What is a prospectus?
A prospectus (emissionsprospekt) is a document describing the company, its business and risks, and the terms of an issue. Its purpose is to give investors enough information to make a well-founded decision. For larger public offers, the prospectus is reviewed and approved by Finansinspektionen (the Swedish FSA).
When is a prospectus required?
The requirement is governed by the EU Prospectus Regulation. An approved prospectus is generally required for public offers above a certain threshold. Smaller offers and pure directed issues to a limited group are often exempt — in which case a simpler information memorandum is usually drawn up instead. This is common in a directed issue (private placement).
What does it contain?
A prospectus typically contains a company description, financial information, a statement of risk factors and the terms of the offer — number of shares, subscription price and subscription period. For you as an investor, the risk section and the financial history are especially important to read.