We have discussed provisions relating to prospectus under Section 26 of the Companies Act 2013 earlier here. Section 26 lists out details of information, Reports and other matters to be stated in the prospectus. The Companies (Prospectus and Allotment of Securities) Rules 2014 further elaborate these matters. Here, we will discuss, Reports to be set out in the Prospectus as per Rule 4 of these Rules.
Rule 4 was deleted by the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018 after amendment in Section 26 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 with effect from 7th May 2018. Rule 4 was relevant from 1st April 2014 to 6th May 2018.
The following reports shall be set out with the prospectus, namely:-
The reports by the auditors with respect to profits and losses and assets and liabilities of the company shall be attached. The report shall also include the amounts or rates of dividends, if any, paid by the issuer company in respect of each class of shares for each of the five financial years immediately preceding the year of issue of the prospectus, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years.
If no accounts have been made up in respect of any part of the period of five years ending on a date three months before the issue of the prospectus, a statement of that fact accompanied by a statement of the accounts of the issuer company in respect of that part of the said period up to a date not earlier than six months of the date of issue of the prospectus indicating the profit or loss for that period and assets and liabilities position as at the end of that period together with a certificate from the auditors that such accounts have been examined and found correct and the said statement may indicate the nature of provision or adjustments made or which are yet to be made.
CONTAINS OF AUDITOR REPORT:
The reports relating to profits and losses for each of the five financial years or where five financial years have not expired, for each of the financial year immediately preceding the issue of the prospectus shall-
(a) if the company has no subsidiaries, deal with the profits or losses of the company (distinguishing items of a non-recurring nature) for each of the five financial years immediately preceding the year of the issue of the prospectus; and
(b) if the company has subsidiaries, deal separately with issuer company’s profits or losses as provided in clause (a) and in addition, deal either –
(i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of the issuer company; or
(ii) individually with the profits or losses of each subsidiary, so far as they concern members of the issuer company; or
(iii) as a whole with the profits or losses of the company, and, so far as they concern members of the issuer company, with the combined profits or losses of its subsidiaries.
According to Rule 6 for the matters specified, which require a company to provide certain particulars or information relating to the preceding five financial years, it shall be sufficient compliance for a company which has not completed five years, if such company provides such particulars or information for all the previous years since its incorporation.
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