Define the term "prospectus" and explain the circumstances under which a company may issue a prospectus

Define the term "prospectus" and explain the circumstances under which a company may issue a prospectus.

Under Section 2 (1) of the Companies Act “prospectus” means:

-“Any prospectus, notice, circular advertisement or other invitation offering to the public for subscription or purchase any shares or debentures of a company.”
Any invitation intended to avail shares or debentures to the public qualifies as a prospectus.
- A prospectus does not offer securities but invites offers from prospective investors.
- “Public” is not restricted to the public at large, it includes a section thereof.
- Its contents are prescribed by law and a copy thereof must be delivered to the registrar for registration.

? A newly formed company may issue a prospectus inviting subscription for its shares.?? ? An existing company may issue it when floating new share to the public.?? ? When a private company goes public, pursuant to Sec.32 (1) of the Act, it may issue prospectus or statement in lieu.?

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marto answered the question on February 5, 2019 at 11:47

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