The document defines a prospectus and outlines what companies must issue one when offering shares or debentures to the public. It discusses the classes of prospectus, matters that must be specified in a prospectus like company information and financials, reports that must be included, expert opinions, and liabilities for misstatements. Companies must get regulatory approval and register their prospectus, which becomes a legally binding document for investors.

3. Presented by Umair Noor Muhammad MATTERS TO BE SPECIFIED IN PROSPECTUS 1. Contents of the Memorandum with the names, addresses and occupations of the signatories of the memorandum and the number and value of shares subscribed by them and their interest in the property and profits of the company. This content is not required if the prospectus is published in newspaper or issued after 2 years from the commencement of business. 2. Description of the business and length of time during which the business of the company has been carried on. 3. Names, addresses and occupation of proposed or existing Chief Executive, directors, secretary and any other Company in which they hold office. 4. Remuneration to Chief Executive and directors. Contd…

4. Presented by Umair Noor Muhammad 5. Minimum subscription (only in the case of first allotment). For allotment of shares minimum subscription must have been received in cash. Concept of minimum subscription is applicable only for the first allotment by public company whether listed or not. MINIMUM SUBSCRIPTION IN CASE OF A COMPANY ISSUING PROSPECTUS The amount which, in the opinion of the directors, must be raised from public by means of shares in order to provide for the following matters: a. Purchase price of any property purchased or to be purchased b. Preliminary expense and any commission in respect of the issue c. Repayment of loan obtained by the company in respect of the above matters d. Working capital e. Any other expenditure stating the nature, purpose and estimated amount in each case Contd…

5. Presented by Umair Noor Muhammad 6. Date and time of opening and closing of subscription list and the amount payable on application on each share. 7. The amount offered and allotted on each previous allotment, if any, within two preceding years. 8. Substance and particulars of any contract or arrangement in respect of any preferential rights or options given to any person (e.g. option of conversion from debentures to ordinary shares or preferential right in allotment to NIT, non-residents or employees). 9. Share or debentures issued within two preceding years otherwise than in cash. 10. Premium on shares within two preceding years. 11. Names of underwriters and the opinion of the directors that the resources of underwriters are sufficient to discharge their obligation Contd…

7. any property acquired within two years or proposed to be acquired.17. Pending legal proceedings.

8. Presented by Umair Noor Muhammad REPORTS TO BE SET OUT IN PROSPECTUS Auditor’s report is required to be included in the prospectus with respect to: 1. Profits and losses for each of the five financial years preceding the issue of prospectus and of its subsidiaries, if any. 2. Assets and liabilities on the last balance sheet date and of its subsidiaries, if any. 3. If proceeds of shares or debentures are to be applied in the purchase of any business or more than 50% share of that business, the auditor’s report as above shall also be in respect of that business. The Chief Executive and Chief Financial Officer of the company and the underwriter to the issue shall certify that the prospectus constitutes a full, true and fair disclosure of all material facts relating to the securities offered by the prospectus.

9. Presented by Umair Noor Muhammad EXPERTS OPINION 1. Expert includes an engineer, a valuer, an accountant, or every other person whose profession gives authority to any statement made by him. 2. Experts written consents are required to be obtained which are not withdrawn before the issue of prospectus. 3. Statement is required to be included in the prospectus that experts have given and not withdrawn their consents. 4. An expert shall not be a person engaged or interested in the formation or in the management of the company.

10. Presented by Umair Noor Muhammad CIVIL LIABILITY FOR MISSTATEMENT IN THE PROSPECTUS The following persons shall be liable to pay compensation to all persons who subscribe for shares or debentures on the faith of the prospectus for all losses or damages they may have sustained by reason of any misleading or untrue statement in the prospectus: 1. Every director at the time of issue of prospectus 2. Every proposed director named in the prospectus 3. Every person who has authorized the issue of prospectus i.e. expert, auditor, legal advisor etc. (they are liable for misstatement in their report e.g. legal advisor is not liable for any misstatement in the financial statement). 4. Every promoter of the company Contd…

11. Presented by Umair Noor Muhammad If a person is not a director, proposed director or expert or he has withdrawn his consent before publication of the prospectus but his name is given in the prospectus they every person willfully involved shall be liable to indemnity the said person against all damages and expenses to which he may be liable by reason of his name having been inserted in the prospectus. CRIMINAL LIABILITY FOR MISSTATEMENT IN THE PROSPECTUS In the case of any misstatement in the prospectus, every person who signed or authorized the issue of prospectus shall be punishable with imprisonment up to two years or fine up to Rs 10,000 or both.

13. he had reasonable ground to believe that the statement was true

14. as regards any matter not disclosed he proves that he had no knowledge thereof

15. non-compliance arose from an honest mistake of fact on his part

16. the prospectus was issued without his knowledge or consent and on becoming aware of its issue, he forthwith gave a reasonable public notice of the fact

17. after the issue of prospectus but before the allotment he withdrew his consent and he gave a reasonable public notice2. Experts, bankers etc. are not liable merely on the basis of their consents unless any material misstatement is there on their part.

18. Presented by Umair Noor Muhammad PENALTY FOR FRAUDULENTLY INDUCING PERSONS TO INVEST MONEY Any person who induces any other person by making false statement to make investment in shares or debentures of a company shall be liable to imprisonment up to three years or with a fine up to Rs 20,000 or with both.

19. Presented by Umair Noor Muhammad OTHER PROVISIONS INCLUDING APPROVAL AND REGISTRATION OF PROSPECTUS 1. Prospectus shall be dated which shall be considered as the date of its publication. Prospectus shall be issued within 30 to 7 days before the date of subscription except as allowed by SECP for any special reasons. It is also required to be published in one English and one Urdu newspaper having circulation in the province of Stock Exchange. 2. No person shall issue or publish any prospectus or other document offering for subscription or publicly offering for sale any security unless approved by SECP. Approval from SECP is required within 60 days preceding the date of issue of prospectus i.e. prospectus is required to be issued within 60 days from the date of approval. 3. Prospectus is required to be registered with the Registrar. Application for registration shall accompany the following: Contd…

21. Consents in writing of experts, auditors, legal advisors, attorney, bankers or brokers named in the prospectus.If the Registrar is satisfied that all the requirements have been complied with, he shall register the prospectus. 4. Approval from stock exchange is also required for which provisions of Stock Exchange Listing Regulations are required to be complied with. 5. Every prospectus on the face of it shall state that application has been bade to the Registrar and Stock Exchange and consents as required have been obtained. 6. Nominal value (i.e. face value) of shares or debentures shall be approved / specified by SECP. 7. Application form for subscription shall be specified by SECP which may include certain declaration or verification and such form shall become a part of prospectus. Contd…

22. Presented by Umair Noor Muhammad Application for shares and debentures against prospectus shall be irrevocable. All certificates, statements and declarations made by applicant shall be binding on him. 8. A company shall not vary the terms of any contract referred to in the prospectus except with the approval of general meeting. 9. If a person hold more than 10% shares or debentures of a company, he cannot offer his shares or debentures for sale to the general public with the approval of SECP and any document for such offer shall be deemed to be a prospectus. However, a notice, circular, advertisement or any document by a scheduled bank or financial institution for disinvestment of shares or debentures shall not be deemed to be a prospectus.

23. Presented by Umair Noor Muhammad