- The significance/Importance of the prospectus can be more understood from the following points:
1. In the prospectus the information about the name of the company, the kind of share capital, the working area of company, future plans are given.
2. Information regarding main officers of a company are provided in the prospectus.
3. The purpose of this document is to inform the public at large. There should not be any misrepresentation or misleading information in it as the same amounts to breach of trust on the investors who have relied upon the company. Special provisions.
4. The officers who have given such false, misleading statement or information in the prospectus of a company are held liable.
5. The presentation of true financial situation of a company in its prospectus gives idea of reality to the investor.
6. In the prospectus there is a mention about the possible risks of a project of a company. As a resultant effect investor can take appropriate decision.
- Therefore it is said that Prospectus should be unambiguous and clear as well as transparent like water.