We have discussed provisions related to Variation in terms of a contract or object in the prospectus stated in Section 27 of the Companies Act, 2013 earlier here. Rule 7 of the Companies (Prospectus and Allotment of Securities) Rules 2014 under authority of Section 27 of the Companies Act, 2013 prescribed procedure related to variation in Term of a Contract or object stated in terms of prospects.
Where the company has raised money from public through prospectus and has any unutilized amount out of the money so raised, it shall not vary the terms of contracts referred to in the prospectus or objects for which the prospectus was issued except by passing a special resolution through postal ballot and the notice of the proposed special resolution shall contain the following particulars, namely:-
(a) the original purpose or object of the Issue;
(b) the total money raised;
(c) the money utilised for the objects of the company stated in the prospectus;
(d) the extent of achievement of proposed objects(that is fifty percent, sixty percent, etc);
(e) the unutilised amount out of the money so raised through prospectus,
(f) the particulars of the proposed variation in the terms of contracts referred to in the prospectus or objects for which prospectus was issued;
(g) the reason and justification for seeking variation;
(h) the proposed time limit within which the proposed varied objects would be achieved;
(i) the clause-wise details as specified in sub-rule (3) of rule 3 as was required with respect to the originally proposed objects of the issue;
(j) the risk factors pertaining to the new objects; and
(k) the other relevant information which is necessary for the members to take an informed decision on the proposed resolution.
Advertisement of Notice:
The advertisement of the notice for getting the resolution passed for varying the terms of any contract referred to in the prospectus or altering the objects for which the prospectus was issued, shall be in Form PAS – 1 and such advertisement shall be published simultaneously with dispatch of Postal Ballot Notices to Shareholders.
The notice shall also be placed on the web-site of the company, if any.
Form PAS – 1
Notice is hereby given that by a resolution dated……….., the Board has proposed to vary the terms of the contract referred to in the prospectus dated…….. (or to alter the object(s) for which the prospectus dated……. was issued) issued in connection with issue of [number and description of securities] at an issue price of Rs. ___/- per [description of security] aggregating to Rs. __________________/.
In pursuance of the said resolution, further notice is given that for approving the said proposition, a special resolution is to be passed by postal ballot.
The details regarding such variation/alteration are as follows-
1) Particulars of the terms of the contract to be varied (or objects to be altered)
2) Particulars of the proposed variation/alteration
3) Reasons/justification for the variation
4) Effect of the proposed variation/alteration on the financial position of the company-
5) Major Risk factors pertaining to the new Objects
6) Names of Directors who voted against the proposed variation/alteration
Any interested person may obtain the copy of the special resolution along with the explanatory statement free of charge at the registered office of the company or at the office of its Company Secretary Shri……….. at…………… or visit the website of the Company viz. ————– for a copy of the same.
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