THE PROSPECTUS

        This is a document which is designed to raise capital for the new undertaking, the new public company. A prospectus is a very important document. It must be dated and signed by every person named therein as a director of the new company. It must be registered at the corporate affairs commission before publication, this commission differs in names in different countries and it is a commission set up to register companies as valid and legit for business entering and to be entered into. A certificate is issued called the certificate of incorporation. The  prospectus must  contain certain particulars laid down by statute as for example , the minimum amount required to be raised for the preliminary expenses and working capital; the number of shares issued otherwise than for cash and the consideration for which they were issued; the names and addresses of the vendors of any property to the company when the property is to be paid for out of the subscribed by the signatories of the commission for procuring subscribers to the issue, the amount paid as commission for such payment ; dates of the material contracts, the parties  thereto and the particulars of the nature and extent of the interest in the property acquired by the company of every director. Every person who is a director, every promoter and everyone who has authorized the issue of a prospectus is liable to pay compensation to every person who subscribes for shares on the faith of any untrue statement contained in the prospectus by which he suffers loss, unless the director, promoter and authorizer of the prospectus can show that he acted in good faith in accordance with the provision of the Act of 1948. The prospectus does more than invite subscriptions for the shares oaf new company, it seeks to induce subscriptions. Consequently, the matter of a prospectus is set out as persuasively as possible. Suppose a promoter had conceived the idea of a new omnibus service between an inland spa and near industrial city. The prospectus might stress under the head of need for the new service, the following-

Health vale is a dormitory town for Birmchester and business men/ women must travel to Health vale each day. Birmchester people are in the habit of travelling to Health vale for recreation and to drink. Birmchester possesses fine shops, a great market and Health vale people go there to shop. Birmchester has two famous football clubs, a dog racing track and several cinemas. Between the two places there are 6 villages whose dwellers also make a practice of visiting both Health vale and Birmchester as mentioned that although the two places are connected by an existing railway, the service is not so good, nor can it be as cheap as the service to be provided by the company.

          Under the head of earnings and profits, figures will be given to show the probable net earnings of the company. These will be based on the assumption that a certain proportion of seats will be occupied in each omnibus on each joinery, that a certain number of season tickets will be sold, the result being that in the first financial year the total receipts will be so much with the prospects of growth in subsequent years. An estimated figure is given of the operating expenses  and the second figure being  deducted from the first shows an estimated net yearly profit of so much, which on the capital now offered for subscription will amply provide  the shareholders  with  a handsome dividend of at least  so much percent ,per share.  His prospectus is brought to the notice of investing public by direct circularizing, by being disseminated through bankers and stock brokers, by advertisements in public press. Normally the shares are to be paid for by subscribers in installments. Therefore the RRR & co. Ltd.may offer ITS #1 shares to be paid for as follows 5s per share on application, 5s per share on allotment, 5s per share on a first call and 5s per share on a second and final call , the dates of the first  and second calls  being given in the prospectus. When the second and final calls have been paid by a subscriber for shares, his liability to the company is at an end. Imagine the RRR & Co ltd had offered its shares 5s per share on application, 5s per share on allotment, 5s per share on say Its June 1959 leaving 5s.per share to be called up at some unspecified future date, then the company’s shares would be described as #1 shares ,15s paid up and there would remain with each subscriber a liability of 5s on each share held. Until the balance would remain with each subscriber and with any person to whom the shares were transferred.

                      MEMORANDUM OF ASSOCIATION

       Before the promoter can issue the prospectus there must have been prepared and filed at Corporate affairs commission as known in Nigeria but in the U.K , it is located at the Somerset House  that is if at all the company is domiciled in England. A memorandum of Association which is so to speak the charter of the company to be .Any seven or more than seven fellows associated for any lawful agenda may by subscribing their names in a Memorandum of Association from public Incorporated Company with limited liability. The memorandum of Association must state-

      The name of the company with the word Limited as the last word in the name. Whether the registered office of the company is to be situating in England or in Scotland. The objects of the company. That liability of the members is limited. The amount of the share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount.

Not even a subscriber to the memorandum may take less than one share and each must write after his/her name the number he takes, this is equally as the Association clause. On a serious effect of the companies Act 1947 is to make it easier alterations to the memorandum of Association. If the alterations to the memorandum  of Association ,if the alteration falls within the company’s  object clause  confirmation of the customary special resolution by the court is not now necessary  except the alteration is opposed by at least 15% of the shareholders. The companies Act of 1947, amended the companies Act of 1929.The companies Act of 1948 consolidated all previous legislation including the 1947 Act.