Red herring prospectus
📚 Law Minded summary
A red herring prospectus is issued before the full prospectus and leaves out the details that are not fixed yet — typically the price of the securities or the number on offer.
It has to be filed with the Registrar at least three days before the offer opens, and it carries the same obligations as a prospectus.
Once the offer closes, the complete prospectus with the final details goes to the Registrar and to SEBI.
(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 highlighte d 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.
All sections in Chapter III — Prospectus and Allotment of Securities