A formal document that provides the details about an investment offering to the public and is filed with the Securities and Exchange Commission, is called Prospectus. It is filed for offerings of bonds, stocks, and mutual funds. It helps in making more informed investment decisions as it has all the relevant information about the security of investment. A company will need to file with the Securities and Exchange Commission, if they wish to offer bonds or stock for sale to the public, as part of the registration. A prospectus includes information like the name of the company which is issuing the stock, the number of shares, a summary of the companies background, a summary of financial information, the types of securities which is being offered, security's which are offered are public or private needs to be mentioned in the prospectus, it includes the name of the companies principles, and the name of the financial corporations, banks or financial companies performing the underwriting.

RED HERRING PROSPECTUS

It is a type of prospectus, however, it does not contain any particular about the quantum of price and securities. It is a preliminary or first prospectus and it is a document submitted by the issuer or company as a part of a public offering of securities.

A statement under red herring prospectus contains the purpose of issue, balance sheet, underwriters commissions and discounts, disclosure of any option agreement, promotion expenses, net proceeds to the issuing company or the issuer, copy of the underwriting agreement, legal opinion on the issue, earning statements of last 3 years (optional), Address and name of all the directors, underwriters, officers, stockholders that oh 10% or more of the stock and the prospectus contains the copies of articles of incorporation of the company or the issue.

A company may issue a red-herring prospectus before the issue of a prospectus if they are proposing to make an offer of securities as per section 32 of the Companies Act 2013. A red herring prospectus has information related to the operations of a company but not key details.

A red herring Prospectus has to be filed with the registrar at least 3 days before the opening of the subscription list and offer if a Company is proposing to issue the same. It has to be issued during the book-building process and it should contain either the price band along with the range within which the bids can move or the floor price of the securities offered. The applicant scored the price and the quantity for the shares which they would like to have. Certain disclosures need to be made in the red herring prospectus as prescribed by SEBI (ICDR).

The process of book building needs to be undertaken by the companies By which demand for the securities proposed to be issued by the corporate body is discovered and the price for such security is accessed for the determination of quantum of securities to be issued through offer document and the red herring prospectus.

Section 60B (7) Gives the right to Subscriber or applicant to withdraw the application if there is any intimation of variation within 7 days of such intimation. The application of withdrawal needs to be made and communicated in writing.

Concluding, RHP is a preliminary prospectus that needs to be filed with SEC, Which is in connection with IPO, Which does not include any details like the number and price of shares that are offered. RHP needs to be registered and the registration statement has to be filed with the SEC, Any information on the red-herring prospectus can change and be subjected to change and the Securities and Exchange Commission Is only there to ensure relevant information is disclosed.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.