What must be disclosed in share allotment contracts?

In share allotment contracts, it is essential to disclose all material facts in the prospectus. This requirement is rooted in maintaining transparency and ensuring that potential investors have access to crucial information that could influence their investment decisions. A prospectus serves as a formal legal document that provides details about an investment offering, allowing buyers to understand the nature, risks, and potential returns of the investment.

The inclusion of all material facts helps protect both the company issuing the shares and the investors. By providing comprehensive and accurate information about the company's business operations, financial status, and any associated risks, investors can make informed choices and weigh the potential merits against the risks involved. This practice aligns with securities laws and principles aimed at promoting fairness and integrity in the investment marketplace.

While the other options touch on important aspects of business operations or risk management, they do not encompass the comprehensive requirement for disclosure mandated in prospectus documents. For example, while estimated company earnings and profit-sharing models are relevant to investors, they are part of the broader material facts that need to be disclosed rather than standalone requirements. Similarly, investment risks are important but are also encompassed within the material facts that must be disclosed. Thus, the requirement underscores the importance of holistic transparency in share allotment contracts through the inclusion