Q: What are the differences between red- herring prospectus and shelf prospectus ?

Ans: In the process of going public for the first time, a company issues shares through an Initial Public Offering (IPO) to raise funds. Conversely, a company that is already publicly traded can raise funds by selling bonds. Any company seeking to raise funds publicly must file a prospectus with the market regulator, SEBI (Securities & Exchange Board of India).

While a company launching IPO files a Red Herring Prospectus, a company issuing bonds is required to file a shelf prospectus. The prospectus will encompass comprehensive information about the issued bonds, including crucial details such as prices, maturity dates, and more. It serves a dual purpose as a legal document and a marketing tool for the bonds.