prospectus business definition

A formal written document relating to a new securities offering that delineates the proposed business plan or the data relevant to an existing business plan—information needed by investors to make an educated decision on whether to purchase the security. The prospectus includes financial data, a prospective on the firm's business history, a list of its officers, a description of its operations, and mention of any pending litigation. A prospectus is an abridged version of the firm's registration statement filed with the SEC. See also offering circular, red herring.