Companies Act 2013 · Rules · G.S.R. 251(E)
Companies (Prospectus and Allotment of Securities) Rules, 2014
What a prospectus must contain, offer for sale by members, compulsory demat of securities for unlisted public companies (rule 9A) and for private companies that are not small companies (rule 9B), the return of allotment (PAS-3), underwriting commission and private placement (rule 14).
Last checked: 27 October 2026 against the Ministry of Corporate Affairs consolidated rules text.
| Notification | G.S.R. 251(E) dated 31 March 2014 · made for Chapter III Part I of the Act |
|---|---|
| Act sections | 23, 26, 28, 29, 31, 39, 40, 42 |
| MCA forms | PAS-1, PAS-2, PAS-3, PAS-4, PAS-5, PAS-6 |
| Latest amendment | Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025 dated 12 February 2025 Allowed a private company that was not a small company on 31 March 2023 to comply with rule 9B (demat) by 30 June 2025. Source: MCA text + Gazette reports · 11 amending notifications shown in MCA's text |
The rules, one by one
Rule numbers and headings follow MCA's consolidated text. Rule 1 (short title) and rule 2 (definitions) are left out unless they matter in practice. The notes are a plain-English guide, not the rule text.
| Rule | Heading | What it says |
|---|---|---|
| 3 | Information to be stated in the prospectus | The details a prospectus must give under section 26. |
| 4 | Reports to be set out in the prospectus | |
| 5 | Other matters and reports in the prospectus | |
| 6 | Period for which information is given in certain cases | |
| 7 | Variation in terms of contracts or objects of the prospectus | Needs a special resolution, with an advertisement of the notice (Form PAS-1). Dissenting shareholders get an exit offer. |
| 8 | Offer of sale by members | |
| 9 | Dematerialisation of securities | Before a public offer, the promoters' securities must be in demat form. |
| 9A | Demat securities of unlisted public companies | An unlisted public company must issue securities only in demat form and must help holders demat existing securities. It files a half-yearly reconciliation of share capital audit in Form PAS-6. Nidhis, government companies and wholly owned subsidiaries are excluded. |
| 9B | Demat securities of private companies | A private company that is not a small company (on its audited accounts for a year ending on or after 31 March 2023) must issue securities only in demat form and help holders demat existing ones, within 18 months of the end of that year. A producer company gets five years. A company that was not a small company on 31 March 2023 had until 30 June 2025 (2025 amendment). Promoters', directors' and KMP holdings must be in demat before any new issue, buy-back, bonus or rights offer. |
| 10 | Shelf prospectus and information memorandum | |
| 11 | Refund of application money | |
| 12 | Return of allotment | Allotments are reported to the Registrar in Form PAS-3. For a private placement, section 42(8) requires the return within 15 days of allotment. |
| 13 | Payment of commission | Underwriting commission may not exceed 5% of the issue price of shares or 2.5% of the issue price of debentures, or a lower rate set by the articles. |
| 14 | Private placement | A private placement needs a special resolution and an offer letter in PAS-4. Offers go to at most 200 persons in a financial year, excluding qualified institutional buyers and employees under ESOP. The minimum investment is ₹20,000 of face value per person. Money must come from the applicant's bank account, and the company keeps a record in PAS-5. |
Related
- Section 42 explainer (private placement)
- Section 62 explainer (further issue of shares)
- All Companies Rules · Companies Act 2013 ready reckoner
Other rules explained in detail: Incorporation Rules · Share Capital and Debentures Rules · Acceptance of Deposits Rules · Management and Administration Rules · Accounts Rules · Audit and Auditors Rules · Appointment and Qualification of Directors Rules · Meetings of Board and its Powers Rules · Registration of Charges Rules · Significant Beneficial Owners Rules · CSR Policy Rules · Managerial Personnel Rules · Compromises, Arrangements and Amalgamations Rules · Strike-off (Removal of Names) Rules · Registration Offices and Fees Rules
Sources: Ministry of Corporate Affairs, Acts & Rules e-book (consolidated rules with amendment notes), and the Gazette of India notifications named on this page. This page is a plain-English guide, not the text of the rules. Check the current rule on the MCA portal before relying on it.