Prospectus

A prospectus is a legal document which stipulates the terms and conditions applicable to a company’s stock.

Corporations are generally required to create a prospectus ahead of an initial public offering (IPO). This prospectus acts as a contract which governs share certificates.

Investment funds are another form of company which is required to publish a prospectus. Like the prospectus of a corporation, an investment fund’s prospectus governs its shares and specifies the rights and obligations of its shareholders.

If a company issues more than one category of share, the rights and conditions applicable to each share class must be clearly laid out in the prospectus.

The prospectus must also contain all provisions applicable to the company's initial public offering (or security token offering). If the company has made provisions which apply in extraordinary circumstances - such as in the event of a hostile takeover - these must be included in its prospectus.

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