Question

© Is it obligatory for
a public Company to issue its prospectus . (T/F)​

Answer 1

Answer:

True

Explanation:

It is mandatory to issue a prospectus for a public company since it tells the public about the company, what it does and how it expects to perform in the future. It is only through the prospectus potential investors invest in the securities of the company.

Answer 2

Answer:

I think it is false

Section 2(70) of the Companies Act, 2013 defines a prospectus as ““A prospectus means Any documents described or issued as a prospectus and includes any notices, circular, advertisement, or other documents inviting deposit fro the public or documents inviting offer from the public for the subscription of shares or debentures in a company.” A prospectus also includes shelf prospectus and red herring prospectus. A prospectus is not merely an advertisement.

A document shall be called a prospectus if it satisfy two things:

1. It invites subscription to shares or debentures or invites deposits.

2. The aforesaid invitation is made to the public.

Contents of a prospectus:

1. Address of the registered office of the company.

2. Name and address of company secretary, auditors, bankers, underwriters etc.

3. Dates of the opening and closing of the issue.

4. Declaration about the issue of allotment letters and refunds within the prescribed time.

5. A statement by the board of directors about the separate bank account where all monies received out of shares issued are to be transferred.

6. Details about underwriting of the issue.

7. Consent of directors, auditors, bankers to the issue, expert’s opinion if any.

8. The authority for the issue and the details of the resolution passed therefore.

9. Procedure and time schedule for allotment and issue of securities.

10. Capital structure of the company.

11. Main objects and present business of the company and its location.

12. Main object of public offer and terms of the present issue.

13. Minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash.

14. Details of directors including their appointment and remuneration.

15. Disclosure about sources of promoter’s contribution.

16. Particulars relation to management perception of risk factors specific to the project, gestation period of the project, extent of progress made in the project and deadlines for completion of the project

I hope my Answer help you