The document defines a prospectus and outlines what companies must issue one when offering shares or debentures to the public. It discusses the classes of prospectus, matters that must be specified in a prospectus like company information and financials, reports that must be included, expert opinions, and liabilities for misstatements. Companies must get regulatory approval and register their prospectus, which becomes a legally binding document for investors.

1. Presented by Umair Noor MuhammadDEFINITION OF PROSPECTUS [S-2(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.WHICH COMPANIES ARE REQUIRED TO ISSUE PROSPECTUSEvery public listed company who intends to offer shares or debentures of the company to the public.

2. 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.Presented by Umair Noor MuhammadCLASSES OF PROSPECTUS1. Prospectus issued generally i.e. issued to persons who are not existing members or debenture holders (e.g. prospectus issued to a new company making a public issue on its formation).2. Prospectus issued generally uniform with shares or debentures already quoted on stock exchange.3. Prospectus not issued generally i.e. only to the existing shareholders and debenture holder (e.g. right issue).

3. Presented by Umair Noor MuhammadMATTERS TO BE SPECIFIED IN PROSPECTUS1. Contents of the Memorandum with the names, addresses and occupations of the signatories of the memorandum and the number and value of shares subscribed by them and their interest in the property and profits of the company. This content is not required if the prospectus is published in newspaper or issued after 2 years from the commencement of business.2. Description of the business and length of time during which the business of the company has been carried on.3. Names, addresses and occupation of proposed or existing Chief Executive, directors, secretary and any other Company in which they hold office. 4. Remuneration to Chief Executive and directors.Contd…

4. Presented by Umair Noor Muhammad5. Minimum subscription (only in the case of first allotment). For allotment of shares minimum subscription must have been received in cash.Concept of minimum subscription is applicable only for the first allotment by public company whether listed or not.MINIMUM SUBSCRIPTION IN CASE OF A COMPANY ISSUING PROSPECTUSThe amount which, in the opinion of the directors, must be raised from public by means of shares in order to provide for the following matters:a. Purchase price of any property purchased or to be purchasedb. Preliminary expense and any commission in respect of the issuec. Repayment of loan obtained by the company in respect of the above mattersd. Working capitale. Any other expenditure stating the nature, purpose and estimated amount in each caseContd…

5. Presented by Umair Noor Muhammad6. Date and time of opening and closing of subscription list and the amount payable on application on each share.7. The amount offered and allotted on each previous allotment, if any, within two preceding years.8. Substance and particulars of any contract or arrangement in respect of any preferential rights or options given to any person (e.g. option of conversion from debentures to ordinary shares or preferential right in allotment to NIT, non-residents or employees).9. Share or debentures issued within two preceding years otherwise than in cash.10. Premium on shares within two preceding years.11. Names of underwriters and the opinion of the directors that the resources of underwriters are sufficient to discharge their obligationContd…

6. Presented by Umair Noor Muhammad12. Commission on shares or debentures within two preceding years (including underwriting commission) with names, nature, rate etc.13. Preliminary expenses (not applicable if prospectus is issued after two years of commencement of business).14. Amount or benefits within two preceding years or intended to be given to any promoter or officer.15. Name and addresses of auditors and legal advisors.16. Interest of every director of promoter in:the promotion of the company

7. any property acquired within two years or proposed to be acquired.17. Pending legal proceedings.

8. Presented by Umair Noor MuhammadREPORTS TO BE SET OUT IN PROSPECTUSAuditor’s report is required to be included in the prospectus with respect to:1. Profits and losses for each of the five financial years preceding the issue of prospectus and of its subsidiaries, if any.2. Assets and liabilities on the last balance sheet date and of its subsidiaries, if any.3. If proceeds of shares or debentures are to be applied in the purchase of any business or more than 50% share of that business, the auditor’s report as above shall also be in respect of that business.The Chief Executive and Chief Financial Officer of the company and the underwriter to the issue shall certify that the prospectus constitutes a full, true and fair disclosure of all material facts relating to the securities offered by the prospectus.

9. Presented by Umair Noor MuhammadEXPERTS OPINION1. Expert includes an engineer, a valuer, an accountant, or every other person whose profession gives authority to any statement made by him.2. Experts written consents are required to be obtained which are not withdrawn before the issue of prospectus.3. Statement is required to be included in the prospectus that experts have given and not withdrawn their consents.4. An expert shall not be a person engaged or interested in the formation or in the management of the company.

10. Presented by Umair Noor MuhammadCIVIL LIABILITY FOR MISSTATEMENT IN THE PROSPECTUSThe following persons shall be liable to pay compensation to all persons who subscribe for shares or debentures on the faith of the prospectus for all losses or damages they may have sustained by reason of any misleading or untrue statement in the prospectus:1. Every director at the time of issue of prospectus2. Every proposed director named in the prospectus3. Every person who has authorized the issue of prospectus i.e. expert, auditor, legal advisor etc. (they are liable for misstatement in their report e.g. legal advisor is not liable for any misstatement in the financial statement).4. Every promoter of the companyContd…

11. Presented by Umair Noor MuhammadIf a person is not a director, proposed director or expert or he has withdrawn his consent before publication of the prospectus but his name is given in the prospectus they every person willfully involved shall be liable to indemnity the said person against all damages and expenses to which he may be liable by reason of his name having been inserted in the prospectus.CRIMINAL LIABILITY FOR MISSTATEMENT IN THE PROSPECTUSIn the case of any misstatement in the prospectus, every person who signed or authorized the issue of prospectus shall be punishable with imprisonment up to two years or fine up to Rs 10,000 or both.

12. Presented by Umair Noor MuhammadDEFENCES AVAILABLE AGAINST CIVIL AND CRIMINAL LIABILITY1. A person is not liable for civil or criminal liability if he proves that:the untrue statement was immaterial

13. he had reasonable ground to believe that the statement was true

14. as regards any matter not disclosed he proves that he had no knowledge thereof

15. non-compliance arose from an honest mistake of fact on his part

16. the prospectus was issued without his knowledge or consent and on becoming aware of its issue, he forthwith gave a reasonable public notice of the fact