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 thepublic 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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