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What is a Prospectus of a Company?

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What is a Prospectus?

In general parlance prospectus refers to an information booklet or offer document on the basis of which an investor invests in the securities of an issuer company. 

It means any document described or issued as a prospectus and includes a red herring prospectus or shelf prospectus or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate.

What is a Red Herring Prospectus?

Red herring Prospectus means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.

What is a Shelf Prospectus?

Shelf Prospectus mean a prospectus in respect of which the securities or class of securities included therein are issued for subscription in one or more issues over a certain period without the issue of a further prospectus.

Any notice, circular, advertisement or any other document inviting offers from public for the subscription or purchase of securities shall be included in the definition of Prospectus.

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MATTERS TO BE STATED IN PROSPECTUS

Matters to be stated in prospectus include:

1. Names and addresses of

  • the registered office of the Company
  • Chief Financial Officer
  • Auditors of the Company
  • Company Secretary
  • Legal Advisors
  • Bankers
  • Trustees
  • Underwriters etc.

2. Opening and closing dates of the issue, and declaration about the issue of allotment letters and refunds within the prescribed time.

3. A confirmation by the Board of Directors that a separate Bank account is there where all the money received out of issue are transferred and disclosures about its utilization in the prescribed manner

4. Details about underwriting of the issue. The names, addresses, telephone numbers and email addresses of the underwriters alongwith the amount underwritten by them.

5. Authority for issue and resolution passed thereof.

6. Procedure and Time schedule for allotment of securities

7. Capital Structure of the company in the prescribed manner

8. Objects of the company. The locations where the company has its business and schedule of implementation of project.

9. Details regarding minimum subscription including the amount payable by way of premium and details of issue of shares in case they are issued otherwise than on cash.

10. Details of directors including their appointments and remuneration. The directors also need to mention their nature and extent of interest in the company. Further, their details regarding their remuneration and appointment is also required to be mentioned.

These are few of the matters that need to be present in a prospectus of the company. Hope you have liked this article on “ What is a Prospectus ” please share and comment below in case you have any query. For any other information you can contact us on www.registrationsindia.com

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