Meaning: “Shelf Prospectus” means a prospectus issued by any financial institute or bank for one or more issues of the securities or class of securities specified in that prospectus. [Section 60A]
Need: Raising funds from the public by means of various securities is a time consuming process. Negotiations with the various parties have to be finalized. Matters to be specified in the prospectus have also become quite large and highly informative, particularly under the SEBI Guidelines. Every time any such issue comes, a fresh prospectus is required to be filed. Although it is a repetitive matter, the procedural aspects take a lot of time. In order to minimize the Burdon on such institutions, it is now provided to introduce shelf prospectus, which will be valid, for a period of one year from the date of opening of the first offering of the shelf prospectus.
- A company filing a shelf prospectus with the Registrar of Companies shall not be required to file prospectus at every stage of offer of securities by it within a period of validity of such self prospectus.
- An information memorandum shall be issued to the public alongwith shelf prospectus filed at the stage of the first offer of securities and this prospectus will be valid for a period of one year, from the date of opening of the first issue of securities under the prospectus.
- Any public financial institution, public sector bank, or scheduled bank, whose main object is financing, shall file a shelf prospectus. “Financing” means making loans to or subscribing in the capital of a private industrial enterprise engaged in infrastructural financing or such other companies as the central government may notify in this behalf.
- An update information memorandum should be filled every time when an offer for securities is made. Such memorandum together with the shelf prospectus shall constitute the prospectus.
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