A prospectus is a document that is designed to solicit investors for a company’s initial public offering (IPO) or any other time the company is issuing new shares. While they are unique to each offering, they are required by law to contain certain information. There are a number of sections in a prospectus, but they can be classified into three general sections.
In this section, the prospectus will contain information about the company, the address of its office and any other locations. This section also contains the names, addresses and occupation of the company’s directors and managing directors; the names and addresses of the company’s auditors, bankers and solicitors; and information about the years the company has been in business.
Purpose of Issuance
This section will contain information specific to the offer being made, including the amount of the shares being issued, expenses associated with the issuance and plans for capital raised.
This section contains information about the financial health of the underlying company, including the number of shares and debentures that are issued and outstanding; and the time and place where copies of the company balance sheets, profit and loss statements and the auditor’s report can be inspected. If an auditor’s report has been submitted it must address the profit or loss for the company for each for previous five years prior to new issuance. If any profit or reserve has been used, the particulars of the capitalization will also be stated.
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