1. A company proposing to make an offer of securities may issue a red herring prospectus prior to the issue of a prospectus.
2. A company proposing to issue a red herring prospectus under sub-section (1 ) shall file it with the Registrar at least three days prior to the opening of the subscription list and the offer.
3. A red herring prospectus shall carry the same obligations as are applicable to a prospectus and any variation between the red herring prospectus and a prospectus shall be highlighted as variations in the prospectus.
4. Upon the closing of the offer of securities under this section, the prospectus stating therein the total capital raised, whether by way of debt or share capital, and the closing price of the securities and any other details as are not included in the red herring prospectus shall be filed with the Registrar and the Securities and Exchange Board.
Explanation.- — For the purposes of this section, the expression "red herring prospectus" means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.
Legal Commentary & Landmark Judgments: Section 32
Section 32 governs the issuance of a 'Red Herring Prospectus' in book-built public issues, allowing the issuer to circulate an incomplete prospectus that omits the final quantum or price of the offered securities.
In book-built IPOs, verify that the Red Herring Prospectus is registered with the RoC at least 3 days prior to bid opening under Section 32(2). Any material change in the interim necessitates an addendum and extension of the bidding period by at least 3 working days.