1. Chapter :- 3 Prospectus

2. According to section 2(36) Prospectus is any document which includes any notice,circular,advertisement or other document inviting deposits from the public or inviting offers from public for the purchase of shares and debenture of the body corporate

3. A document shall be called the prospectus if it satisfies two conditions 1. It invites subscriptions to share or debenture or invite deposits 2. The aforesaid invitation is made to the public

4. Provision of law regarding the issue of prospectus A prospectus must be dated and signed by all the directors A copy of prospectus must be accompanied with every application form for shares Every prospectus must disclose the matters as required by schedule –II of the companies act When prospectus includes a statement by an expert (such as legal advisor), it must contain a written consent of that expert

5. Contents of prospectus Name and address of the registered office of the company and addresses of the directors Objects of the company Numbers and types of share issued Particulars of the preliminary expenses Particulars of the property

6. Types of prospectus Draft offer document :- means the offer document in draft stage. The draft offer documents are filed with SEBI, atleast 21 days prior to the filing of the Offer Document with ROC. SEBI may specify changes, if any, in the draft Offer Document and the issuer or the lead merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC. The Draft Offer Document is available on the SEBI website for public comments for a period of 21 days from the filing of the Draft Offer Document with SEBI.

7. Red herring prospectus A preliminary registration statement that must be filed with the SEC describing a new issue of stock and the prospectus of the issuing company.

8. Abridged Prospectus” means the memorandum as prescribed in Form 2A under subsection (3) of section 56 of the Companies Act, 1956. It contains all the salient features of a prospectus. It accompanies the application form of public issues.

10. Shelf Prospectus& Information Memorandum Prospectus issued by a financing bank or institution. This prospectus is part of Section 60A and 60B in the Indian Code A document detailing the project and project financing, usually inconnection with a syndication.

11. MIS –STATEMENT IN PROSPECTUS  Rex v. Kylsant Here, Kylsant issued a prospectus where it was stated that the company had paid dividend varying from 5 to 8% every year between 1911 to 1927, except in or 2 years where a lower rate of dividend or no dividend was paid. The prospectus thus rejected that the company was financially strong and stable. But, the facts were that the last 7 years, the company had incurred heavy losses and dividends were paid only out of the accumulated profits which had been stored up during the war period. The Court held that the prospectus was misleading not because of what is stated but because of what it concealed or omitted. The Court is completely right in judging the case as the fact that the company has incurred heavy losses from past 7 years, and that the dividends is paid form a fund is a material fact. And so, it’s the duty of a company to disclose such fact.

12. LIABILITY FOR MIS –STATEMNET IN PROSPECTUS Civil liability Criminal liability

13. Civil liability Remedies against the company Remedies against the directors,promoters and experts

14. Escape liability That the Statement was immaterial. That he had reasonable grounds to believe and did up to the time of the issue of the prospectus believe that the statement was true

15. Defenses available –TO DIRECTORS IN CASE OF MISLEADING PROSPECTUS Withdrawal of consent Issue without knowledge Ignorance of untrue nature of the statement Official documents Statement of expert

16. Case