A red herring prospectus is a document/booklet submitted by a company with the Securities and Exchange Commission (SEC), usually regarding the company’s initial public offering (IPO). The name “red herring” comes from the bold disclaimer in red on the cover page of the prospectus.

The red herring prospectus provides information that is useful for potential investors. It contains information about the company’s operations, the purpose of this share sale/issue, net proceeds to the issuing company, company’s balance sheet, earnings statement for the last 3 years, information about the company’s directors, and major shareholders, etc.