The prospectus of any given company acts as a legal document to pursue
the potential worth and features of the company. Such a prospectus is circulated to potential
customers, investors, and all market participants who may choose to engage in the dealings of
the company and thereby raise the capital of the company in the process. Section 2 subsection 70
of the Companies Act, 2013 dictates that a prospectus is defined as any sort of document that
is circulated It is mandated by the law to be supplied to prospective customers. These
customers pave the way to raise capital. The said capital could be raised from the public at large or
from an outlined strata of people or pre-known investors. There exists a public offer that is
available to investors at large and private placements are for people who are pre-known or
belong to an inner circle of sorts. Capital raising brings in substantial funds but needs advert
placing to raise such capital and needs to have adhered to legal regulations so that
investor protection is guaranteed. Chapter III of the Companies Act 2013 contains provisions
about prospectus, share allotment, and other similar issues. Security is an asset that can be traded. The term applies to almost any form of financial instrument. The term securities, within its purview, include:
- Stocks, shares, scripts, bonds, debenture stock, debentures, or any other securities
that are marketable;
- derivatives;
- Government securities;
- Security receipt as dictated in clause 2(g) under section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002;
- Rights or interests in securities;
- Any certificate or instrument issued to an investor by a competent issuer;
-Schemes or units issued collectively to investors.
The sole purpose of a prospectus is to invite and raise capital. A prospectus provides details to investors so that they may take a calculated decision. All the required information that investors require to make their investment lies in the documents that classify as the prospectus and can be used by both public and private investors to make the required investments.
ADVANTAGES
1. Contains information about the said corporate.
2. It is made available to the public so has the potential to invite some serious buyers
3. It invites investors to subscribe to the company’s shares or rights issues or debentures.
4. The invitation is made on behalf of the company so there exists accountability.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.