Q.What is a prospectus? Is it necessary for every company to file a prospectus?

A prospectus is any document described or issued as a prospectus — including any notice, circular or advertisement — inviting the public to subscribe for or purchase a company's securities (or to make deposits).

It is not necessary for every company to file a prospectus:

• A private company is prohibited from inviting the public to subscribe, so it never issues a prospectus.
• A public company that raises funds from friends or relatives rather than the public files a statement in lieu of prospectus instead. …

What is a prospectus?

• A prospectus is any document described or issued as a prospectus — including any notice, circular or advertisement — that invites deposits from the public or invites offers from the public to subscribe for or purchase the securities (shares, debentures) of a body corporate.
• It is essentially an invitation to the public to invest in the company.
• Because investors decide primarily on the basis of its contents, a prospectus must contain no mis-statement and must fully and honestly disclose all material, significant information, so that investors are protected.

Is it necessary for every company? No — filing a prospectus is not required of every company:

• A private company is prohibited from raising funds from the public. It therefore never issues a prospectus, and can begin operations after only promotion and incorporation. …