Question

A private company does not issue prospectus.

• A. True
• B. False

Answer 1

The correct option is A True

(i) Prospectus is a document which invites offers from public to purchase shares or debentures of a company.

(ii) It gives all essential information about every aspect of the company.

(iii) Prospectus of a company is a written request to the investors to purchase (subscribe) its shares and debentures of a public limited company by shares.

(iv) A copy of prospectus must be filed with the Registrar of Companies.

(v) Prospectus must be issued to the public within 90 days from the date of filing it with Registrar of Company.

(vi) The main purposes of a prospectus is to raise the requited capital for business of a compy

(vii) Prospectus is issued by 'Public Limited' company by shares only.

(viii) 'Private Ltd' company cannot issue prospectus since it cannot invite general public to purchase its shares.

(ix) In case, no prospectus is issued a statement-in-lieu of prospectus must be filed with Registrar of Companies.