5.3 Prospectus/information memorandum


The Act defines a prospectus as “any prospectus, notice, circular, advertisement or other invitation to the public for subscription or purchase of any shares or debentures of the Company”. Thus any document containing an offer of shares or debentures for sale to the public shall be deemed to be a prospectus and all provisions relating to a prospectus shall also apply to it.

Offer to the Public

Under section 510 public includes any section of the public however selected whether as members or debenture holders or clients of the person issuing the prospectus. No offer shall be treated as made to the public if:

  • It is not calculated to result in the shares or debentures becoming available to persons other than those receiving the invitation
  • It appears to be a domestic concern between persons making and receiving the invitation

Form of Prospectus

Before a prospectus is issued a copy must be delivered to the registrar and it must be signed by every person named there in as a director or proposed director. It must be dated and the date unless otherwise stated is taken to be the date of publication of the prospectus.

Contents of the Prospectus

The Act provides that every prospectus issued by or on behalf of the Company must state matters set out and reports specified under different schedule of the Act.

The following matters (contents) must be stated

  1. Name of the Company and address of registered office
  2. Objects of the Company
  3. Address and occupation of directors or proposed directors
  4. Number and classes of shares held by members
  5. Details about redeemable preference shares, if any
  6. Date and time of opening the subscription
  7. The amount payable on application and allotment
  8. Amount of premium payable on each share if issued at a premium
  9. Names and address of the Company’s auditors
  10. Qualification shares of directors where articles require


Reports to Be Set Out in the Prospectus

In appropriate form, the following are required to be set out in the prospectus

  1. A report by the auditors of the Company relating to profits and losses and assets and liabilities of the Company for the last 5 years
  2. A report by directors of the Company in respect of rate of dividends paid by the Company in respect of each class of shares for the last 5 years
  3. If the Company proposes to acquire any business, a report by a qualified accountant whose name should be disclosed in the prospectus