Question

State the following statement is True or False:

Invitation to the public to invest in shares or debentures of a company is through the prospectus.

• A. True
• B. False

Answer 1

The correct option is A True

The term ‘prospectus’ refers to a mandatory document which contains an invitation to subscribe for shares and debentures, issued by all the companies. It is a legal document, wherein the offer their securities for the public for purchase. It must be in written format, i.e. an oral invitation to offer, for the purchase of shares will not be regarded as a prospectus.