Question

.................. of the Companies Act, 2013 requires disclosure in the prospectus of names and addresses of CFO about sources of promoters' contribution among other things.

• A. Section 36
• B. Section 37
• C. Section 26
• D. Section 38

Hint:

For company law, prospectus-related provisions are very important. Remember Section 26 (Contents), Section 34 (Criminal Liability for Misstatements), and Section 35 (Civil Liability for Misstatements).

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question asks for the section of the Companies Act, 2013, that specifies the contents of a prospectus, including details about key personnel and promoters. A prospectus is a crucial document for a public issue of shares, providing investors with the necessary information to make an informed decision.
Step 2: Key Formula or Approach:
The relevant provision is Section 26 of the Companies Act, 2013.
Section 26. Matters to be stated in prospectus.—
(1) Every prospectus issued by or on behalf of a public company... shall be dated and signed and shall state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board in consultation with the Central Government...
This section and the rules made thereunder mandate extensive disclosures, including the names and addresses of the directors, Chief Financial Officer (CFO), promoters, the sources of the promoters' contribution, and details of the objects of the issue.
Step 3: Detailed Explanation:
- Section 26 is the primary section that governs the contents and registration of a prospectus.
- Section 36 deals with punishment for fraudulently inducing persons to invest money.
- Section 37 deals with action by affected persons for fraudulent practices.
- Section 38 deals with punishment for personation for acquisition of securities.
Therefore, the section requiring disclosures in the prospectus is Section 26.
Step 4: Final Answer:
Section 26 of the Companies Act, 2013 requires these disclosures.

Answer 2

The question asks which section of the Companies Act, 2013 requires the prospectus to disclose the CFO's name and address and the sources of promoters' contribution, so each option should be matched against what that specific section actually covers.

1. Section 36: This section deals with the offence of fraudulently inducing persons to invest money in a company, a penal provision aimed at deceptive conduct in raising capital, not with what must be stated in the prospectus itself.
2. Section 37: This section provides a remedy for persons affected by a misleading prospectus or fraudulent inducement, allowing them to bring an action for damages or other relief, again a consequence-and-remedy provision rather than one prescribing prospectus contents.
3. Section 26: This section, titled "Matters to be stated in prospectus," is the primary content-and-disclosure provision, requiring extensive information including details of directors, the Chief Financial Officer, promoters and the sources of promoters' contribution, along with the reports and information that SEBI, in consultation with the Central Government, may specify. This matches the disclosure obligation the question describes precisely.
4. Section 38: This section penalises personation for the acquisition of securities, an offence relating to fraudulently applying for shares in another's name, unrelated to what must be disclosed in the prospectus.

Since Sections 36, 37 and 38 all deal with fraud, remedies or offences rather than disclosure requirements, only Section 26 matches the specific obligation the question describes.

Therefore, the correct answer is Section 26.