What is red herring prospectus?

A red herring prospectus is a preliminary prospectus for a securities offering that contains detailed information about a company's business and finances, but does not include the final offering price or the number of shares to be offered. The name "red herring" comes from the disclaimer printed in red on the cover of the prospectus, which states that the information contained in the prospectus is subject to change and should not be considered final.

A red herring prospectus is typically issued by companies that are in the process of going public, but have not yet determined the final terms of the offering. The red herring prospectus is used to gauge investor interest in the offering and to help the company determine the final offering price and the number of shares to be issued.

The information contained in a red herring prospectus is similar to that found in a final prospectus, such as information on the company's management, products, financial statements, and risks. However, the red herring prospectus does not include the final offering price, the number of shares to be issued, or the expected date of the offering.

The red herring prospectus is not a final document and does not provide any of the terms of the sale of the securities. The final terms of the sale will be included in a registration statement filed with the SEC. It is important to note that the information contained in a red herring prospectus is subject to change and should not be considered final until the registration statement is filed.