Why is it necessary for a Public Limited Company to print prospectuses?

A Public Limited Company (PLC) prints prospectuses primarily to attract potential shareholders. The prospectus serves as a formal document that outlines important information about the company, including its financial performance, management structure, future plans, and the details of the shares being offered for sale. By providing this information, the company aims to inform and persuade investors about the potential benefits of buying its shares. This transparency helps to build trust and can effectively encourage individuals and institutions to invest in the company, ultimately increasing its capital for expansion and growth.

The prospectus is not primarily intended to increase share prices directly; rather, it serves as a tool to inform potential investors who may lead to increased demand and thus potentially influence share prices positively over time. Compliance with governmental regulations is also essential, as many jurisdictions require companies to provide this information to protect investors, but the main goal is to utilize the document as a marketing tool to make the investment opportunity appealing to potential shareholders. Maintaining confidentiality is not a goal of the prospectus; in fact, the document is meant to disclose vital information rather than keep it secret.