<PAGE>
 
                                                                      EXHIBIT 99

                                 21,760 SHARES

                           IMPERIAL HOLLY CORPORATION

                                  COMMON STOCK
                                ________________


     This prospectus (this "Prospectus") relates to the offering of 21,760
shares (the "Shares") of common stock, without par value (the "Common Stock"),
of  Imperial Holly Corporation (the "Company") by one or all of the selling
shareholders named herein (the "Selling Shareholders").  See "Selling
Shareholders."  The Shares include rights to purchase preferred stock associated
with the Common Stock.  The Selling Shareholders are or have been directors of
the Company and acquired the Shares under the Company's Nonemployee Director
Compensation Plan.  The Company will not receive any of the proceeds from the
sale of Shares by the Selling Shareholders.

     Sales of the Shares by the Selling Shareholders may be made from time to
time, pursuant to this Prospectus or Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"), (or any other applicable exemption from
registration under the Securities Act), in one or more transactions, including
block transactions, on the American Stock Exchange or any other exchange or
quotation system on which the Common Stock may be admitted for trading
(collectively, the "Exchanges"), pursuant to and in accordance with the
applicable rules of the Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.  The Shares may be offered
directly, to or through agents designated from time to time, or to or through
brokers or dealers, or through any combination of such methods of sale. Such
agents, brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions).  A member firm of an Exchange may
be engaged to act as a Selling Shareholder's agent in the sale of Shares by such
Selling Shareholder.  To the extent required, specific information regarding the
Shares will be set forth in an accompanying Prospectus Supplement.  The Selling
Shareholders and any broker, dealer, agent or other person that participates
with the Selling Shareholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by such persons and any profit on the resale of the Shares purchased by
such persons may be deemed to be underwriting commissions or discounts under the
Securities Act.  All expenses of registration incurred in connection with this
offering are being borne by the Company, but all brokerage commissions and other
expenses incurred by a Selling Shareholder will be borne by such Selling
Shareholder.  See "Plan of Distribution."

     The Common Stock is listed on the American Stock Exchange under the symbol
"IHK."

         THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
           COMMISSION   NOR   HAS   THE   SECURITIES   AND   EXCHANGE
               COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION
                  PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
                     PROSPECTUS.  ANY REPRESENTATION TO THE
                        CONTRARY IS A CRIMINAL OFFENSE.
                                ________________

                The Date of this Prospectus is November 18, 1996
<PAGE>
 
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS.  IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF ANY OFFER TO BUY, THE SECURITIES IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.

                              ___________________

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
<S>                                                                     <C>
AVAILABLE INFORMATION..................................................  2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................  3
THE COMPANY............................................................  3
SELLING SHAREHOLDERS...................................................  4
PLAN OF DISTRIBUTION...................................................  5
LEGAL MATTERS..........................................................  5
EXPERTS................................................................  5
</TABLE>
                             AVAILABLE INFORMATION

          The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission").  Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission in
Washington D.C., and at certain of its Regional Offices, during business hours.
The current address of each such facility is set forth below.  Copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington D.C. 20549, at prescribed rates.  Furthermore, the Commission
maintains a Web site that contains reports, proxy statements and other
information filed electronically by the Company with the Commission. The address
of such Web site is http://www.sec.gov.


              Current Addresses of SEC Public Reference Facilities
              ----------------------------------------------------
<TABLE>
<CAPTION>

<S>                      <C>                       <C> 
Public Reference Room    New York Regional Office  Chicago Regional Office
450 Fifth St., NW        7 World Trade Center      Northwestern Atrium Center
Room 1024                13th Floor                500 West Madison Street, Suite 1400
Washington D.C. 20549    New York, New York 10048  Chicago, Illinois 60661
 
</TABLE>

          The Company's Common Stock is listed on the American Stock Exchange
under the symbol "IHK." Reports, proxy statements and other information
concerning the Company can also be inspected at the American Stock Exchange
during business hours.  The American Stock Exchange is located at 86 Trinity
Place, New York, New York 10006; telephone (800) 875-1247.

          This Prospectus constitutes part of a registration statement on Form
S-8 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act
with respect to the securities offered hereby.  As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement, and reference is made to the
Registration Statement for further information with respect to the Company and
the securities offered hereby.  Statements contained herein concerning the
provisions of any contract, agreement or any other document or exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete; with respect to each such contract, agreement or document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.

                                       2
<PAGE>
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

          The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated in this Prospectus by
reference and shall be deemed to be a part hereof:

          (1) the Company's Annual Report on Form 10-K for the fiscal year ended
              March 31, 1996;

          (2) the Company's Quarterly Reports on Form 10-Q for the quarters
              ended June 30 and September 30, 1996;

          (3) the Company's Current Reports on Form 8-K dated April 19, 1996
              (as amended by Form 8-K/A filed July 5, 1996) and August 29, 1996;

          (4) the description of the Company's Common Stock contained in the
              Company's Registration Statement on Form 8-A dated August 11,
              1989; and

          (5) the description of the Company's Rights to Purchase Preferred
              Stock contained in the Company's Registration Statement on Form 8-
              A dated September 29, 1989.

