Prospectus

A prospectus exists so investors can make an informed decision, and its legal significance is that they are entitled to rely on it. That is why the risk factors section runs so long and so specifically: anything material omitted creates liability for the company and its directors.

It is reviewed by the relevant regulator before the offering can proceed, which in the UK is the FCA and in the EU the competent authority of the home member state under the Prospectus Regulation.

Preparing it consumes much of the IPO timetable. Drafting sessions bring the company, its lawyers, the banks and the auditors together to agree every claim, and the verification exercise requires each statement to be evidenced.

It promises nothing about returns, which is precisely why the disclosure obligation is drawn so widely.