directors and promoters remain the same in the case of” offer for sale to public

The responsibility of the .;company, its directors and promoters remain the same in the case of” offer for sale to public” by an Issue House, as that in the case of direct issue of prospectus by a company.” Offer to the public”. “Offer to the public” is an important condition as per Section 2(36) which decides whether a document is a prospectus or not. It is difficult to say exactly how many persons constitute “the public”. Any number from two to infinity; perhaps even one, may serve to indicate pubic. The ‘public’ is of course a general word. No particular number is prescribed. Section 67 of the Companies Act clarifies the position and states that “public” includes any section of the public, however selected.

For example, if a document inviting persons to buy shares is issued, to all teachers, or to all students of Science, or to all the clients of a particular share broker or to all the shareholders of a company concerned, it is still issued to “the public” and therefore is a prospectus.

However, there are circumstances when an offer or invitation for shares, though made to a section of the public, will not be deemed to be made to them. According to Section 67(3), no offer or invitation shall be made to the public if (i) Where the invitation is restricted to those who are receiving the invitation and non-else; (ii) where the offer is made to a few friends of directors or (iii) it is a domestic concern of those making or receiving the offer or invitation.