CA Inter P2 · Chapter 3 · Question 2 of 10
Section 25 deems a document containing an offer for sale of securities to the public to be a prospectus issued by the company. Unless the contrary is proved, an allotment with a view to the securities being offered for sale to the public is presumed where:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) The offer for sale is made within six months after the allotment, or before the whole consideration for the securities has been received by the company
Explanation
Section 25(2) presumes that an allotment was made with a view to an offer for sale to the public in either of two cases. The first is that the offer was made within six months after the allotment. The second is that, at the date of the offer, the whole consideration had not been received by the company. The document is then a deemed prospectus.
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