Q.What is a Prospectus? State any four matters that a Prospectus must disclose.

A prospectus is the formal, legally regulated way a public company asks the general public to invest in it.

A Prospectus is defined broadly under Section 2(70) of the Companies Act, 2013 as any document described or issued as a prospectus, and includes a red herring prospectus, a shelf prospectus, or any notice, circular or advertisement inviting the public to subscribe for or purchase a company's securities, or to make deposits with it. Only a public company issues a prospectus; a private company is barred by law from inviting the public in this way. Under Section 26 of the Companies Act, 2013, a prospectus must disclose matters such as:

1. the name and registered office of the company, and its main objects and present business;
2. the names, addresses and particulars of its directors and promoters;
3. the nature and number of shares or debentures being offered, and the minimum subscription required before allotment;
4. the dates on which the subscription list opens and closes;
5. the company's capital structure; and
6. its financial statements, together with the auditor's report and the risk factors attaching to the issue. …

Students often list only financial details when asked for prospectus contents and omit the equally important qualitative disclosures such as director/promoter particulars, mini …