Prospectus
A prospectus provides information specified by the relevant rules to help investors evaluate an issuer, its securities and associated risks. Its contents, approval, exemptions and liability depend on jurisdiction, offering type and date. It is not a guarantee that financial forecasts will be achieved or that investors will recover their money. Issuers and advisers must assess the actual legal requirements rather than assuming every share sale requires the same document. The prospectus is separate from the securities and cash raised by an issue.
Worked example
A company preparing a public offering consults advisers on whether an approved prospectus is required and what information must be disclosed. Investors assess the issuer's risks and the security's terms before deciding whether to subscribe.
Common mistake
Assuming a prospectus makes an investment risk-free or that one jurisdiction's disclosure exemptions apply to every market.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Supporting | September 2026–June 2027 |