what is an offering circular 
an offering circular is a type of prospectus provided for a new security listing it is delivered to individuals and brokerage houses who are interested in potentially purchasing the newly issued securities it is often slightly abbreviated from the final long form prospectus but is still required to contain specific information an offering circular should not be confused with a red herring or preliminary prospectus the red herring is issued during the ipo process and is intended to generate interest in the new issue it lacks many of the specifics regarding the new issue the offering circular on the other hand is a more complete document and should be viewed before making a final decision about an investment understanding offering circularsan offering circular allows investors to access information regarding a new issue it provides them with very important information about the security such as financial information about the issuer the objective of the fund or purpose of the funds being raised and other terms of the security issuance the offering circular is a legal document and is a requirement for many but not all new issues offering circulars are required to contain certain pieces of information that are meant to be helpful to a prospective investor in deciding whether or not the investment is suitable for their interests this information includes items such as the issuer of the security the objective of the mutual fund or the purpose of the stock issue the terms of the issue and any additional information that could be helpful to a prospective buyer offering circular vs red herringit is important to distinguish it from the red herring or preliminary prospectus which lacks significant details about the new issue the red herring is a promotional item passed out to potential investors early on in the ipo process to solicit indications of interest and does not include the crucial information that an investor should review before purchasing a security however this important information is included in the offering circular the term red herring is derived from the bold disclaimer in red on the cover page of the preliminary prospectus the disclaimer states that a registration statement relating to the securities being offered has been filed with the sec but has not yet become effective that is the information contained in the prospectus is incomplete and may be changed thus the securities may not be sold and offers to buy may not be accepted before the registration statement becomes effective the red herring does not state a price or issue size 