Question

When is a prospectus called a Red-herring prospectus?

A It is a summary prospectus giving the salient features of the issue Correct Answer Incorrect Answer
B It is prospectus that can be used to make multiple issues Correct Answer Incorrect Answer
C It is a prospectus that does not specify the price or number of shares being offered Correct Answer Incorrect Answer
D It is a prospectus that is issued to SEBI for approval Correct Answer Incorrect Answer

Solution

It is a prospectus that does not specify the price or number of shares being offered, Explanation: Section 32.Red herring prospectus: Explanation—For the purposes of this section, the expression “red herring prospectus” means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.

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