Define prospectus. State the contents of a prospectus.

Prospectus:-

A prospectus is an invitation to the public to purchase shares or debenture of a company. In other words, a prospectus may be defined as any document that includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any share in, or debentures of a body corporate. 

Prospectus has the following characteristics:

A. It is a document described or issued as a Prospectus.

B. It includes any notice, circular, advertisement inviting deposits from the public.

C. It is an invitation to the Public.

D. The public is invited to subscribe the shares or debentures of a company.

Contents of the Prospectus:-
Every prospectus issued by or on behalf of a company shall state the matters specified in Part- I of schedule 111 of the Companies Act 1994. According to the Part I of Schedule III, the following items are to be included in the Prospectus:

1. The names, addresses, descriptions and occupations of the signatories to the memorandum and the number of shares subscribed for them;

2. The number and classes of shares and the nature and extent of interest of holders in the property and profits of the company;

3. The number of redeemable preference shares intended to be issued with the date of redemption;

4. The rights in respect of capital and dividend attached to different classes of shares;

5. The number of shares fixed by the articles as the qualification of director;

6. Particulars regarding directors, managing agents, manager, secretaries and treasures etc;

7. Remuneration of the directors;

8. The minimum amount of subscription and amount payable on application;

9. Time of opening of subscription list;

10. Preliminary expenses incurred;

11. Particulars regarding purchase of property;

12. Details of any premium or under-writing commissions paid;

13. Particulars of reserves including reserve capital;

14. Nature and extent of interest of every director and promoter;

15. Names and addresses of the auditors of the company;

16. The nature and extent of restrictions upon members at company meetings;

17. Restrictions upon Powers of the directors; and

18. Voting rights, capitalization of reserves and surplus of revaluation.