Allotment Of Shares And Debentures To Be Dealt In On Stock Exchange
- Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before making such issue is required to make an application to one or more recognized stock exchanges for seeking permission to list the shares and debentures such issued on the stock exchanges. Where an appeal against the decision of any recognized stock exchange refusing permission for the shares or debentures to be listed on the stock exchange has been preferred, such allotment shall not be void until the dismissal of the appeal.
- Where the permission has not been applied, the company will repay all money received from applicants without interest, and if, any such money is not repaid within 8 days after the company becomes liable to repay it, the directors are held responsible. From the expiry of 8th day, they will be jointly liable to repay that money with interest, not less than 4% and not more than 15%, depending upon the length of the period of delay in making the repayment of such money.
- All money received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank, and if default is made in complying with the conditions aforesaid, then every officer of the company is held responsible and this offense is punishable with fine which may extend to 50000 rupees. Money standing to the credit of the separate bank account, shall not be utilized for any purpose other than the following purposes, namely – (a) adjustment against allotment of shares, where the shares have been permitted to be listed on the stock exchanges as specified in the prospectus; or (b) repayment of money received from applicants, where shares have not been permitted to be listed on the stock exchanges as specified in the prospectus.
No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be listed on any stock exchange, unless it is recognized stock exchange.
