Prospectus & allotment of securities

An IPO opens, your WhatsApp groups light up, and a cousin asks whether to put in his savings. All he can go on is the company's own document telling him how wonderful it is. What stops the company from simply lying? Part of the answer is the prospectus rules in the Companies Act 2013: what must be disclosed, who is personally liable if it misleads, and how the company may take money and allot shares afterwards. This topic walks through that chain from the offer document to the allotment.

In two minutes

A public offer of securities must be made through a prospectus that is dated, signed, filed with the Registrar and truthful; those who authorise a misleading one face criminal action (s.34) and civil compensation (s.35), and allotment may follow only after the stated minimum is subscribed (s.39).

The rest of this chapter

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