Sections 386 to 389 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 386 to 389 regulate the issue of a prospectus in India offering securities of a company incorporated or to be incorporated outside India. Section 386 gives three definitions. Section 387 sets out what the prospectus must contain and say. Section 388 deals with an expert's consent. Section 389 requires the prospectus to be delivered to the Registrar for registration before it is issued.
No person may issue, circulate or distribute in India a prospectus offering securities of an overseas company unless it is dated and signed, carries the particulars in section 387 and the matters in section 26, has any expert's written consent, binds applicants under sections 33 and 40, and a copy certified by the chairperson and two other directors has been delivered to the Registrar before issue. This applies whether or not the company has or will have a place of business in India. Contravention is punishable under section 392.
Section 386: three definitions
| Expression | Meaning for this Chapter |
|---|---|
| "certified" | Certified in the prescribed manner to be a true copy or a correct translation |
| "director" (of a foreign company) | Includes any person in accordance with whose directions or instructions the Board is accustomed to act |
| "place of business" | Includes a share transfer or registration office |
The widened meaning of "director" matters in section 389, where the certification is given by the chairperson and two directors.
Section 387: what the prospectus must contain
Section 387(1) bars any person from issuing, circulating or distributing in India a prospectus offering to subscribe for securities of a company incorporated or to be incorporated outside India, whether or not the company has established, or will establish, a place of business in India, unless the prospectus is dated and signed and:
(a) contains particulars on
- the instrument constituting or defining the company's constitution;
- the enactments or provisions under which the company was incorporated;
- the address in India where those instruments, or copies, and a certified English translation if not in English, can be inspected;
- the date and country of incorporation; and
- whether the company has established a place of business in India, and if so the address of its principal office in India; and
(b) states the matters specified under section 26. See section 26: matters to be stated in a prospectus.
The first proviso says items (i), (ii) and (iii) of clause (a) do not apply to a prospectus issued more than two years after the date on which the company is entitled to commence business.
If your group is planning to offer securities in India, our foreign company filing team can help you check which of these requirements apply.
The other sub-sections of section 387
| Sub-section | Rule |
|---|---|
| (2) | A condition that makes an applicant waive compliance, or imputes notice of a contract, document or matter not specifically referred to in the prospectus, is void |
| (3) | No application form may be issued in India unless issued with a compliant prospectus and without breaching section 388. A proviso exempts a form issued in connection with a bona fide invitation to enter into an underwriting agreement |
| (4) | The section does not apply to an issue to existing members or debenture holders (clause (a)); and, except for the dating requirement, it does not apply to a prospectus for securities uniform with those previously issued and dealt in or quoted on a recognised stock exchange (clause (b)) |
| (5) | Nothing limits liability a person may incur under other Indian law or under the Act apart from this section |
Section 388: expert's consent and binding applicants
Section 388(1) bars issue of the prospectus:
- (a) if it includes a statement made by an expert who has not given, or has before delivery for registration withdrawn, his written consent to the issue with the statement in the form and context in which it appears, or if the prospectus does not state that he has given and not withdrawn that consent; or
- (b) if the prospectus does not have the effect, where an application is made on it, of binding all persons concerned by sections 33 and 40, so far as applicable.
Under section 388(2), a statement is deemed included in the prospectus if it is in any report or memorandum appearing on its face, incorporated by reference, or issued with it.
Section 389: registration before issue
Section 389 says no person shall issue, circulate or distribute the prospectus in India unless, before issue:
- a copy certified by the chairperson and two other directors as approved by resolution of the managing body has been delivered to the Registrar for registration;
- the prospectus states on its face that a copy has been delivered; and
- there is endorsed on or attached to the copy any consent required by section 388 and the prescribed documents.
Section 391(1)(i) then applies sections 34 to 36 to a prospectus issued under section 389 as they apply to an Indian company's prospectus. See sections 30 to 36: prospectus liability for the civil and criminal consequences of misstatements. The Registrar filing fee under section 385 is as prescribed.
Why it matters
Section 387 to 389 apply to anyone who issues the prospectus in India, not only the company. An intermediary that circulates material offering shares of an overseas company to people in India can therefore be caught. The Act does not ask whether the company has a place of business in India. Sections 387(1), 388(1) and 389 all say "whether the company has or has not established, or when formed will or will not establish, a place of business in India".
Consequences of default
Section 392 applies: a fine on the company of not less than one lakh rupees up to three lakh rupees, with an additional fine up to fifty thousand rupees per day after the first for a continuing contravention, and a fine on each officer in default of not less than twenty-five thousand rupees up to five lakh rupees. Section 393 prevents the company from suing on its contracts until it complies. Other securities laws may apply separately.
Need help with an offer of securities into India?
If an overseas company or its advisers are preparing offer documents for people in India, the section 387 contents, expert consents and Registrar delivery should be settled before circulation. Our foreign company filing team can help map the steps.
Key takeaways
- The rules cover any person issuing an overseas company's prospectus in India.
- The prospectus must be dated, signed and give the prescribed particulars plus section 26 matters.
- Expert consent must be given in writing and stated in the prospectus.
- The prospectus must bind applicants by sections 33 and 40.
- Before issue, a copy certified by the chairperson and two directors goes to the Registrar.
- Default is punishable under section 392.
Read next
- Indian Depository Receipts: sections 390 and 391
- Debentures, annual return and charges of a foreign company: sections 384 and 385
- Section 26: matters to be stated in a prospectus
- Sections 379-393: foreign companies
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.