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An issuing house disposes of shares allotted to it under private placement by selling to the public via advertisement. The advertisement is NOT deemed a prospectus if:
AIt is issued within six months of allotment
BFull consideration has not yet been paid
CIt is issued after six months of allotment AND the issuing house has paid full consideration to the company
DIt is issued within three months of allotment
Answer & Solution
Correct answer: C. It is issued after six months of allotment AND the issuing house has paid full consideration to the company
1. Section 25 — an offer through an issuing house is deemed a prospectus if made within 6 months of allotment OR if consideration is unpaid.
2. Both conditions must fail for the advertisement to escape prospectus treatment.
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — Prospectus and Allotment_