The document defines a prospectus as any written document issued by a body corporate to the public to invite investment through shares, debentures, or deposits. It outlines the required contents of a prospectus, including company details, issue dates, consents, and financial information. A prospectus can be considered misleading if it contains untrue statements or omits relevant details. Directors are liable for fraud if the prospectus misleads investors in this way. However, directors have a defense if they can prove a statement was immaterial or they had reasonable grounds to believe its inclusion was necessary. The process of issuing a prospectus can delay business operations and discourage some companies from public share offerings.

1. By:- Aamir Mirza

2. Prospectus means any document described or issued as prospectus and
includes- • any notice, circular, advertisement or any other communication,
inviting offers from the public for the subscription or purchase of any shares in
or debentures of, body corporate, inviting deposits from the public other than
deposits invited by a banking company or a financial institution approved by
the Federal Government whether described as prospectus or otherwise

4. • Every public listed company who intends to offer shares or
debentures of the company to the public.
• Every private company who ceases to be a private company
and converts into a public company and intends to offer shares
or debentures of the company to the public.

5. A document would be considered a prospectus only if it meets the
following requirements:-
• It should be in written
• It should be issued by or on behalf of a body corporate
• It should be issued to public
• It should contain invitation to public for making deposits or for
subscription of share in or debentures of a body corporate.

6. • Address of the registered office of the company.
• Name and address of company secretary, auditors, bankers,
underwriters etc.
• Dates of the opening and closing of the issue.
• Declaration about the issue of allotment letters and refunds within the
prescribed time.
• A statement by the board of directors about the separate bank account
where all monies received out of shares issued are to be transferred.
• Details about underwriting of the issue.
• Consent of directors, auditors, bankers to the issue, expert’s opinion if
any.
• The authority for the issue and the details of the resolution passed
therefore

7. • Procedure and time schedule for allotment and issue of securities.
• Capital structure of the company.
• Main objects and present business of the company and its location.
• Main object of public offer and terms of the present issue.
• Minimum subscription, amount payable by way of premium, issue of
shares otherwise than on cash.
• Details of directors including their appointment and remuneration.
• Disclosure about sources of promoter’s contribution.

8. A prospectus is said to be misleading or untrue in two following
cases
• A statement included in a prospectus shall be deemed to be
untrue, if the statement is misleading in the form and context
in which it is included.
• Omission from prospectus of any matter to mislead the
investors.

9. (SECTION 35) Here the remedy to claim damage is available for any loss
sustained by the subscriber by reason of any untrue statements in a
prospectus, irrespective of whether they were made fraudulently or
innocently. But now he can keep his contract and claim the loss as
damage.

10. • He has withdrawn his consent or never give his consent;
• The prospectus was issued without his knowledge or consent and
when he become aware, gave a reasonable public notice that
prospectus was issued without his knowledge or consent.

11. Where a prospectus, issued, circulated or distributed:
• Includes any statement which is untrue or misleading in form or
context in which it is included; or
• Where any inclusion or omission of any matter is likely to mislead;
Every person who authorizes the issue of such prospectus shall be liable
under section 447 i.e. fraud.

12. • Person prove that statement or omission was immaterial
• Person has reasonable ground to believe and did believe
that the inclusion or omission was necessary.

13. Prospectus is a mandatory document for limited organization to
commence their business, but its complicated procedure
delays the operation of any business. Therefore a no. of
organizations hesitate to issue prospectus to general public
for subscription of share capital and debenture.