(1) Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in such stock exchange or each such stock exchange.

(2) Where a prospectus states that application under sub-section (1) has been made, such prospectus shall also state the name or names of the stock exchange or stock exchanges to which such application has been made.

(3) Where permission has not been granted by the stock exchange or each stock exchange referred to in sub-section (1), before the expiry of such period as may be specified by the Securities and Exchange Board, the company shall forthwith repay without interest all money received from applicants in pursuance of the prospectus.

(4) If default is made in complying with the provisions of this section, the company and every officer who is in default shall be liable to a penalty of five lakh rupees which may extend to fifty lakh rupees.