A formal written document that accompanies a new offering of a corporate security, meant to provide information to potential buyers of that security. It contains detailed information on the business' history, financial state, current business plans, the names of its directors and officers as well as any pending litigation it is involved in. The prospectus is usually an abridged version of the business' registration statement filed with the Securities and Exchange Commission (SEC).
Definition from Nolo’s Plain-English Law Dictionary
A detailed statement by a corporation used to describe an issuance (offer) of stock to the general public. A prospectus includes the corporation's financial statements, information about its directors and officers, its business plans, any litigation in progress, its recent performance, and other matters that would assist a potential investor or investment adviser to evaluate the stock and the prospects of the company for profit, loss, or growth. The Federal Securities Act requires the filing of the prospectus with the Securities and Exchange Commission before any major stock issuance. State laws generally require similar documentation for some issuances of stock within the state.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:22 pm