Shelf Prospectus in India: Definition, Purpose & Legal Significance

A shelf prospectus is a term used in India representing a prospectus issued by a financing bank or institution. This prospectus is part of Section 60A and 60B in the Indian Code.

Purpose

When a financial institution wants financing from the Central Government in India, it must provide a shelf prospectus to the Registrar of Companies. A shelf prospectus contains one or more issues of the securities listed in the prospectus. It is a notification to the public of the transaction the institution plans to do, and it is the company's way into the primary market.

Process

The financial institution creates a shelf prospective and files in with the Registrar. Once it is filed, it remains valid for 1 year to the public. All securities wanted by the financial institution are listed in the prospectus. If five securities are wanted, only one shelf prospectus is needed.

Features

Shelf prospectuses are under India's code of laws in sections 60A and 60B, which stipulate all requirements of the prospectuses. Once a prospectus is filed, the company has access to the primary market for 1 year. The company does not need to file another shelf prospectus until the 1-year period ends.