explain prospectus .......?? no spams only correct answer ♥
Answers
Answer:
A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering to the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds.
Answer:
Definition: Prospectus is an offer document or information brochure issued by a public company used for inviting offers from the general public for subscribing the shares.
Explanation:
It contains all the material information as to the price and number of shares/convertible shares being offered for sale to the public, which helps the investors to take a rational decision regarding the investment of his/her funds.
The prospectus is a legally mandated document and so it needs to be registered with the Registrar of Companies (RoC) prior to the opening of an issue when there is a fixed price issue and after the closure of issue when there is a book built issue.
Types of Prospectus
There are various types of the prospectus, discussed as under:
Abridged Prospectus: An abridged prospectus as the name signifies is the summarized offer document containing salient features of an ordinary prospectus. It is issued together with the company’s application form of pubic issue.
Red herring Prospectus: A red herring prospectus is a prospectus used when there is a book built public issue. It contains all the material facts and information excluding the price or quantum of the securities offered for sale.
Basically, it contains information concerning the company’s operations and future prospects, but the relevant details about the offering are not mentioned.
Shelf Prospectus: Shelf Prospectus refers to an offer document that lets the company make a number of issues of the securities or the class of securities mentioned in the document within a period of one year. Meaning that there is no requirement of issuing a fresh prospectus each time when the issue has to be made.
The facility to issue shelf prospectus is available to specific banks and financial institutions only.