          All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering made hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such document.  Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.  Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

          The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or all
of the information that has been incorporated by reference in this Prospectus
(not including exhibits to the information that have been incorporated by
reference herein unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates).  Requests should be
directed to William F. Schwer, Senior Vice President, Secretary and General
Counsel, Imperial Holly Corporation, One Imperial Square, Suite 200, 8016
Highway 90-A, Sugar Land, Texas 77487 (telephone (281) 491-9181).


                                  THE COMPANY

          The Company is one of the nation's largest producers and marketers of
refined sugar, producing both cane and beet sugar.  The Company refines raw cane
sugar primarily at its Imperial Sugar Company refinery in Sugar Land, Texas.
Through Holly Sugar Corporation, the Company's wholly-owned subsidiary, the
Company extracts refined beet sugar by processing sugarbeets purchased from
independent growers at processing plants in California, Wyoming, Montana and
Texas.  The Company sells its refined sugar directly and through brokers to
wholesalers, retail grocers and food manufacturers.  The Company sells by-
products (primarily beet pulp and molasses) from the extraction and refining
processes for use as livestock feed and markets commercial beet seed.

          The Company was incorporated in 1924 as Imperial Sugar Company and is
the successor to a cane sugar plantation and milling operation begun in Sugar
Land in the early 1800's that began producing granulated sugar in 1843.  In
1988, the Company purchased Holly Sugar Corporation and the Company's name was
changed to Imperial Holly Corporation.  Holly Sugar Corporation was founded in
1905 and incorporated in 1916.

          The principal executive offices of the Company are located at One
Imperial Square, Suite 200, 8016 Highway 90-A, Sugar Land, Texas 77487;
telephone (281) 491-9181.

                                       3
<PAGE>
 
                                  SELLING SHAREHOLDERS

          The following table sets forth certain information known to the
Company with respect to beneficial ownership of the Company's Common Stock as of
October 31, 1996 by each Selling Shareholder.
<TABLE>
<CAPTION>

                                                                        Number of       Percent of
                                      Number of Shares     Number of     Shares           Class
                                        Beneficially        Shares    Beneficially     Beneficially           
                                           Owned           Offered       Owned         Owned After
Selling Shareholder (1)               Prior to Offering     Hereby    After Offering    Offering (2)        
------------------                    -----------------   ---------   --------------   --------------           
<S>                                   <C>                    <C>        <C>                 <C>
A. M. Bartolo (3)(4)                   42,865                2,176          40,689            *

John D. Curtin, Jr. (4)                 5,676                2,176           3,500            *

Edward O. Gaylord                      14,176                2,176          12,000            *

Ann O. Hamilton (5)                   309,769                2,176         307,593           2.2%

Harris L. Kempner, Jr. (6)(7)         454,478                2,176         452,302           3.2%

I. H. Kempner, III (4)(5)(6)(8)(9)    714,113                2,176         711,937           5.0%

Henry E. Lentz (10)                    15,176                2,176          13,000             *

Robert L. K. Lynch (5)(11)            411,838                2,176         409,662           2.9%

Fayez Sarofim                         678,676                2,176         676,500           4.8%

Daniel K. Thorne (12)                 760,745                2,176         758,569           5.4%

---------------------
</TABLE>

*  Less than 1% of the outstanding Common Stock.

