Prospectus

prospectus
A prospectus is 'any document described or issued as a prospectus including any

notice, circular, advertisement or other document inviting deposits from the
public or inviting offers from the public for the subscription or purchase of any
shares or debentures of a body corporate'.
A prospectus is defined as a legal document describing a company's securities
that have been put on sale.
Which Companies are Required to Issue
Prospectus
 Every public listed company who intends to offer shares or debentures of the
company to the public.
 Every private company who ceases to be a private company and converts into
a public company and intends to offer shares or debentures of the company to
the public.
Types of Prospectus
 Red-herring Prospectus: Red-herring prospectus means a prospectus which
does not have complete particulars on the price of securities and the
quantum of securities offered.
 Shelf Prospectus: Shelf prospectus means a prospectus issued by any
financial institution or bank for one or more issues of the securities or class
of securities specified in that prospectus.
 Abridged Prospectus: It is the summary of prospectus content. According
to Section 2(1) of the Companies Act, 1956, an abridged prospectus means
memorandum containing such salient features of a prospectus as may be
prescribed.
Process of IPO
 Companies typically go public to raise huge amount of capital in exchange for
securities. Once a private company is convinced about the need to become a
public company, it kick-starts the process of IPO. Companies which want to
go public follow a process that exchanges adhere to. The IPO process is quite
complicated.
 Step 1: Hiring Of An Underwriter Or Investment Bank. ...
 Step 2: Registration For IPO. ...
 Step 3: Verification by SEBI: ...
 Step 4: Making An Application To The Stock Exchange. ...
 Step 5: Creating a Buzz By Roadshows. ...
 Step 6: Pricing of IPO. ...
 Step 7: Allotment of Shares.
Dividend
 Dividend refers to a reward, cash or otherwise, that a company gives to
its shareholders. Dividends can be issued in various forms, such as cash
payment, stocks or any other form. A company's dividend is decided by
its board of directors and it requires the shareholders' approval.
 A dividend is a reward paid to the shareholders for their investment in a
company's equity.
Dividend fund
 We will now move forward to understand other terms related to dividends.
Dividend fund is the amount of cash which is to be distributed as dividends.
In some places, it also refers to the maximum amount of cash which may be
paid out as dividends.
Statutory provisions
 The Companies Act, 2013 itself provides for certain cases in which the
directors or members of the company may be held personally liable. In
such cases, while the separate entity of the company is maintained, the
directors or members are held personally liable along with the company.
Separate bank account for dividend

 1. Compliance with Sections 73 and 74 of the Companies Act, 2013.
 2. Grant of a Proportional Dividend.
 3. Deposition of Dividend in a separate Bank Account.
 4. Payment of the money only to the shareholders.
 5. The mode of payment must be in cash only.
 6. Unpaid dividend account.
Audit
 An audit is the examination of the financial report of an organisation - as
presented in the annual report - by someone independent of that
organisation.
 The financial report includes a balance sheet, an income statement, a
statement of changes in equity, a cash flow statement, and notes
comprising a summary of significant accounting policies and other
explanatory notes.
 The purpose of an audit is to form a view on whether the information
presented in the financial report, taken as a whole, reflects the financial
position of the organisation at a given date, for example:
 Are details of what is owned and what the organisation owes properly
recorded in the balance sheet?
 Are profits or losses properly assessed?
How is the audit conducted?
 The organisation's management prepares the financial report. It must be
prepared in accordance with legal requirements and financial reporting
standards.
 The organisation's directors approve the financial report.
 Auditors start their examination by gaining an understanding of the
organisation's activities, and considering the economic and industry
issues that might have affected the business during the reporting period.
 For each major activity listed in the financial report, auditors identify
and assess any risks which could have a significant impact on the
financial position or financial performance, and also some of the
measures (called internal controls) that the organisation has put in place
to mitigate those risks.
How is the audit conducted?
 Based on the risks and controls identified, auditors consider what
management does has done to ensure the financial report is accurate, and
examine supporting evidence.
 Auditors then make a judgement as to whether the financial report taken
as a whole presents a true and fair view of the financial results and position
of the organisation and its cash flows, and is in compliance with financial
reporting standards and, if applicable, the Corporations Act.
 Finally, auditors prepare an audit report setting out their opinion, for the
organisation's shareholders or members.

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prospectus

A prospectus is 'any document described or issued as a prospectus including any

Separate bank account for dividend

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