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Definition: Prospectus

When a company wants to issue shares for the first time or wants to issue new shares it is mandatory by the SEBI (Securities and Exchange Board of India) guidelines that the company has to prepare the prospectus.

The prospectus is a legal document which is a form of disclosure of information to the public. It includes information that is required for an investor. The prospectus consists of the information like the reason for raising the money, how the company is planning to spend the money, the kind of return the company is expected on the money.

Along with this information the size of the issue, the current financial position of the company, the current and past performance, the detail of the promoters etc. information is also present. It helps the investor to determine the short term and long term prospect of the company.



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