Question

    What does a Red Herring Prospectus contain as per the

    provisions of the Companies Act?
    A Only complete details about the price and number of securities Correct Answer Incorrect Answer
    B Information about the company’s operations and prospects, but not the price and number of securities Correct Answer Incorrect Answer
    C Only financial statements of the company Correct Answer Incorrect Answer
    D Only the price and number of shares offered Correct Answer Incorrect Answer
    E Information about the company's directors and management team Correct Answer Incorrect Answer

    Solution

    Explanation: Section 32 of Companies Act - Red herring Prospectus means a prospectus which does not include complete particulars of the quantum or price of the securities included therein. In simple terms a red herring prospectus contains most of the information pertaining to the company’s operations and prospects, but does not include key details of the issue such as its price and the number of shares offered.

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