Once a company has been registered, it has to take off. This is described as the float of a business. It is true that a company begins to exist once registered and can immediately do business. But a newly formed company often needs to raise enough capital to get off the ground. Promoters there have to take the necessary steps to get off the ground. There, the promoters must carry out the necessary steps to obtain working capital for the successful launch of the company.

When there is an existing business in the form it can be a single business or a partnership, which is absorbed by the new company, the capital of the previous business becomes part of the floating capital of the new company. Similarly, there is the transfer of capital when one company takes over another.

There are several ways to float or increase the capital of a company. The method is often affected by the type of company: whether it is private or public.

Private companies generally rely on capital contributions from their shareholders, although new shares may be issued for cash.

In addition, capital can be obtained through bonds, loans, and overdrafts. It could also be floated by private placement. On the other hand, public companies can be financed when they take off through capital contributions, debentures, loans and overdrafts and private placement. But additionally, it could invite the public to buy shares and acquire their debentures through their listing on the stock or capital market.

USER INFORMATION

A public company invites the public to subscribe for its shares and debentures by issuing a prospectus. Section 48 of the Securities and Investments Law (ISA) establishes that it shall not be lawful to issue any application form for securities in a public company unless the form is issued with a prospectus of the company.

A prospectus is any notice, circular, announcement, or other offer inviting the public to subscribe to or purchase shares or bonds of a company.

The ISA, at section 57(1), states that no prospectus shall be issued by or on behalf of a company or in relation to a prospective company unless, on or before the date of publication, it has been delivered one copy to Securities and Exchange. Commission for registration.

CONTENT OF A BROCHURE

Under section 50(1) of the Securities and Investments Act, each prospectus issued by or on behalf of a company must state:

– The number of founders or administrators or deferred shares (if any).

– The qualification actions of the directors (if any) and the remuneration of the directors in accordance with the provisions of the bylaws.

– Names, addresses and descriptions of the directors or proposed directors;

– The minimum subscription, which is the amount that, in the administrators’ opinion, must be raised through the issue to provide the sums of the following items.

(a) The price of any purchased property to be paid for with the proceeds of the issue;

b) Preliminary expenses and insurance commission charged to the company.

c) Repayment of any money borrowed by the company in view of a and b above

(d) The amount that will be provided with respect to the matters established in (iv) that do not come from the product of the emissions and the sources of said amounts.

– The moment of the opening of the subscription lists.

– The amount to be paid in the application and award of each action.

– Details of shares and debentures issued other than in cash

– Details of stock or bond options

– Data of the sellers of the properties sold to the company.

– Amount paid for real estate, stating the amount paid for goodwill.

– Date, parties and general nature of all material contracts.

– Names and addresses of the company’s auditors.

– Interest of the directors in the property that the company intends to acquire.

– Preliminary expenses, commission and brokerage.

Remuneration of promoters.

EXPERT STATEMENT IN A BOOKLET

When a prospectus includes a statement made by an expert prior to publication, two conditions must be met:

1. You must have given your consent and must not, prior to the delivery of a copy of the registration booklet, have withdrawn your consent in writing to the issuance with your declaration included;

2. The prospectus must contain a statement that you have given your consent.

LIABILITY WITH RESPECT TO THE PROSPECTUS.

Since potential investors in the company know little or nothing about the company, the content of a prospectus should include material facts that enable the investing public to make a correct assessment of the company’s true purpose and position. Accordingly, the prospectus must not contain false or misleading statements or information. The company and those responsible for the issuance of a prospectus that contains errors in the action of the subscriber may be civil or criminal.

CIVIL RESOURCES.

This is both under common law and under the 2004 CAMA; and they are:

1. The action of the aggrieved subscriber in compensation for damages provided for in article 562, may demand compensation.

2. Termination action of the award contract (art. 571).

To be successful in a claim for damages and/or recession under common law, such underwriters must prove:

a) That the incorrectness is a material manifestation of the facts;

b) That he was induced by the false declaration to subscribe to the shares;

(c) That the misrepresentation was fraudulent and was made by a person acting on behalf of the company;

d) That he has suffered loss or damage as a result. According to the CAMA, to be successful, the aggrieved underwriter must prove that the prospectus contained a misstatement on which it relied and therefore suffered a loss.

CRIMINAL PROCEDURES

Under section 563, any officer of the company who authorizes the issuance of a prospectus, or a statement in lieu of a prospectus, containing false statements is guilty of a crime and is liable to imprisonment for a term not to exceed 2 years or fine not to exceed N5,000 or both; or summary conviction to a term of 3 months or a fine of N500 or both.