Define the term prospectus and explain the contents of a prospectus

Define the term prospectus and explain the contents of a prospectus
ANSWER
A prospectus as “any prospectus, notice circular, advertisement or other invitation offering to the public for subscription or purchase any shares or debentures of a company.”

The contents of a prospectus include:

  • Directors interest in the promotion of the company.
  • Particulars of directors and remuneration
  • Share qualification of directors
  • Voting and class rights
  • Minimum subscription
  • Promoters remuneration
  • Particulars of material contracts
  • Amount payable on application and allotment
  • Particulars of options on shares or debentures
  • Length of time the company has carried on business if less than 3 years.