What is the main purpose of a prospectus?

The primary purpose of a prospectus is to detail an investment offering for potential investors. A prospectus serves as an important disclosure document that provides comprehensive information about a security being offered for sale, including details about the company's business, financial performance, risks associated with the investment, management, and how the funds will be used. This transparency is crucial for helping investors make informed decisions about whether to invest in the offering.

The financial details, risks, and operational information included in a prospectus help establish a clear picture of the investment's potential and assists investors in evaluating if the investment aligns with their financial goals and risk tolerance. It is a regulatory requirement for many public offerings and other securities to ensure that potential buyers have access to essential information prior to making an investment decision.