§ 230.421Presentation of information in prospectuses.
(a) The information required in a prospectus need not follow the order of the items or
other requirements in the form. Such information shall not, however, be set
forth in such fashion as to obscure any of the required
information or any information necessary to keep the required information
from being incomplete or misleading. Where an item requires information to
be given in a prospectus in tabular form it shall be given in
substantially the tabular form specified in the item.
(b) You must present the information in a prospectus in a clear, concise and understandable manner.
You must prepare the prospectus using the following standards:
(1) Present information in clear, concise sections, paragraphs, and
sentences. Whenever possible, use short, explanatory sentences and bullet
(2) Use descriptive headings and subheadings;
(3) Avoid frequent reliance on glossaries or defined terms as the primary
means of explaining information in the prospectus. Define terms in a glossary or other section
of the document only if the meaning is unclear from the context. Use a
glossary only if it facilitates understanding of the disclosure; and
(4) Avoid legal and highly technical business terminology.
In drafting the disclosure to comply with this section, you should avoid the
1. Legalistic or overly complex presentations that make the substance of the
disclosure difficult to understand;
2. Vague “boilerplate” explanations that are imprecise and readily subject to
3. Complex information copied directly from legal documents without any clear
and concise explanation of the provision(s); and
4. Disclosure repeated in different sections of the document that increases
the size of the document but does not enhance the quality of the
(c) All information required to be included in a prospectus shall be clearly understandable without the
necessity of referring to the particular form or to the general rules and
regulations. Except as to financial statements and information required in a
tabular form, the information set forth in a prospectus may be expressed in condensed or summarized
form. In lieu of repeating information in the form of notes to financial
statements, references may be made to other parts of the prospectus where such information is set forth.
(1) To enhance the readability of the prospectus, you must use plain English principles in the
organization, language, and design of the front and back cover pages, the
summary, and the risk factors section.
(2) You must draft the language in these sections so that at a minimum it
substantially complies with each of the following plain English writing
(i) Short sentences;
(ii) Definite, concrete, everyday words;
(iii) Active voice;
(iv) Tabular presentation or bullet lists for complex material, whenever possible;
(v) No legal jargon or highly technical business terms; and
(vi) No multiple negatives.
(3) In designing these sections or other sections of the prospectus, you may include pictures, logos,
charts, graphs, or other design elements so long as the design is not
misleading and the required information is clear. You are encouraged to use
tables, schedules, charts and graphic illustrations of the results of
operations, balance sheet, or other financial data that present the data in
an understandable manner. Any presentation must be consistent with the
financial statements and non-financial information in the prospectus. You must draw the graphs and
charts to scale. Any information you provide must not be misleading.
Instruction to § 230.421: You should read Securities Act Release No. 33-7497 (January 28, 1998) for
information on plain English principles.