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Registration statement


Registration statement is set of documents including prospectus which company must file with Securities and Exchange Commission before it proceeds with public offering. It contains two principal parts: prospectus and additional information and exhibits that must be filed with SEC but not necessarily revealed to investors. Company can use form S-1 to prepare registration statement and add any information that is necessary to make disclosure not misleading.

Prospectus is "selling" document that must be offered to anyone who is offered or buys security. Distribution of prospectus to potential investor is usually done by underwriters or brokerages but they are most widely distributed through websites such as EDGAR (Electronic Data Gathering Analysis and Retrieval System). In prospectus company must clearly describe important information about business operation, financial statement, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, risk factors, a list of material properties etc. Prospectus must include audited financial statement. When the offering is not required to be registered with SEC prospectus is instead referred as an offering memorandum or offering circular.

Prospectus is filed for different kinds of offerings, stock, bond and mutual funds offering. The main reason of prospectus is to help investors make more informed decision. Company must file preliminary and final prospectus. SEC has specific guidelines what is listed in a prospectus for various securities. Preliminary prospectus is the first offering and it includes most of the details about business but it doesn't contain the number of shares to be issued and its price. Prospectus should elicit interest on the market for offered securities. Final prospectus contains complete and final background information about the offering, including number of offered shares and its price.
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