1. INTRODUCTION
The Standing Committee on Finance in its 21st report had
highlighted that a company should not be able to freely change the
terms of contracts or the objects stated in its initial public
offering ("IPO") prospectus after
listing of the shares is achieved. The idea behind such restriction
was to protect IPO investors who would have invested based on
disclosures made in the prospectus, including in relation to the
objects or use of proceeds of the IPO. This suggestion, along with
certain exceptions, eventually translated into Section
271 of the Companies Act, 2013 as amended (the
"CA 2013"), which was notified in April
2014.
Since then, many companies have changed IPO objects following
this law, reflecting the dynamic nature of businesses and any
alterations in assumptions made at the time of stating IPO objects.
It is well understood that change in internal or external factors
would give genuine reasons to a company to alter the use of IPO
money