(1)  All Selling Shareholders, except Mr. A. M. Bartolo, are nonemployee
     directors of the Company as of the date of this Prospectus. Mr. Bartolo
     served as a nonemployee director of the Company until his retirement from
     active membership on the Company's Board of Directors on October 25, 1996.
     The Company has appointed Mr. Bartolo as a director emeritus.
(2)  Based on 14,143,717 shares of the Company's Common Stock outstanding on
     November 4, 1996 and excluding shares held in the treasury of the Company.
(3)  At the time of his retirement from the Company in 1994, Mr. Bartolo was
     Executive Vice President and Chief Operating Officer of the Company and
     President of Imperial Sugar Company, a division of the Company.
(4)  Includes shares subject to stock options exercisable within 60 days as
     follows: Mr. I. H. Kempner, III, 81,325 shares; Mr. Bartolo, 12,000 shares;
     Mr. Curtin, 1,500 shares.
(5)  Includes 134,187 shares of Common Stock owned by the Harris and Eliza
     Kempner Fund, a charitable foundation, as to which Ms. Hamilton, Mr. I. H.
     Kempner, III and Mr. Lynch share voting power and investment power as co-
     trustees along with other trustees.
(6)  Includes 332,363 shares of Common Stock owned by the H. Kempner Trust
     Association, over which Mr. I. H. Kempner, III and Mr. Harris L. Kempner,
     Jr. share voting power and investment power as co-trustees with three other
     co-trustees.
(7)  Includes 6,420 shares of Common Stock held by Mr. Harris L. Kempner, Jr.'s
     wife, as to which he shares voting and investment power.  Mr. Kempner
     disclaims beneficial ownership as to such shares.
(8)  Includes 4,443 shares of Common Stock held by Mr. I. H. Kempner III's wife,
     as to which Mr. Kempner disclaims beneficial ownership.
(9)  Mr. I. H. Kempner, III currently serves as Chairman of the Board of
     Directors and Chairman of the Executive Committee of the Board of Directors
     of the Company.  He retired as an executive officer of the Company in
     January 1996.
(10) Mr. Lentz serves as a managing director of Lehman Brothers, Inc., an
     investment banking firm that serves from time to time as the Company's
     financial advisor in connection with various matters.
(11) Includes 188,891 shares of Common Stock owned by a testamentary trust as to
     which Mr. Lynch is the income beneficiary and has a power of appointment.
     Mr. Lynch does not have voting or investment power with respect to such
     shares.  Also includes 45,367 shares of Common Stock held by a revocable
     trust for the benefit of Mr. Lynch's sister as to which Mr. Lynch is co-
     trustee and shares voting and investment power with two other co-trustees.
     Mr. Lynch disclaims beneficial ownership over the shares held in trust for
     his sister.
(12) Includes 327,142 shares of Common Stock owned by a testamentary trust as to
     which Mr. Thorne is the sole beneficiary and a co-trustee.  Also includes
     166,947 shares owned by the Alan Pryce-Jones Trust, of which Mr. Thorne is
     a co-trustee, and 875 shares owned by his wife of which Mr. Thorne
     disclaims beneficial ownership.

          The Shares may be offered or sold by the Selling Shareholders named
above or by any pledgee, donee, transferee or other successor in interest that
may be permitted under the Plan.

                                       4
<PAGE>
 
                              PLAN OF DISTRIBUTION

          Shares of Common Stock covered hereby may be offered and sold from
time to time by the Selling Shareholders, pursuant to this Prospectus or Rule
144 under the Securities Act (or any other applicable exemption from
registration under the Securities Act).  The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale.  The Selling Shareholders may sell the Shares
being offered hereby in one or more transactions, including block transactions,
on the American Stock Exchange or any other Exchange pursuant to and in
accordance with the applicable rules of such Exchanges, in negotiated
transactions or in a combination of any such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.

          The Shares may be offered directly, to or through agents designated
from time to time or through brokers or dealers, or through any combination of
these methods of sale.  Such agent, broker or dealer may receive compensation in
the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of the Shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).  A member
firm of an Exchange may be engaged to act as the Selling Shareholder's agent in
the sale of Shares by the Selling Shareholders. Usual and customary brokerage
fees will be paid by the Selling Shareholders.  The Selling Shareholders and any
underwriter, dealer or agent who participate in the distribution of such shares
may be deemed to be "underwriters"  under the Securities Act, and any discount,
commission or concession received by such persons might be deemed to be an
underwriting discount or commission under the Securities Act.   All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all brokerage commissions and other expenses incurred by individual
Selling Shareholders will be borne by such Selling Shareholders.

          The Selling Shareholders may indemnify any broker-dealer or other
person that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act.  Any commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal.

          At the time a particular offer of the shares of Common Stock
registered hereunder is made, if required, a Prospectus Supplement will be
distributed that will set forth the number of shares being offered and the terms
of the offering including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter for securities purchased, any discount,
commission and other item constituting compensation and any discount, commission
or concession allowed or reallowed or paid to any dealer, and the proposed
selling price to the public.

          The sale of the Shares also is subject to certain restrictions
contained in the Nonemployee Director Compensation Plan.  There can be no
assurance that the Selling Shareholders will sell all or any of the shares of
Common Stock offered hereunder.

 
                                  LEGAL MATTERS

          Certain legal matters in connection with the Common Stock offered
hereby are being passed upon for the Company by Baker & Botts, L.L.P., Houston,
Texas.


                                    EXPERTS

          The Company's consolidated financial statements incorporated in this
Prospectus by reference from the Company's Annual Report on Form 10-K for the
year ended March 31, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated by
reference herein and have been so incorporated in reliance upon the report of
such firm based on their authority as experts in accounting and auditing.

          The combined financial statements of Spreckels Sugar Company, Inc. and
Limestone Products Company, Inc. incorporated in this Prospectus by reference
from the Company's Current Report on Form 8-K/A filed July 5, 1996 have been
audited by Arthur Andersen LLP, independent public accountants, as stated in
their reports,

                                       5
<PAGE>
 
which are incorporated by reference herein and have been so incorporated in
reliance upon the reports of such firm as experts in accounting and auditing.

                                       6