to Section 31(2) Material changes must be intimated; subscription money is refunded within fifteen days if the applicant withdraws.
Legal status Section 31(3) The information memorandum together with the shelf prospectus is deemed to be a prospectus.

Shelf prospectus and current SEBI framework

For relevant public issues of non-convertible securities, Section 31 operates alongside the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. The regulations contain the detailed securities-market requirements applicable to such issuances, and SEBI publishes consolidated versions as amendments are made.

Practical note: Section 31 supplies the Companies Act framework, but an actual securities issue may also require compliance with SEBI regulations, MCA rules and forms, stock exchange requirements and other applicable law. The current official text should be checked for a live transaction.

Related provisions of the Companies Act, 2013

Section 31 forms part of the statutory scheme governing prospectuses and public offers. Related provisions include Section 30 on advertisement of prospectus, Section 32 on red herring prospectus, Section 33 on application forms for securities, and the provisions dealing with liability for misleading statements in a prospectus.

Updated: September 16, 2026. This article is intended as a general legal reference and should be read with the latest statutory text, rules and SEBI regulations applicable to the particular issue.