Objectives of Prospectus
The prospectus is an important document of Public Limited Company. By using this document, promoters invite people to buy shares or debentures to raise the required fund of the company. So from the idea of the prospectus, the importance of the prospectus in public limited company is easy to understand. However, we tried to find some points regarding the objectives of the prospectus are as follows:
Collection of Capital: As we know, capital is the blood of any organization, though Private Limited Company arranges its fund by itself. On the other hand, the Public Limited Company can’t. For this reason, a public limited company can raise its capital by selling shares and debentures at various rates. The prospectus is invited by the people to purchase shares or debentures. This is the prospectus which holds the rate of return of the shares or debentures of the respective company and it also holds the potentiality of the company by explaining the future plans and policies of the company.
An obligation of Companies Art: According to the Companies Act, every Public Limited Company is being obligated to issue prospectus and need to submit it to the registrar. That’s why it is mandatory for all the public limited company.
Importance to Potential Share-holders: It helps the potential investors to take proper decision to invest their money in the respective company as it describes the policies, financial conditions and earning a rate of the company.
On the basis of above-mentioned discussion, it can be said that prospectus is very much important to let the people know about the company clearly. Prospectus invited the investors to purchase shares and debentures and helps to raise capital for the company.