1. Where a company allots or agrees to allot any securities of the company with a view to all or any of those securities being offered for sale to the public, any document by which the offer for sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and rules of law as to the contents of prospectus and as to liability in respect of mis-statements, in and omissions from, prospectus, or otherwise relating to prospectus, shall apply with the modifications specified in subsections (3 ) and (4 ) and shall have effect accordingly, as if the securities had been offered to the public for subscription and as if persons accepting the offer in respect of any securities were subscribers for those securities, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of mis-statements contained in the document or otherwise in respect thereof.
2. For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, securities was made with a view to the securities being offered for sale to the public if it is shown—
a. that an offer of the securities or of any of them for sale to the public was made within six months after the allotment or agreement to allot; or
b. that at the date when the offer was made, the whole consideration to be received by the company in respect of the securities had not been received by it.
3. Section 26 as applied by this section shall have effect as if—
i. it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus—
a. the net amount of the consideration received or to be received by the company in respect of the securities to which the offer relates; and
b. the time and place at which the contract where under the said securities have been or are to be allotted may be inspected;
ii. the persons making the offer were persons named in a prospectus as directors of a company.
4. Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document referred to in sub-section (1 ) is signed on behalf of the company or firm by two directors of the company or by not less than one-half of the partners in the firm, as the case may be.
Legal Commentary & Landmark Judgments: Section 25
Section 25 codifies the doctrine of 'Deemed Prospectus', enacting that any document by which an offer for sale of securities is made to the public through an issuing house or intermediary is legally treated as a statutory prospectus.
When investigating structured secondary market share sales or unlisted placement schemes, invoke Section 25(2) presumptions to treat the intermediary's information memorandum as a deemed prospectus, fastening joint liability on both the issuing entity and intermediate underwriters.