Definition: “Sec 2(70) of Companies Act, 2013 defines prospectus as any document described or issued as a prospectus and includes 32a Red Herring Prospectus or shelf prospectus or/and notice, circular advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate”.
Meaning: Prospectus is a document that contains information about various aspects of the company and invests the investors to buy the securities offered by the company.
Contents of Prospectus:
A prospectus must contain the following:
(i) Information and Reports:
As per the Companies Act, the prospectus must contain information such as the name of the issuing company its full registered office address with phone numbers, email address, nature, number and price of securities being offered, details of a lead merchant banker, registrar to the issue, name of the stock exchange where the shares are listed.
- It must also have listed a clause of general risk date of opening and closing of issue etc.
- It must also have reported on financial information.
(ii) Declaration:
There should be a declaration by the company saying that all the provisions of the Companies Act have been complied with and that the prospectus does not contain anything contrary to the provisions of the Companies Act.
(iii) Statement of an Expert: A prospectus may contain a statement made by an expert like Company Secretary, Chartered Accountant, Cost Accountant, Valuer, Engineer, etc., relating to matters that they have looked into.
- Any other matter as may be prescribed by the Companies Act.
- The expert has to give written consent to issue the prospectus.
(iv) Any other matter as may be prescribed by the Companies Act.
