A company prospectus is a disclosure document that provides detailed information about investment offerings to the public. It must be issued when a company sells stocks, bonds, or other securities. A prospectus outlines key company information like objectives, share classes, rights, expenses, auditors, and restrictions. It must include particulars listed in the Companies Act schedule and be signed by directors. Prospectuses are subject to legal requirements regarding timing, contents, registration, and penalties for non-compliance. Individuals can be liable for misstatements in a prospectus.
A company prospectus is a disclosure document that provides detailed information about investment offerings to the public. It must be issued when a company sells stocks, bonds, or other securities. A prospectus outlines key company information like objectives, share classes, rights, expenses, auditors, and restrictions. It must include particulars listed in the Companies Act schedule and be signed by directors. Prospectuses are subject to legal requirements regarding timing, contents, registration, and penalties for non-compliance. Individuals can be liable for misstatements in a prospectus.
A company prospectus is a disclosure document that provides detailed information about investment offerings to the public. It must be issued when a company sells stocks, bonds, or other securities. A prospectus outlines key company information like objectives, share classes, rights, expenses, auditors, and restrictions. It must include particulars listed in the Companies Act schedule and be signed by directors. Prospectuses are subject to legal requirements regarding timing, contents, registration, and penalties for non-compliance. Individuals can be liable for misstatements in a prospectus.
document that a company has to issue at the time of issuing investment securities to the public. These formal documents provide detailed information to prospective investors about mutual funds, bonds, stocks, and other investment offerings to the public. Characteristics Of Prospectus: Some essential characteristics such as 1.It is a document described or issued as a prospectus. 2.It includes any notice,circular,advertisement inviting deposits from the public or other document. 3.It is an invitation to the members of the public. 4.The public is invited to subscribe the shares or debentures of the company. 5.The term public does not mean an invitation of very large number of people.It is enough if the invitation is to a section of the public. *Form and contents Of Prospectus: i.Principal objects of the company and particulars of signatories of the memorandum of the company and shares subscribed by them. ii.Number and classes of shares and extent of interest of holders. iii.The rights in respect of capital and dividends attached t0 different classes of shares. iv.The minimum amount of subscription and amount payable on application. v.Time of opening subscription list. vi.Preliminary expenses incurred. vii.Details of any premimum or under writing commission paid. viii.particulars of reserves including reserves capitalized. ix.Names and addresses of auditors of the company. x.The nature and extent of restrictions upon members at company meetings. xi.Restrictions upon the powers of directors. xii.Voting rights,capitalisations of reserves and surplus of revaluation. xiii.Inspection of balance sheet,profit and loss amount. xiv.There are two reports which must be annex to the prospectus like; 1.Reports by the auditors 2.Reports by the accountant. #Legal Requiements Of Prospectus 1.Time: A prospectus is to be issued after the incorporation 2.Particulars:The prospectus must contain all the particulars listed in Schedule II to the companies act. 3.Date: The prospectus must be dated and this date will be considered to be the date of publication unless otherwise proved sec:55 4.Signature:The prospectus must be signed by every person mentioned there in as director or proposed director or his agent. 5.Copy of prospectus:Every application form for his shares,issued by the company,must be accompanied by a copy of the prospectus except i.Application forms issued in connection with a bona fide invitation to a person to enter an under writing agreement and ii.application forms issued to existing members and debenture holders..sec. 56(3) 6.Statement by expert:A statement relating to the company, by an expert can be included in the prospectus only if the expert concerned is not engaged or interested in the formation,promotion, or the management of the company. 7.Deposits:Deposits are not be invited without issuing an advertisement.The Central Government may in consultation with the Reserve Bank Of India prescribed the limits. 8.Before a prospectus is issued,it must be registered with the Registrar of Companies.Copies of relevant documents of directors and experts to the issue of the prospectus and copies(contracts) have to be filled when the application is made of registration.If the relevant documents are not filed or if the prospectus does not comply with the provisions of the Act,registration will be refued.No prospectus can be issued more the 90 days after a copy it is filed for registration. 9.Terms of prospectus:The terms of any contract,mentioned in the prospectus,cannot be varied after registration of the prospectus except with the approval of the members in a general meeting.(sec61) 10.Penalty for Non compliance:If the aforesaid rules,relating to the matters to be included in the prospectus, are not complied with,any person who is knowingly a party to the issue therefore,shall be punished with a fine which may be extend to Rs.50000 11.Defence:A person charged with non compliance of the aforesaid rules will be excused in the cases of i.as regards any matter not disclosed,if he proves that he had no knowledge ii.if he proves that thr non compliance or conversation arose from an honest mistake of fact on his part. *Misstatements in the prospectus: Any statement in the prospectus that is eerroneous or misleading is referred to as misstatements in the prospectus. A misrepresentation is defined as the inclusion or omission of a fact that is likely to mislead the public. # Who are liable for misstatements in prospectus? A person who has signed and given consent to the prospectus is liable for misstatement. Persons who had the management of the whole, or substantially whole of the affairs of the company can be held liable for misstatement in prospectus if they have signed the prospectus and had given consent for the same. # The court further observed that as per Section 65 of the Companies Act, 1956 untrue statements in the prospectus will result in liability for the loss or damage sustained by a person while subscribing for shares or debentures based on such statements in the Prospectus. *Statement in liue of Prospectus:The Statement in Lieu of Prospectus is a document filed with the Registrar of the Companies ( ROC ) when the company has not issued prospectus to the public for inviting them to subscribe for shares. The statement must contain the signatures of all the directors or their agents authorized in writing. It is similar to a prospectus but contains brief information. The Statement in Lieu of Prospectus needs to be filed with the registrar if the company does not issues prospectus or the company issued prospectus but because minimum subscription has not been received the company has not proceeded for the allotment of shares. *Minimum Subscription: Minimum subscription refers to the minimum amount required by the company for its preliminary functions. It has been provided by the Companies Act, that the company must receive applications for a certain minimum number of shares before going ahead with the allotment of shares in order to prevent companies from commencing business with inadequate resources. This is called the 'minimum subscription'. The limit of minimum subscription is 90% of the size of the issue.