General Rules and Regulations
Securities Act of 1933
Rule 421 -- Presentation of Information in Prospectuses
The information required in a prospectus need not follow
the order of the items or other requirements in the form. Such information shall
not, however, be set forth in such fashion as to obscure any of the required information
or any information necessary to keep the required information from being incomplete
or misleading. Where an item requires information to be given in a prospectus in
tabular form it shall be given in substantially the tabular form specified in the
You must present the information in a prospectus in
a clear, concise and understandable manner. You must prepare the prospectus using
the following standards:
Present information in clear, concise sections, paragraphs,
and sentences. Whenever possible, use short, explanatory sentences and bullet lists;
Use descriptive headings and subheadings;
Avoid frequent reliance on glossaries or defined
terms as the primary means of explaining information in the prospectus. Define terms
in a glossary or other section of the document only if the meaning is unclear from
the context. Use a glossary only if it facilitates understanding of the disclosure;
Avoid legal and highly technical business terminology.
Note to Rule 421(b):
In drafting the disclosure to comply with this section, you should avoid the following:
Legalistic or overly complex presentations that
make the substance of the disclosure difficult to understand;
Vague "boilerplate" explanations that
are imprecise and readily subject to different interpretations;
Complex information copied directly from legal
documents without any clear and concise explanation of the provision(s); and
Disclosure repeated in different sections of
the document that increases the size of the document but does not enhance the quality
of the information.
All information required to be included in a prospectus
shall be clearly understandable without the necessity of referring to the particular
form or to the general rules and regulations. Except as to financial statements and
information required in a tabular form, the information set forth in a prospectus
may be expressed in condensed or summarized form. In lieu of repeating information
in the form of notes to financial statements, references may be made to other parts
of the prospectus where such information is set forth.
To enhance the readability of the prospectus, you
must use plain English principles in the organization, language, and design of the
front and back cover pages, the summary, and the risk factors section.
You must draft the language in these sections so
that at a minimum it substantially complies with each of the following plain English
Definite, concrete, everyday words;
Tabular presentation or bullet lists for complex
material, whenever possible;
No legal jargon or highly technical business terms;
No multiple negatives.
In designing these sections or other sections of
the prospectus, you may include pictures, logos, charts, graphs, or other design
elements so long as the design is not misleading and the required information is
clear. You are encouraged to use tables, schedules, charts and graphic illustrations
of the results of operations, balance sheet, or other financial data that present
the data in an understandable manner. Any presentation must be consistent with the
financial statements and non-financial information in the prospectus. You must draw
the graphs and charts to scale. Any information you provide must not be misleading.
Instruction to Rule 421
You should read Securities Act Release No. 33-7497
(January 28, 1998) for information on plain English principles.
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