Skip to content

CSEET · Business Laws and Management · Elements of Company Law

Consider these statements about a red herring prospectus. (I) It is a prospectus that does not include complete particulars of the quantum or price of the securities. (II) It carries lesser obligations than a prospectus. (III) Any variation between it and the prospectus must be highlighted as variations in the prospectus. Which statements are correct?

Statements I and III are correct. A red herring prospectus lacks complete particulars of quantum or price, and variations from the final prospectus must be highlighted. Statement II is wrong because it carries the same obligations as a prospectus, not lesser ones.

  1. AI and II only
  2. BII and III only
  3. CI and III onlyCorrect
  4. DI, II and III

Explanation

Statement I matches the definition in the Explanation to Section 32. Statement III is correct under Section 32(3). Statement II is wrong because a red herring prospectus carries the same obligations as a prospectus.

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