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Saturday, 11 June 2011

What is prospectus and discuss the main sections of prospectus

Prospectus :-
Prospectus is a document in which company invites the public to purchase its shares. Purchase may be defined as any advertisement, notice or circular offering to the public for subscription or purchase of any share or debenture of till company. Prospectus may be dated and signed by all the directors or other agents.

Contents of the Prospectus :-
Following are the important particulars of prospectus :

1. The main object of the company.

2. All the points of memorandum.

3. The name and address of the company.

4. The name and address of the directors and managing director.

5. Name and address of the auditor.

6. Number and value of shares.

7. Shareholders right regarding vote.

8. Details regarding the interest of directors and promoters.

9. Balance sheet inspection time and place.

10. If a company has purchased any property its detail.

11. Preliminary expenses estimate.

12. The amount of underwriting commission paid within two previous years.

13. The minimum subscription on which the directors may allot the share.

14. Amount payable on application.

15. Date, time and condition of contract made by founders.

16. Duration for which the business is to be conducted if it is less than 3 years.

17. Any restriction imposed on the transfer of shares.

18. Amount which is being paid to the promoters within two years.

19. Last three years reports summary of earnings of the company.

20. Statement that a copy of prospectus has been submitted in the registrar office.

A Statement in Lieu of Prospectus :-
If a company has not issued the prospectus on its formation then it must file a statement in lieu of prospectus with the registrar of the companies. It provides the information like prospectus. It is also signed by all the directors. A company can not allot the shares or debentures without filing it. According to companies ordinance it is necessary that if a company fails to issue prospectus then it must file the statement in lieu of prospectus.

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