Skip to content

CSEET · Business Laws and Management · Elements of Company Law

Consider the statements about a red herring prospectus. (I) It carries the same obligations as a prospectus. (II) It includes complete particulars of the quantum or price of the securities. Which is correct?

Only statement I is correct. A red herring prospectus carries the same obligations as a prospectus, but it is defined as one that does not include complete particulars of the quantum or price of the securities.

  1. AOnly I is correctCorrect
  2. BOnly II is correct
  3. CBoth I and II are correct
  4. DNeither I nor II is correct

Explanation

Under Section 32(3) a red herring prospectus carries the same obligations as a prospectus, so I is correct. The Explanation defines it as a prospectus that does not include complete particulars of the quantum or price, so II is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Elements of Company Law shows your real accuracy, how long you take and where you lose marks.

Practise Elements of Company LawFree diagnostic mock

More Elements of Company Law questions