Standard Documentation of a Securities Issuer

After describing the Financing principle in a previous article, it is now time to describe the Standard Documentation of a Securities Issuer but I feel obliged to repeat the Disclosure Principle and the Disclosure Document.


Who wants a Capital must provide to any Prospect without it requiring it. Any material information of such a nature as to enable it to form an exact and complete opinion or to be able to affect its judgment as an Investor.

PROVIDING FALSE INFORMATION, OMITTING REAL INFORMATION, FAVORABLE OR NOT delays the process and exposes the infringer to civil liabilities and criminal sanctions.

Standard Disclosure Documents

Investors expect the following documentation from an issuer seeking to raise funds from them:

  1. Complete Audited Financial Statements with Auditors’ notes from the day of incorporation of the company and if the company is older than 7 years, at least for the last three years.
  2. a Short Summary of one or two pages to appraise quickly whether the investor has interest in investing in the securities issue of the Issuer.
  3. a Website fully documented so that the investor can appreciate how the issuer is appearing to the public at large.
  4. a Budget, as explained in my article, including Assumptions and Financial Projections showing the expected financial results. Do not show the Investors only a shopping list of costs or YOu will not raise a dime.
  5. a Disclosure Document that I will describe more in detail hereafter.

The Disclosure Document

The information is provided in the form of a Prospectus called a Disclosure Document describing the Issue, more or less complete, which may have several designations:

The Disclosure Document and Prospectus are generic terms.

The Summary, Abstract or Executive Summary is a summary which should be limited to determining the interest of the Prospect for Investment.

The PPM, Private Placement Memorandum or POM, Private Offering Memorandum are terms designating a prospectus describing a Private Issue.

The Preliminary Prospectus or Red Herring is a term designating a provisional prospectus (without Price or Issue Date) describing a Public Issue.

The Public Offering Prospectus is a term designating a prospectus describing a Public Offering.

The Support Documents

  1. a Business Plan detailed plan for setting up or developing a company or a project.

    A business plan should never be used to raise money.

  2. a Competition Analysis identifying competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of the issuer’s product or service. A competitive analysis is a critical part of the issuer’s marketing plan.
  3. a Marketing Plan
  4. an Action Plan