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Class : 11
Unit : Business

What is prospectus? Explain its the main contents.

Ans : Prospectus is the profile of public limited company and provides past and present information and also future prospect of the company. Generally, it is issued at the time of issue of shares or debentures after getting approval from registration office. The objectives of issue of prospectus are as follow:- i) To provide summary of past information (if any), present position and future programs of the company. ii) To draw attention of the public for subscription of capital by purchasing shares. iii) To create confidence among the public about the company and its future prosperity. iv) To provide information to the public about the procedure, terms and condition of issue of shares for subscription. Contents of Prospectus i) Name and location of the company. ii) Objective of the company. iii) Liability of the shareholders. iv) Name and address of the promoter. v) Number of shareholders (put limited at least one, public at least 7). vi) Board of directors and their tenure. vii) Number of minimum share to be the board of directors. viii) Remuneration, facilities and commission of the board of directors. ix) Procedure of general meeting. x) Qualification and required qualities for board of directors. xi) Method of appointing employees. xii) Right and duties of board of directors. xiii) About provision of board of directors. xiv) Reason for debenture issue and details of issue. xv) Assets purchase through the sales of shares. xvi) Brokerage of commission on sales of debenture and share. xvii) Expected income and expenditure. xviii) Total asset and liabilities of the company. xix) Possible risks. xx) Name and address of the auditors of the company, if any. xxi) Connection of promoters and directors with any other company. xxii) Time for publication of share. xxiii) Preliminary expenses of new company. xxiv) Name of shareholders holding more than 57% of issued capital. xxv) Time and place for inspection of financial report. xxvi) Any other information required by law.
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