Question

Sunanda subscribed to the shares issued by Jolly Ltd. The prospectus

of Jolly Ltd. included a statement which was misleading in the forms and

contents. Believing the prospectus to be true, Sunanda had subscribed for

shares and sustained a loss.

In context of the above case:

a. Define the term ‘prospectus’.

b. Can Sunanda sue for compensation of loss? Justify your answer. 4)​

Answer 1

Answer:

Explanation: Companies Act 1956, defines a Prospectus as “any document described or issued as prospectus and includes any notice, circular, advertisement inviting deposits from the public or inviting offers from the public for subscription or purchase of any shares in, or debentures of a body corporate”.