Sec. 2(36) of the Companies Act defines a prospectus as, “any document described or issued as a prospectus and includes a notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debentures of a body corporate”. Thus any document inviting the public to buy its shares or debentures comes under the definition of prospectus. It also applies to advertisements inviting deposits from the public.
Under Sec.65 of the Companies Act, a prospectus will be deemed to contain an untrue statement, if:
- The statement included in the prospectus is misleading in the form or in the context in which it is included; and
- There is an omission from the prospectus of any matter which is calculated to misled [Sec.65(1)].