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Question
Explain the following term/concept.
Misstatement in Prospectus
Solution
Misstatement means and includes a false statement, irrelevant statement, or omission to disclose relevant statements. Prospectus constitutes the basis of the company’s contract between the company and the shareholders. Hence. it should contain true and correct information. There should be a full and honest disclosure of all essential facts. A prospectus that contains false. misleading, ambiguous, or fraudulent statement of material facts, or which suppresses material facts. is considered to be a misleading prospectus.
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