—(1) Every company making public offer shall,
before making such offer, make an application to one or more recognized stock exchange or exchanges
and obtain permission for the securities to be dealt with in such stock exchange or exchanges.
(2) Where a prospectus states that an application under sub-section (1) has been made, such
prospectus shall also state the name or names of the stock exchange in which the securities shall be dealt
with.
(3) All monies received on application from the public for subscription to the securities shall be kept
in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than—
(a) for adjustment against allotment of securities where the securities have been permitted to be
dealt with in the stock exchange or stock exchanges specified in the prospectus; or
(b) for the repayment of monies within the time specified by the Securities and Exchange Board,
received from applicants in pursuance of the prospectus, where the company is for any other reason
unable to allot securities.
(4) Any condition purporting to require or bind any applicant for securities to waive compliance with
any of the requirements of this section shall be void.
(5) If a default is made in complying with the provisions of this section, the company shall be
punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh
rupees and every officer of the company who is in default shall be punishable with imprisonment for a
term which may extend to one year or with fine which shall not be less than fifty thousand rupees but
which may extend to three lakh rupees, or with both.
(6) A company may pay commission to any person in connection with the subscription to its
securities subject to such conditions as may be prescribed.