A prospectus is a document that is published by a company prior to raising capital.

The most important type of prospectus is that issued prior to an IPO as:

  • The company is usually trying to raise a substantial amount of capital.
  • The company has no track record and has previously published less information than companies that are already listed.

A prospectus is in some ways similar to an annual report: it contains a full set of financial statements together with various non-financial information.

IPO prospectuses usually contain more useful information than an annual report. It is usually much easier for an investor with no prior knowledge of a company to analyse it at IPO (relying primarily on the prospectus) than later when there are more, but individually less complete, sources of information.

The level of detail required in a prospectus can make it a very expensive document to produce.

Copyright Graeme Pietersz © 2005-2020