When is it Mandatory for a Company to Issue a Prospectus?


A prospectus is a document that provides information about a companies financial information, its buisness information and risk considerations. Prospectus is essentially an invitation to offer for the public to subscribe the securities of that company. A company as soon after it decides to “go public” it should get the approval of the Securities Commission. Once the approval of the Securities Commission is given to the company, the company is required to issue a prospectus. It is mandatory to issue a prospectus since it tells the public about the company, what it does and how it expects to perform in the future. It is only through the prospectus potential investors invest in the securities of the company. It is very important for a prospectus to have the risk considerations of the company which had incurred in the past or what may affect its growth in the future. Section 44 of the Companies Act, 1956 deals with the issuance of a prospectus by a private company which plans to cease to be a private company.

Priya holds a masters in accounting and is well-versed with compliance and legal issues a small business may face.