What is a Prospectus?
A Prospectus is a legal document that contains all the necessary disclosure requirements of a business, a joint venture, an investment opportunity or merger and acquisition project.
Why is a Prospectus required?
In the United States of America, the going public process requires the filing of a Prospectus or otherwise known as the Registration Statement (“Form S-1”) with
The United States Securities and Exchange Commission (“SEC”). In British Commonwealth countries, raising capital from an Initial Public Offering (“IPO”) also require a Prospectus. Subsequent public offerings also required the filing of a Prospectus.
Besides the use of a Prospectus for raising capital in public, a Prospectus is also used or applicable for:
- Raising capital by way of private placement
- Joint Venture
- Merger and Acquisition (“M&A”)
Is it essential to have a Prospectus?
A comprehensive Prospectus provides an opportunity to attract investors and potential business partners to invest in the intended business, joint venture or M&A. Transparency of the business coupled with the disclosure requirements is crucial to the success of going public, raising capital, joint venture or for the M&A. A Prospectus prepared by professionals could probably help to materialise the desired objectives.
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Categories: Public Company, IPO, SEC, Raising Capital, Joint Venture and M&A