DEFINITION of 'Subscribed'

Subscribed refers to newly issued securities that an investor has agreed or stated his or her intent to buy prior to the issue date. When investors subscribe, they expect to own the designated number of shares once the offering is complete.

BREAKING DOWN 'Subscribed'

The goal of an investment bank in a public offering of securities is to have the right number of subscribed investors for the issue. Many accredited or high net worth (HNI) investors can view a subscription to a public offering and make orders to purchase soon-to-be issued shares from their brokerage firms. These options are generally not available to retail investors.

The investment bank handling a public offering tries to determine which offering price will result in an optimal number of share subscriptions; too many subscriptions will not impress the issuing company, as the company is likely to prefer a higher offering price. Conversely, too few subscriptions might result in the investment bank being unable to sell its entire inventory of the security issue, exposing it to significant losses.

Subscribed Deals and Prospectus Reports

The prospectus for a new offering is a detailed document that potential investors will pore over prior to subscribing to a new issue. The prospectus is a formal legal document that the Securities and Exchange Commission requires. It provides an enormous amount of information about an investment offering for sale to the public, including basic details, such as the name of the company or mutual fund issuing stock, the amount and type of securities being sold, and the number of available shares (for a stock offering).

The prospectus also describes whether an offering is public or a private placement, what the underwriting fees are, and the names of the company’s principals. An overview of the company’s financial statements, the background of its management, a section wherein the management describes the company’s current state and future goals for growth (management discussion and analysis), and the risks section are all also important.

A preliminary prospectus is the first document that a security issuer will circulate; it includes many details of the business and transaction in question, and the final prospectus containing finalized background information (e.g. the exact number of shares/certificates issued and the precise offering price) will traditionally follow. The final prospectus is printed after the deal has been made effective.

When reading a prospectus, it’s important to pay attention to information that is unique to that company (not just the legalese that all public companies incorporate into their filings).

  1. Prospectus

    A prospectus is a document delivered to potential investors that ...
  2. Final Prospectus

    A final prospectus is the final version of a prospectus for a ...
  3. Going Public

    Going public is the process of selling shares that were formerly ...
  4. SEC Form 424A

    SEC Form 424A is a prospectus form that a company must file if ...
  5. Offering

    An offering is the issue or sale of a security by a company. ...
  6. SEC Form S-20

    SEC Form S-20 is a filing with the SEC that accompanies a prospectus ...
Related Articles
  1. Investing

    Interpreting a Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report. It can tell you a lot.
  2. Investing

    An Insight on the Prospectus of Corporate Bonds

    Making a well-informed decision with respect to buying a corporate bond involves reading the significant facts and details of the prospectus document.
  3. Investing

    Digging Deeper: The Mutual Fund Prospectus

    The jargon in a mutual fund prospectus can be daunting. Find out how to get to the important stuff.
  4. Investing

    Netflix Has Entered Its Second Phase of Growth

    Netflix Inc. has officially entered its second phase of growth with U.S. subscriber growth now waning.
  5. Investing

    The Issuance Procedure of High-Yield Bonds

    The issuance of corporate high-yield bonds can have several advantages over equity. A closer look.
  6. Investing

    Digging Deeper Into Mutual Fund Names

    Go beyond the name and find out if that fund fits into your portfolio.
  7. Investing

    5 Tips For Investing In IPOs

    Are you thinking of investing in IPOs? Here are five tips to help your investment decision before jumping into the initial public offering market.
  8. Managing Wealth

    Issued share capital versus subscribed share capital

    Learn the difference between issued share capital versus subscribed share capital. Get information about various types of capital.
  9. Personal Finance

    The Rise of the Modern Investment Bank

    Get to know a little bit about investment banks, the institutions whose actions help guide free markets.
  10. Investing

    Netflix Domestic Subscriber Growth to Slow Down: Analyst

    According to the analyst, the lack of a blockbuster show will hurt the subscriber count.
  1. What is the most important section in an investment company's prospectus?

    Learn about the various elements included in an investment company's prospectus and which ones are most important for investors ... Read Answer >>
  2. What are the advantages and disadvantages for a company going public?

    Companies often use an initial public offering (IPO) as a way to generate capital. There are both advantages and disadvantages ... Read Answer >>
  3. Do underwriters make guarantees to sell an entire IPO issue?

    Underwriters do not necessarily make guarantees concerning selling an initial public offering (IPO). Read Answer >>
  4. How do subscription business models work?

    Understand how a subscription business model works and why companies prefer a subscription business model over a traditional ... Read Answer >>
Trading Center