1. Every prospectus issued by or on behalf of a public company either with reference to its formation or subsequently, or by or on behalf of any person who is or has been engaged or interested in the formation of a public company, shall be dated and signed and shall:—
a. state the following information, namely:—
i. names and addresses of the registered office of the company, company secretary, Chief Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other persons as may be prescribed;
ii. dates of the opening and closing of the issue, and declaration about the issue of allotment letters and refunds within the prescribed time;
iii. a statement by the Board of Directors about the separate bank account where all monies received out of the issue are to be transferred and disclosure of details of all monies including utilised and unutilised monies out of the previous issue in the prescribed manner;
iv. details about underwriting of the issue;
v. consent of the directors, auditors, bankers to the issue, expert's opinion, if any, and of such other persons, as may be prescribed;
vi. the authority for the issue and the details of the resolution passed therefore;
vii. procedure and time schedule for allotment and issue of securities;
viii. capital structure of the company in the prescribed manner;
ix. main objects of public offer, terms of the present issue and such other particulars as may be prescribed;
x. main objects and present business of the company and its location, schedule of implementation of the project;
xi. particulars relating to:—
A. management perception of risk factors specific to the project;
B. gestation period of the project;
C. extent of progress made in the project;
D. deadlines for completion of the project; and
E. any litigation or legal action pending or taken by a Government Department or a statutory body during the last five years immediately preceding the year of the issue of prospectus against the promoter of the company;
viii.
xii. minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash;
xiii. details of directors including their appointments and remuneration, and such particulars of the nature and extent of their interests in the company as may be prescribed; and
xiv. disclosures in such manner as may be prescribed about sources of promoter's contribution;
b. set out the following reports for the purposes of the financial information, namely:—
i. reports by the auditors of the company with respect to its profits and losses and assets and liabilities and such other matters as may be prescribed;
ii. reports relating to profits and losses for each of the five financial years immediately preceding the financial year of the issue of prospectus including such reports of its subsidiaries and in such manner as may be prescribed:
Provided that: in case of a company with respect to which a period of five years has not elapsed from the date of incorporation, the prospectus shall set out in such manner as may be prescribed, the reports relating to profits and losses for each of the financial years immediately preceding the financial year of the issue of prospectus including such reports of its subsidiaries;
iii. reports made in the prescribed manner by the auditors upon the profits and losses of the business of the company for each of the five financial years immediately preceding issue and assets and liabilities of its business on the last date to which the accounts of the business were made up, being a date not more than one hundred and eighty days before the issue of the prospectus:
Provided that: in case of a company with respect to which a period of five years has not elapsed from the date of incorporation, the prospectus shall set out in the prescribed manner, the reports made by the auditors upon the profits and losses of the business of the company for all financial years from the date of its incorporation, and assets and liabilities of its business on the last date before the issue of prospectus; and
iv. reports about the business or transaction to which the proceeds of the securities are to be applied directly or indirectly;
c. make a declaration about the compliance of the provisions of this Act and a statement to the effect that nothing in the prospectus is contrary to the provisions of this Act, the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the rules and regulations made there under; and
d. state such other matters and set out such other reports, as may be prescribed.
2. Nothing in sub-section (1 ) shall apply—
a. to the issue to existing members or debenture-holders of a company, of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant has a right to renounce the shares or not under sub-clause (ii ) of clause (a ) of sub-section (1 ) of section 62 in favour of any other person; or
b. to the issue of a prospectus or form of application relating to shares or debentures which are, or are to be, in all respects uniform with shares or debentures previously issued and for the time being dealt in or quoted on a recognized stock exchange.
3. Subject to sub-section (2 ), the provisions of sub-section (1 ) shall apply to a prospectus or a form of application, whether issued on or with reference to the formation of a company or subsequently.
Explanation.- —The date indicated in the prospectus shall be deemed to be the date of its publication.
4. No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless on or before the date of its publication, there has been delivered to the Registrar for registration, a copy thereof signed by every person who is named therein as a director or proposed director of the company or by his duly authorised attorney.
5. A prospectus issued under sub-section (1 ) shall not include a statement purporting to be made by an expert unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion or management, of the company and has given his written consent to the issue of the prospectus and has not withdrawn such consent before the delivery of a copy of the prospectus to the Registrar for registration and a statement to that effect shall be included in the prospectus.
6. Every prospectus issued under sub-section (1 ) shall, on the face of it,
a. state that a copy has been delivered for registration to the Registrar as required under sub-section (4 ); and
b. specify any documents required by this section to be attached to the copy so delivered or refer to statements included in the prospectus which specify these documents.
7. The Registrar shall not register a prospectus unless the requirements of this section with respect to its registration are complied with and the prospectus is accompanied by the consent in writing of all the persons named in the prospectus.
8. No prospectus shall be valid if it is issued more than ninety days after the date on which a copy thereof is delivered to the Registrar under sub-section (4 ).
9. If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both.
Legal Commentary & Landmark Judgments: Section 26
Section 26 prescribes the statutory disclosures, financial reports, declarations, and expert consents that must be included in every registered prospectus before securities are offered to the public.
It must also contain written consent from experts (auditors, bankers, valuers, legal counsel) who are not connected with the formation or management of the company, ensuring third-party professional accountability.
The prospectus is an invitation to invest that creates strict fiduciary obligations. Section 26 aligns Indian statutory disclosure standards with SEBI (ICDR) Regulations, requiring total transparency regarding promoter backgrounds, litigation risks, and end-use of funds. Omission of material liabilities or inflated financial metrics directly exposes promoters and merchant bankers to criminal prosecution.