When a company goes public, which document must be prepared for investors?

When a company goes public, which document must be prepared for investors?

• A. Memorandum of Association
• B. Articles of Association
• C. Prospectus
• D. Share certificate

Answer: (C)

When a company sells its shares to the public, regulators require a document that lays out the business, finances, risks, and terms of the offer so potential investors can decide whether to buy. This document is the prospectus. It typically includes a description of the business, financial statements, how the raised funds will be used, details of the share offer (price, number of shares), and risk factors. It is usually approved by the securities regulator before the public sale to ensure transparency and protect investors. The other documents have different roles: the Memorandum of Association and Articles of Association are the company’s foundational rules created at incorporation, not the disclosure document for investors; a share certificate is proof of ownership issued after shares are allocated, not something prepared for the public offering.

When a company sells its shares to the public, regulators require a document that lays out the business, finances, risks, and terms of the offer so potential investors can decide whether to buy. This document is the prospectus. It typically includes a description of the business, financial statements, how the raised funds will be used, details of the share offer (price, number of shares), and risk factors. It is usually approved by the securities regulator before the public sale to ensure transparency and protect investors. The other documents have different roles: the Memorandum of Association and Articles of Association are the company’s foundational rules created at incorporation, not the disclosure document for investors; a share certificate is proof of ownership issued after shares are allocated, not something prepared for the public offering.