What is a company's prospectus?

A company's prospectus is a formal legal document designed to provide information and full details about an investment offering for sale to the public. Companies are required to file the documents with the Securities and Exchange Commission (SEC) . The prospectus documents must be made available to a prospective public investor prior to purchase.

Why does a company publish a prospectus?

When a company is issuing stocks or bonds, it publishes a prospectus to provide investors with all the information that they need to make an informed decision. The issuer provides both a preliminary and a final prospectus. A preliminary prospectus is the initial offering document that provides details about the proposed transaction.

What is a prospectus document?

Prospectus documents are for potential investors to understand the value of the offered public security, including information about the company’s history, financial performance, its management team, and the investment’s growth potential.