Explanatory Memorandum

Explanatory Memorandum

The team at Prospectus LLC can help with any step in the process of drafting your explanatory memorandum. Throughout numerous countries and industries, our team has written hundreds of explanatory memorandums.

The Explanatory Memorandum is written by a company that wants to sell securities, most often equity. For the most part, the audience of this document consists of qualified investors or institutions such as mutual and hedge funds. This document, also known as an EM, is comparable to prospectuses and offering memorandums that are also common in the financial world to raise capital.

The EM is similar in form to other offering documents in the world of finance, however, in differing jurisdictions the regulations are different compared to a prospectus or a PPM. Take for example hedge funds, which are highly regulated and watched. An Explanatory Memorandum for such a fund would detail all the requirements and laws it follows for its related jurisdiction/investment.

What’s Included in the Explanatory Memorandum

The most important section of an EM is the details surround the securities offering that will take place. For example this section includes the type of securities being issued, the price, the terms, voting rights and more. In addition, it will disclose the objective of investment as well as biographies and relevant information about the managing officers. All memorandum are split into sections, and the Explanatory Memorandum is no different. The following list includes some of the different sections that can be found in an EM:

  • Organizational structure of fund
  • Investment objective
  • Company directory
  • Offering details
  • Risk factors
  • Management and fees
  • Conflicts of interest
  • Description of securities
  • Redemptions
  • Net Asset Value
  • Tax matters
  • Legal and administrator
  • Team and Board
  • Financials
  • Information on how to subscribe
  • And much more

Prospectus LLC

Here at Prospectus LLC, our team will make sure that your EM is drafted in a proper manner that is attractive to any potential investor. If your business or fund needs to draft an EM, please contact us to discuss a free consultation.

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Explanatory Memorandum

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Explanatory Memorandum

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