Public Offering of Company Securities (Prospectus)
A Public company by its nature is allowed to offer its shares/securities to the public for sale.
A Public company before it can offer its shares/securities to the public must register a prospectus which complies with the Companies Act, by getting approval for that prospectus with the relevant exchange for example the Johannesburg Securities Exchange(JSE) if it intends listing, or by the filing of that prospectus with the CIPC. The intention of a prospectus is to provide a potential investor with adequate information to empower the investor to make an informed investment decision.
A prospectus is a document drafted by the company which sets out the details of the investment offering of shares/securities for sale to the public.
It is important to note that the registration of a prospectus by the Companies and Intellectual Property Commission does not indicate any support or qualify the potential investment as a good investment opportunity. Registration merely indicates the compliance of the prospectus to the minimum requirements set out in the Companies Act 71 of 2008 and Regulations as amended.
A prospectus contains factual information of the company that a prospective investor or subscriber of shares/securities in the company will need to make an informed investment decision, for example, but not limited to:-
- Assets and liabilities
- Financial position
- Profits and losses
- Cash flow
- Prospects of the company in which a right or interest is to be acquired
- The shares/securities being offered and the rights attached to them. (The securities include but is not limited to depository receipt in public companies, notes, derivative instruments, bonds, debentures, participatory interests in collective investment schemes and instruments based on an index.)
The prospectus is deemed to be registered by the Commission after it was vetted by the Prospectus Vetting Committee and a Certificate to that effect was issued. The Certificate will be issued for a specific period.
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