Explanatory Memorandum

Explanatory Memorandum

Prospectus.com team can assist your company with writing and developing your explanatory memorandum. Our team has been involved in the writing and development of hundreds of explanatory memorandums, spanning many countries and industries.

An Explanatory Memorandum is a document created by a company that plans to issue securities, often in the form of equity, and quite common for open-ended and closed-ended funds such as a hedge funds and mutual funds. The “EM”, as its also referred to for short, is often compared to other offering documents commonly employed throughout the financial world, transcending jurisdictions, such as the offering memorandum or private placement memorandum or even the prospectus.

An explanatory memorandum will have a similar outline as other memoranda in the marketplace, but in various jurisdictions the rules are different for an EM in comparison to a traditional prospectus. Hedge funds, for example, must contentiously stay on top of industry regulation and the EM of such funds will detail the regulations and rules for their respective jurisdiction and investment.

What’s Included in the Explanatory Memorandum

One of the most important features of any explanatory memorandum is the terms of the offering: what is the issuer or company offering the investor(s) for their capital? The explanatory memorandum EM document will give solid detail regarding the offering pricing, the type of securities being offered, the terms of the securities such as the length, payout and voting rights. Additionally, the explanatory memorandum will highlight the investment objective, as well as the management team. Since the explanatory memorandum is broken down into many sections, each segment will detail the relevant information. For example, in the description of the securities section, the fund would give vital information on the type of shares being offered, redemption information and more. Below is a partial list of various segments of an explanatory memorandum:

  • 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.com

Our team at Prospectus.com can ensure your explanatory memorandum is written in a professional and compelling manner. If your fund or company requires an explanatory memorandum feel free to reach out to us anytime for a free consultation.

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Explanatory Memorandum


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Explanatory Memorandum