Section 26 of the Companies Act, 2013
📘 Section 26 of the Companies Act, 2013
Title: Matters to be stated in the prospectus
(💡 As originally enacted, but significantly amended by the Companies (Amendment) Act, 2017 w.e.f. 7th August 2018)
🏛️ Text (Before Amendment)
Originally, Section 26 laid down a detailed list of information that must be included in a prospectus issued by a company making a public offer.
It included:
Details of the company's financial information
Board and management structure
Risk factors
Utilization of funds raised
Auditor’s report, etc.
However, this version became too complex and burdensome, so it was replaced by a simpler process under SEBI regulations.
⚖️ Amended Section 26 (Post-2018 Amendment)
Text:
Where a company issues a prospectus, it shall state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board of India (SEBI) in consultation with the Central Government:
Provided that until SEBI specifies the information and reports, the regulations made by SEBI under the SEBI Act, 1992 shall apply.
✅ Key Points After Amendment:
SEBI Empowered: The content and format of a prospectus is now governed entirely by SEBI for listed and to-be-listed companies.
Flexibility: It avoids redundancy by delegating disclosure norms to SEBI's dynamic framework.
Unlisted Public Companies: For them, the Companies (Prospectus and Allotment of Securities) Rules, 2014 apply.
Objective: Simplify the process and ensure alignment with securities market regulations.
🧠 Why is Section 26 Important?
Ensures transparency in public offers.
Protects investors by mandating disclosure of key financial and operational information.
Establishes regulatory coordination between the Companies Act and SEBI.
RELATED Blog
0 comments