By the end of this sub unit, you should be able to:
1. Explain the governing legislation on prospectus and regulator of prospectus.
2. Explain the concept of prospectus and supplementary prospectus.
3. Identify persons involved in preparation of prospectus.
4. Describe the knowledge of content of prospectus.
5. Advise on the requirements of prospectus in raising of capital.
6. Advise on the requirements on registration of prospectus.
The governing legislation for an offer of shares or debentures to public by a company1 is governed by the Capital Market and Services Act 2007 (CMSA). Capital raised from the public is by way of issuance of financial instruments called securities. Shares and debentures are within the meaning of securities. To prevent the intermediary who take up a whole issue and then re-sell to the public, the CMSA reaches out to include (within the term “prospectus”) and legalise any document making an offer to the public as a term fall.
1 Unless it is an offer or invitation of shares or debentures made to public by an unlisted recreational club, offer or invitation in respect of shares or debentures made to the public by an unlisted recreational club is regulated by Section 36A Companies Act 1965.