Prepared by;

Noby V Abraham21st B Batch

BIMS

IntroductionA formal legal document, which is required by and

filed with the Securities and Exchange Commission, that provides details about an investment offering for sale to the public. A prospectus should contain the facts that an investor needs to make an informed investment decision.

Also known as an "offer document."

A formal offer documentIt is required by and filed with the 

Securities and Exchange Commission(SEC India)

Provides details about an investmentOffering for sale to the public It contain the facts that an investor needs to

make an informed investment decision.

possibility no.1When a company go to issue share or

debenture on primary marketBefore company issue a documents to public

which contain all the details about the particular share or debt and company

Also a way to identify the profitability and growthness of business

It helps the public to take the decisions about the purchase of these share or debt on the basis of it

Time period normally 1 week only

possibility no.2 After the receipt of certificate of incorporation, if the

promoters of a public limited company wishes to issue shares to the public, he will issue a document called prospectus.

It is an invitation to the public to subscribe to the share capital of the company.

The companies Act, 1956 defines “prospectus as any document described or issued as a prospectus and include any notice, circular, advertisement or other documents inviting deposits from the public or inviting offer from the public for the subscription of shares. It is circulated among the public in printed pamphlets. It gives all necessary information about the company so that the prospective shareholders may fully understand the objectives and the plans of the company.

Objective’sProspectus is issued with the following broad objectives:

It informs the company about the formation of a new company.

It serves as a written evidence about the terms and conditions of issue of shares or debentures of a company.

It induces the investors to invest in the shares and debentures of the company.

It describes the nature, extent and future prospectus of the company.

It maintains all authentic records on the issue and make the directors liable for the misstatement in the prospectus.

Contents,,

The following important matter are included in the prospectus:

The name, addresses and occupation of directors and managing directors.

The number and classes of shares and debentures issued.

The qualification share of directors and the interest of directors for the promotion of company.

The prospectus contains the main objectives of the company, the name and addresses of the signatories of the memorandum of association and the number of shares held by them.

The name and addresses of the vendors of any property acquired by the company and the amount paid or to be paid.

particulars about the directors, secretaries and the treasures and their remuneration.

The amount for the minimum subscription.If the company carrying on business, the

length of time of such businesses.The estimated amount of preliminary expenses.Name and address of the auditors, bankers and

solicitors of the company.

Time and place where copies of balance sheets, profits and loss account and the auditors report may be inspected.

The auditor’s report so submitted must deal with the profit and loss of the company for each year of five financial years immediately preceding the issue of prospectus.

If any profit or reserve has been capitalized, the particulars of such capitalization will be stated in the prospectus.

Legal requirements of prospectusA prospectus Is required to be issued only

after the incorporation of companyThe prospectus must contain all the

particulars, listed in the schedule II of companies act

The prospectus must be datedBefore a prospectus is issued, a copy of it

must be registered with the registration of companies

Prospectus shall be issued within ninety days of its registration

STAEMENT IN LIEU OF A PROSPECTUSA statement in lieu of prospectus. According to the companies'

ordinance if a public company is not issuing a prospectus on its formation, it then must file a statement in lieu of prospectus with the registrar of the companies. A statement n lieu of prospectus is defined as:

"A public document prepared in the second schedule of company's ordinance by every such public company which doesn't issue a prospectus on its formation with the registrar before allotment or shares of debentures, and signed y every person who is named therein.“A statement in lieu of prospectus gives practically the same information as a prospectus and is signed by all the directors or proposed directors. In case, the company has not filed a statement in lieu of prospectus with the registrar, it is then not allowed to allot any of its shares or debentures.

A statement in lieu of the prospectus contains the information as described below

1- Name of the company2- Statement of capital3- Description of the business4- Names, addresses, and occupation of directors5- Estimated initial expenses6- Names of vendors and details of property7- Material contracts8- Director's interest9- Minimum subscription

TYPES OF PROSPECTUSABRIDGED PROSPECTUS

DEEMED PROSPECTUS

SHELF PROSPECTUS

RED HEARING PROSPECTUS

Pink-herring prospectus

Red-herring prospectus: a prospectus that contains most of the

information that will be presented in the final prospectus but often does not mention a price and/or the number of securities. A red-herring prospectus is alternatively known as a preliminary prospectus.

 It can be distributed to potential investors after the registration statement for a securities offering has been filed with the securities commission. 

The public limited companies, which are yet to obtain the certificate of commencement of business, without filing of business, require the SLP (Statement in lieu of prospectus).

It must be filed when a Private company becomes a Public company.

Abridged prospectusa shorter version of the prospectus that

includes all the most key elements of the typical prospectus. An abridged prospectus contains information very similar to the typical prospectus but in a concise and compact form.

Both versions of the prospectus must comply with the disclosure requirements prescribed by the relevant securities commission.

Deemed prospectus: a prospectus that is deemed to have been

made by the issuer, though it is actually offered to the public by a third party or the so-called issue house (Indian terminology). The issuer saves the underwriting expenses in selling its securities.

Shelf prospectusa prospectus that describes a set of unissued,

but registered securities. It is used in situations where securities are issued in consecutive stages over a period of time because the size of issue is too large (and funds to be raised are enormous, making the filing of prospectus each time very expensive). Later on, an issuer will only need to file the so-called information memorandum with the relevant securities commission.

Pink-herring prospectus a prospectus that is issued without

disclosure of the number of securities being offered or, in an initial public offering, the estimated or indicative price range. It is a preliminary prospectus that precedes the filing of a red-herring prospectus.