Define the term prospectus and explain the contents of a prospectus

Section 2(1) of the Companies Act, Cap 486, Laws of Kenya defines a prospectus as
“any prospectus, notice circular, advertisement or other invitation offering to the public for subscription or purchase any shares or debentures of a company.”

The contents of a prospectus include:
• Directors interest in the promotion of the company.
• Particulars of directors and remuneration
• Share qualification of directors
• Voting and class rights
• Minimum subscription
• Promoters remuneration
• Particulars of material contracts
• Amount payable on application and allotment
• Particulars of options on shares or debentures
• Length of time the company has carried on business if less than 3 years.

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