What is an Offering Circular?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 23 February 2020
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An offering circular is a handout that provides information about a new issue of securities for the benefit of potential investors. Such documents are distributed to brokers and individuals, as well as being available by request. Offering circulars are a shortened version of the prospectus, a detailed document that goes over a company's history and activities. As the thumbnail version of the prospectus, the offering circular provides people with information critical to decisions about investments.

In the United States, companies offering securities are required to produce an offering circular by the Securities Act of 1933, one of a series of financial reforms passed to address the fallout of the Great Depression. In addition, these companies are also required to file prospecti. These documents will be reviewed by regulators and if they lack information or appear misleading in nature, the company can be penalized.

The offering circular must provide basic information about the company, including the name, location of headquarters, key officials, and industry that the company is involved in. It also explains the terms and conditions associated with the new issue, including the number of shares being issued. Additional information such as recent financial statements can be included as well. People are also provided with information about how to access the prospectus if they would like to examine a more detailed overview.


Like the prospectus, the offering circular serves a twofold function. It allows companies to meet their regulatory obligations by providing investors with information that they are entitled to by law so they can make informed decisions about the investments. It also serves as a form of advertisement for the company and its offering, alerting people to the existence of the offering and providing selling points that may encourage investors to get involved. The company is not allowed to make false claims or statements, but it can be creative about the structure of the circular to turn it into an advertisement as well as an informational pamphlet.

It is advisable to read offering circulars carefully before investing in a new issue. People sometimes generate a list of questions they want answered when they read offering circulars so that they can do their due diligence. If possible, looking at the prospectus can also be helpful because it may provide additional information or context. Other sources of information that can be valuable include write-ups on companies in financial publications and the media.



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