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Question
Explain the following term/concept.
Prospectus
Solution
(1) Prospectus refers to any document, statement, notice, circular or advertisement, issued by the company to invite the public to purchase its shares or debentures or to deposit money with it. In other words, a prospectus is a document issued by public company publishing the highlights and business prospects of the company and thereby wishing to sell newly issued shares or debentures to the public.
(2) It should satisfy two conditions, viz.
(a) It Invites subscriptions for shares or debentures invites deposits
(b) This invitation is made to the public at large. A private need not me a prospectus With the Registrar.
(c) Every person connected with the issue of the prospectus is liable for misstatement in the prospectus. Such liability may be a civil and/or criminal liability.
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fine Prospectus. Explain its contents.
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