A company invites subscription to its securities from the PUBLIC without obtaining a valid PROSPECTUS/offer document and without complying with the disclosure framework. Under the Companies Act, 2013, such an invitation/issue:

Section 23 and the related provisions of the Companies Act, 2013 require a public offer to be made through a valid PROSPECTUS (as per its requirements) and disclosures; an invitation to the public in contravention, or an allottment without a valid offer document/provisions-procedure, is VOID and the persons who are parties to the contravention - including directors and promoters, and without prejudice to the company - are liable for the amount(s) subscribed and the prescribed penalties. This protects investors from informal, undisclosed public issues. The validity and liability consequences attach to the unlawful public offer.