What is Prospectus?

It is a document issued by the public limited company at the time of raising money from public, either as shares or debentures. The thing is that, nobody is going to invest his money in the company without looking at proper records and profit earning ability of that company. That is why, company issued prospectus which says everything about the company like its preceding five year balance sheet, profit and loss statement,  name and address of the company and their directors, qualification of the directors, name and address of the signatories of the memorandum of association and shares held by them, etc and many more important things.

After reading this, if the public are tempted to invest their money they will apply accordingly.

Actually, company act also requires the public limited company to issue its prospectus at the time of raising its capital from public so that the general public gets full information about the company.