Public Deposits - Provisions of prospectus to apply to advertisement ‑ Scope and extent of application of the section explained - Companies Law - No. 1/47/75‑CL‑XIV,

Circular : No. 1/47/75 ‑ CL ‑ XIV, dated 6 ‑ 6 ‑ 1975. Subject:- Public Deposits - Provisions of prospectus to apply to advertisement ‑ Scope and extent of application of the section explained I am directed to say that certain doubts seem to exist with regard to the scope and extent of application of the recently enacted section 58B. It has, therefore, been considered desirable to clarify the position in this behalf. Section 58B of the Act runs as follows : The provisions of this Act relating to a prospectus shall, so far as may be, apply to an advertisement referred to in section 58A. The advertisement referred to in the above section is the one required to be issued by the companies for inviting or accepting deposits. Such an advertisement is covered under the definition of prospectus laid down in section 2(36), as amended recently. Accordingly, an advertisement for inviting or accepting deposits is a prospectus and ordinarily all the provisions of the Act, relating to prospectus automatically become applicable in relation to such an advertisement. However, the words so far as may be appearing in section 58B are significant in this context. Having regard to these words, the Central Government is of the opinion that wherever, in respect of certain matters relating to advertisement, specific provision has been made in section 58A or in the Acceptance of Deposits Rules, the corresponding provisions in the Act relating to prospectus would not apply to the advertisement. To illustrate, according to section 56(1), every prospectus is required to contain information on the matters specified in Schedule II. This requirement will not apply to an advertisement for deposits because rule 4 prescribes the form in which such an advertisement is required to be issued. The other provisions governing the prospectus, including those relating to civil and criminal liabilities for mis-statements ( sections 62 and 63 ), penalty for fraudulently inducing persons to make deposits with any company (section 68), etc., will mutatis mutandis apply to the advertisement for deposits.