Prospectus

A prospectus is the formal legal document issued by a company or mutual fund when offering securities to the public, containing detailed disclosures about the issuer's business, financials, management, risk factors, and the terms of the offering. In India, SEBI mandates that companies issuing shares through an IPO file a Red Herring Prospectus (RHP) before the issue opens and a Final Prospectus after pricing. For mutual funds, the Scheme Information Document (SID) serves the same purpose. Reading the prospectus is essential for investors to make informed decisions about whether to participate in a new offering.