What is a prospectus is it necessary for every company to file a prospectus?
Answers
Prospectus refers to that document which contain all the relevant information to the issue and through which the company invites the public to apply for shares, debentures.It is the third important document in relation to the formation of a company.Generally ,the prospectus is issue by a public company to obtain money from the public.The promoters of company generally issue prospectus after obtaining the certificate of incorporation.
It is not necessary to that every company issue a prospectus.restriction is imposed on a private company to offer for sale shares and debentures to the public .But for a public company limited by shares it is necessary before issuing a prospectus and allotment shares to a forward a prospectus or statement in lieu of prospectus,to the registrar. If a public company limited by shares received the capital from the public it is necessary for it to issue a prospectus but the promoter of this company who can collect capital from their personal source are not required to issue a prospectus.
A prospectus is ‘any document described or issued as a prospectus including any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares or debentures of, a body corporate’. In other words, it is an invitation to the public to apply for shares or debentures of the company or to make deposits in the company. It is issued by a public company which is seeking to raise the required funds from the public by means of issue of shares and debentures. It is not necessary for every company to file a prospectus. A statement in lieu of prospectus is filed with the Registrar of Companies if the company has adopted Table A of the Companies Act instead of Articles of Association. Private companies are not required to file a prospectus.