CAF 07: Company Laws
Chapter 6: Prospectus
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)
LO 1: Definition and Types
Prospectus: document inviting general public
to subscribe for shares or debentures.
Shelf-Prospectus: used to make multiple
offerings within a prescribed time.
Supplement to prospectus: used to provide
updated disclosures on subsequent issue, if
shelf-prospectus is issued.
LO 4: Expert
Conditions to include Expert Statement:
1. Expert to be Independent from company:
2. Expert has given his written consent.
3. Prospectus mentions that expert gave consent and did
not withdraw it.
Important Concepts for Case Studies:
Prospectus: Validity period, Publication.
Outlines:
Prospectus: Types, Approval, Publication, Availability, Use of Expert, Premium Content
Misstatement in prospectus, Certificate of Commencement of business. (For Autumn 2023)
PROSPECTUS
LO 3: Publication and Availability
LO 2: Approval
Publication of Prospectus:
In 1 English and 1 Urdu daily newspaper.
Who can approve: Uploading of Prospectus:
Applies to Commission atleast 21 days before proposed date of On website of company (from date of publication till
publication. closing of subscription).
Validity of Approval:
60 days from date of approval (extendable by Commission). Availability of Prospectus:
Longer period may be approved in case of Shelf-registration. At following places:
1. At registered office of company.
Exceptions for Approval: 2. At Stock Exchanges of the Pakistan.
Approval of prospectus is NOT required in following cases: 3. With all bankers to the issue.
Private placement. 4. With concerned share registrar.
Offered to members or their family members. 5. With concerned ballotter.
Offered to employees or their family members. 6. With concerned credit rating agency.
Bonus issue. (from date of publication till closing of subscription)
Issued as dividend.
Offered by State Bank of Pakistan. Commencement of Public Subscription:
Subscription shall start after 7 days but within 30 days of
issuance of prospectus.
LO 5: Misstatement LO 6: Certificate of Commencement of Business
Offence/Criminal Liability: Required for:
If a person makes error or omission in prospectus. Every public company having share capital.
Compensation for Offence/Misstatement in Prospectus: Requirements to obtain certificate:
To Whom: 1. Shares allotted to minimum subscription.
A person who relied on prospectus, acquired 2. Director paid for shares taken.
securities, and suffered loss. 3. No money payable to applicants (if public subscription
made)
By Whom: 4. Company filed statement in lieu of prospectus (if public
Every offeror/issuer, or Every director of company, or subscription not made).
other person who signed prospectus. 5. Company Secretary and Chief Executive (or a Director)
Commission not liable for any loss. file declaration.
Liability of SECP: Legal status of contracts before certificate:
Commission shall not be liable for any misstatement in Borrowing agreements are void. Other agreements are
prospectus approved by it. provisional.