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Which of these documents falls within the definition of “prospectus” in section 2(70) of the Companies Act, 2013?

Question and options

Which of these documents falls within the definition of “prospectus” in section 2(70) of the Companies Act, 2013?

  1. A notice of general meeting seeking members’ approval for a further issue

  2. A newspaper advertisement inviting the public to subscribe for a company’s shares

  3. A share certificate issued to an allottee after the allotment of shares

  4. A private placement offer cum application letter sent to identified persons

Answer and explanation

Correct answer: B - A newspaper advertisement inviting the public to subscribe for a company’s shares

Section 2(70) of the Companies Act, 2013 defines a prospectus as any document described or issued as a prospectus, and expressly includes any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of securities, as well as red herring and shelf prospectuses. A private placement offer letter under section 42 goes only to identified persons, not the public, so it is not a prospectus.

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