What is the main purpose of a prospectus issued by a public company?
Correct answer: A. To invite the public to subscribe for securities
- A. To invite the public to subscribe for securities
- B. To appoint the company’s internal auditor
- C. To transfer all company debts to directors
- D. To dissolve the company without court approval
Explanation
A prospectus provides information and invites the public to subscribe for securities such as shares or debentures. It is not an instrument for appointing auditors or dissolving the company.
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About Company Law Basics
Company law covers incorporation, separate legal personality, limited liability, shares, the memorandum and articles of association, and the powers and duties of directors. It also includes shareholder meetings, resolutions, company records, audit, winding up and the differences between a registered company, partnership and sole proprietorship.
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