Study on Prospectus according to companies act 1956 and different case studies which would help you understand the provisions well. It's important to look at companies act 2013 for amendments made, so that much more clarity can be obtained.

1. CASE STUDYANALYSIS & STUDY
ON
PROSPECTUS – COMPANIESACT 1956
By Raghu & Sriram 

2. DEFINITION OF PROSPECTUS [S2(29)]
PROSPECTUS
means any document described or issued as prospectus, and includes
any notice, circular, advertisement, or other communication, inviting
offers from the public for the subscription or purchase of any shares in,
or debentures of, a body corporate, or 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.

3. CONTENTS OF PROSPECTUS:
Prospectus is one of the means by which he/she is informed of the
soundness of the company’s venture.
This is the basic function of the prospectus. It is the duty of the company
to see that information given in the prospectus is true. Some of the
essentials in the making of the prospectus are:
Prospectus should be dated
Prospectus to be registered
Expert’s Consent
Disclosures in the prospectus: According to the sec – 56 every
prospectus is required to disclose the matters specified in Schedule II of
the Act.

5. ABRIDGED PROSPECTUS Sec 2A(3)56
DEEMED PROSPECTUS Sec 64
SHELF PROSPECTUS Sec-60(A)
RED HEARING PROSPECTUS Sec 60B(2)
TYPES OF PROSPECTUS

6. FRAMING OF PROSPECTUS
The golden rule while framing the prospectus that must be observed was
laid down by KINDERSELY VC in New Brunswick and Canada Rly
and Land Co v Muggeridge.
In brief the rule says that since the public is invited to take shares on the
faith of the representations made in the prospectus, everything must be
stated with strict and scrupulous accuracy. The public is at the mercy of
the company promoters, hence nothing should be stated as fact which is
not so, and no fact should be omitted the existence of which might in any
degree affect the nature or quality of the privileges and advantages
which acted as an inducement to take shares. Thus the true nature of the
company’s venture should be disclosed.

7. MISSTATEMENT
As per Sec-65, 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.

8. STATEMENT IN LIEU OF PROSPECTUS
Section 50(1) provides that a company having a share capital which
does not issue a prospectus on or with reference to its formation or
which has issued such a prospectus but does not proceed to allot any
of its shares or debentures shall not allot any of the said shares or
debentures unless, at least three days before the first allotment,
there has been delivered to the registrar for registration a statement
in lieu of prospectus.

9. CASE LAW: R V. KYLSANT (1932)
A prospectus of a company said that the company had paid a dividend every
year between 1921 and 1927, years of depression, thus giving the impression
of a financially stable company. However, the company had in each of those
years incurred considerable losses on trading account and was only able to
pay a dividend out of reserves accumulated in previous years. This fact was
suppressed.
The court held that the prospectus was false in a material statement and
conveyed a false impression.
(iii) That he has taken action promptly to rescind the contract.
The shareholder must start proceedings for rescission within a reasonable
time and before the company goes into liquidation.

10. Case Law: Nash vs. Lynde (1929)
The directors of a company prepared a document which was in the form of a
prospectus and was in marked “strictly private and confidential”. The
document did not contain all the material facts required by the Acct to be
disclosed. It was circulated among the directors and their friends. The
plaintiff had purchased shares on the footing of these documents which he
obtained from a friend of a director.
It was held that the document received by him was not a prospectus as
private communication between business friends does not constitute a
prospectus. The “public” according to Section 57(1) is not restricted to the
public at large but includes any section of the public whether selected as
members or debenture holders or as clients of the person issuing the
prospectus or in any other manner.
Case Law: Re. South of England Natural Gas and Petroleum Co. Ltd (1911)
3000 copies of a prospectus headed “for private circulation only” were
distributed to shareholders of gas companies. It was not publicly advertised.
It was held that the prospectus was an offer of shares “to the public” even
though it was marked “for private circulation only”.