3. The Prospectus

Question 1

What is the purpose of p

Answer 1

main marketing doc - investors decide whether to invest after reading the info

Question 2

can co select what goes inside p

Answer 2

no - UKPR and s85 fsma prescribes its contents

Question 3

when is a p required

Answer 3

art 3 UKPR
- where a co wishes to
- offer securities to public;
- admit securities to trading on a regulated market situated in the UK

Question 4

what is meant by offering securities to the public

Answer 4

where there is communication to persons in any forms, and by any means presenting sufficient info on the terms of the offer & securities to be offered so as to enable an investor to decide to purchase/subscribe for those securities

Question 5

what are securities art 2(a) UKPR

Answer 5

defined as transferable securities
includes shares

Question 6

what = offer to public

Answer 6

s85(1) all public offers included shares not listed on OL;
if the offer is made to a person in the uk

Question 7

which article sets out exemptions

Answer 7

art 1(4) PRR 1.2.3

Question 8

main exceptions

Answer 8

offers to qualified investors
offers to fewer than 150 natural persons
share swaps
offers in conjunction with takeovers
bonus issues / scrip dividends
offers by listed co to employee / director
small offers (cant exceed 8 mil)

Question 9

what is a regulated market

Answer 9

art 2(j) ukpr
can be found on fca website
main market is regulated, AIM is not

Question 10

can co voluntarily submit a prospectus where an offer otherwise falls under an exemption

Answer 10

yes

Question 11

general content requirements

Answer 11

must contain necessary info which provides material info to help investors assess
- co finances
- SH rights
- reason for issue and impact on co

must be clear, analysable and comprehensible art 6(2)

Question 12

starting point for specific content requirements

Answer 12

art 7 ukpr - sets out content for the summary

Question 13

what is the summary

Answer 13

overview of the key info

Question 14

companys duty of care re p

Answer 14

PRR 3.1.4R to take all reasonable care to ensure it contains all necessary info required by art 6 and the annexes

3.1.5 to ensure facts are correct and do not omit info re import

Question 15

when can a p be abbreviated

Answer 15

SME and co with reduced market capitalisation

Question 16

how is a SME defined per art 2(f)

Answer 16

less than 250 employees
balance sheet under 43 mil
annual turnover is under 50 mil

Question 17

what if a co = SME

Answer 17

only needs to provide info as in annexes 20,23,24,26

Question 18

options re format

Answer 18

1) single doc
2) 3 separate docs art 6(3)
- summary
- reg doc
- securities note

Question 19

which art specifies requirements as to basic format

Answer 19

art 24 UKPR

Question 20

why 3 separate docs

Answer 20

art 12(2) any approved reg doc is valid for 12 months after approval

once approved, any further issue of shares only requires summary and securities note

Question 21

art 7

Answer 21

p must include a self contained summary no more than 7 sides of a4

Question 22

what must a summary not do

Answer 22

cross ref other parts of the prospectus (ie it must be self-contained)

Question 23

4 sections within sumamry

Answer 23

intro containing warnings
key info on co
key info on shares
key info on the offer and admission to trading

Question 24

what must a securities note contain

Answer 24

info about the securities to be offered / admitted
listed in annex 2

Question 25

can info be incorporated by reference

Answer 25

yes- art 19

Question 26

when can info be omitted art 18(1)

Answer 26

if - disclosure contrary to public interest - disclosure detrimental to co and misleading in assessment - info of minor importance, unlikely to affect investors assessment

Question 27

what is required if info is to be omitted

Answer 27

reasoned in writing

Question 28

what if director deliberately omits facts

Answer 28

personally liable to investors

Question 29

can investors be compensated for omitted info

Answer 29

yes

Question 30

civil law remedies for breach of art 6

Answer 30

fines public censure s90 compensation for loss resulting from misleading statement liability from summary contents

Question 31

defences for s90 civil liability

Answer 31

p believed erroneous info to be true at the time loss arises from expert statement correction made prior to share acquisition erroneous info produced from public official doc person seeking compensation acquired shares knowing info was deficient

Question 32

what is an advertisement

Answer 32

communication re a specific offer to the public of securities aiming to promote possible acquisition of securities

Question 33

can fca bring criminal proceedings

Answer 33

yes under ss401, 402 FSMA

Question 34

when is a director at risk of criminal liability

Answer 34

s89 misleading statement s90 misleading impression

Question 35

what is verification

Answer 35

directors to have made reasonable enquiries to satisfy that - each statement is true & not misleading - doc as a whole gives true and fair impression on history, business and prospects of co - doc does not omit info

Question 36

whats a price range prospectu

Answer 36

price for shares unspecified price issued before offer closes

Question 37

path finder prospectus

Answer 37

draft p sent out to stimulate interest must comply with advertisement provisions can only be sent to institutional investors

Question 38

whats a supplementary p

Answer 38

art 23(1) if sig new factors, material mistale arises, interim p must be produced must contain details of the new info and obtain fca approval within 5 days of submission investors can withdraw acceptance during 2 WD following publication

Question 39

how long is p valid for

Answer 39

12 months post approval provided it is updated by supplementary p