What is a prospectus? Is it necessary for every company to file a prospectus?
A prospectus is any document described or issued as a prospectus, including any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any securities of a body corporate. In other words, it is an invitation to the public to apply for securities (shares, debentures, etc.) of the company or to make deposits in the company.
No, it is not necessary for every company to file a prospectus. A public company needs to file a prospectus or a statement in lieu of prospectus with the Registrar of Companies during the capital subscription stage. However, a private company does not require a prospectus as it does not invite the public to subscribe to its securities.
Explanation
The textbook defines a prospectus as a document inviting the public to subscribe to securities or make deposits. Regarding necessity, the context clarifies that public companies undergo a 'capital subscription stage' where they must file a prospectus or statement in lieu of prospectus. Private companies, however, only have two stages—promotion and incorporation—and do not raise funds from the public, hence they do not need to file a prospectus.