The prospectus is an important document for Public Limited Company. By using this document, promoter makes an invitation to the mass people to buy the Initial Public Offering (IPO) of the respective company. Generally, it refers to that informative document that the registered organization uses for the purpose of informing people aid inviting people to buy the shares of the respective company to collect required capital and to start the proposed organization. The different definitions of the prospectus are given below:
Companies Act 1994: “Document containing an offer of shares or debentures for sale to be deemed as the prospectus.”
Dictionary of Trade and Commerce: “Prospectus is an invitation to the public to subscribe to the shares capital of the company. It is generally circulated to the public in printed pamphlets. When it has not issued a statement in lieu of Prospectus must be issued.”
The prospectus is being said in the Companies Act, sec: 405: “Prospectus means any prospectus, notice, circular, advertisement or other invitation or offer, to the public for subscription or purchase any shares or debentures of a Company.
Above all, it can be said that prospectus is circular by which company offers people to buy or purchase shares and debentures and make a contribution to the collection of the required capital of the respective organization.