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Golden Rule of Framing Prospectus in Company Law

The Golden Rule of Prospectus has a meaning and a moral in it, which says whatever information comes from the company to the public, through the medium of prospectus, must be true, fair and accurate.

A company issues prospectus to attract general public to purchase its shares. Interested people rely on the information presented in the prospectus and on the basis of which they desire and take steps to make an investment in the shares of the issuing company.

As such various financial, operational and other important information in the prospectus needs to be true in its strict sense.

In addition to the responsibility of the company for presenting true facts in the prospectus, it is also expected from the company to not to miss out or omit any important facts that is required to be presented in it.

The person presenting the information in the prospectus on behalf of the company must be honest enough to present facts only and no more or no less exaggerations.

This 'Golden Rule' for framing of a prospectus was laid down by Justice Kindersely in New Brunswick & Canada Rly.


  1. Vimlesh Gounder29 June, 2018

    I was wondering what the Golden rule of prospectus I know it. Thanks for sharing the information briefly!


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