i) Definition of "Prospectus"
A prospectus is defined by S.2 as "any prospectus, notice, circular, advertisement or other invitation offering to the public for subscription or purchase any shares or debentures of a company" This particular definition was intended to prevent companies from evading the legal duties pertaining to the issue of a prospectus by issuing a prospectus under such name as "notice", "circular" or "advertisement". Whether a particular document is a prospectus will ultimately depend on the function it fulfills rather than the name given to it by its authors. Regarding the word "offering" in the definition it should be remembered that the issue of a prospectus by a company is not an offer as such but is a mere "invitation to treat". It is the application made in response to the prospectus that will constitute the "offer"
ii) Dating of the prospectus
s.39 provides that a prospectus shall be dated. The date shall, unless the contrary is proved, be taken as the date on which the prospectus was issued to the public.
iii) Contents of the prospectus
The authors of a prospectus are legally free to state therein whatever they deem appropriate to state but the contents must include, where applicable, the eighteen matters specified in Part I of the Third Schedule to the Act and the three reports specified in Part II of the said Schedule. Section 40(3) provides that, except as provided therein, it shall not be lawful for a company to issue any form of application for shares in or debentures of a company unless the form is issued with a prospectus which complies with the statutory requirements. However, a form of application for shares need not be issued with a prospectus if the form was issued either:-
i) There in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or
ii) There in relation to shares or debentures which were not offered to the public; or
iii) to existing members or debenture holders of the company (irrespective of whether the applicant had the right to renounce in favour of other persons); or
iv) in relation to shares or debentures which are or are to be in all respects uniform with shares or debenture previously issued.