Prospectus — Meaning and Contents

Meaning. Section 2(70) of the Companies Act, 2013 defines a prospectus broadly, as any document described or issued as a prospectus, and expressly includes a red herring prospectus and a shelf prospectus, as well as any notice, circular, advertisement or other document inviting the public to make deposits with the company or inviting offers from the public to subscribe for or purchase any of its securities. In plain terms, a prospectus is the formal invitation a public company extends to the general public to buy its shares or debentures. A private company, being legally barred from inviting the public to subscribe for its securities, never issues a prospectus.

Contents. Section 26 of the Companies Act, 2013, together with the schedule it refers to, requires a prospectus to disclose, among other matters:

• the name and registered office address of the company, and its main objects and present business;
• the names, addresses and other particulars of its directors and promoters;
• the nature and number of shares or debentures on offer, and the minimum subscription required before any allotment can be made;
• the dates on which the subscription list opens and closes;
• the company's existing capital structure;
• financial information, including reports on the company's profits or losses and its assets and liabilities for the preceding years, together with the auditor's report on them;
• the risk factors attaching to the company's business or to the particular issue; and
• particulars of any underwriting arrangements, followed by the statutory declaration of compliance that closes the document. …