Prospectus

A prospectus is a legally required document for a securities offering. It contains material information about the company, the securities and the risks so that investors can make an informed decision. Public offers and admission to a regulated market generally require a prospectus, although exemptions apply to certain offerings.

The document combines a description of the business with financial information and the terms of the securities. It covers the business model, ownership structure, intended use of proceeds and principal risks. For an equity offering, investors will want to understand what growth the new capital should enable and how much existing shareholders will be diluted. For bonds, interest, repayment, ranking and the company's ability to service its debt are additional priorities. These details allow the terms of an investment to be assessed against the issuer's financial position.

In Germany BaFin reviews the prospectus for completeness, consistency and comprehensibility. Its approval does not endorse the economic merits of the investment or verify the accuracy of every statement. Investors therefore still need to make their own assessment. Comparing the opportunities presented with the risk factors and historical figures is particularly useful: a credible growth case must be consistent with profitability, capital requirements and financing.

For the company, preparing the document is an important part of becoming ready for the capital markets. Management, banks, legal advisers and auditors must ensure that figures and statements are traceable and consistent. Missing accounts, unclear group structures or contradictory information can delay the timetable. Material inaccuracies or omissions can also create liability.

During an initial public offering the prospectus provides the formal information base for presentations and investor discussions. It therefore needs to be aligned carefully with the equity story. Beyond the summary, readers should pay particular attention to the use of proceeds, financial development and the risks that specifically affect the business.

Note: This explanation is for general information only and does not constitute legal advice. The legal position depends on the individual case and may change with new legislation or case law. For a binding assessment, please consult a qualified lawyer.