SGS 4 (Prospectus) Flashcards
(26 cards)
What is verification and why is it required?
Checking accuracy of all price-sensitive statement in prospectus and other marketing documentation.
To reduce risks of liability for false, misleading or inaccurate statements and omissions.
What must verification questions do?
Check factual ACCURACY of statements.
Ensure no relevant info OMITTED
Ensure INFERENCES which may be drawn from documents are correct.
Can information be omitted from a prospectus?
Yes provided the conditions in PR 2.5.2 are met and the issuer applies in WRITING.
Are accountants responsible for the prospectus?
For 75-80% on average,
MUST take responsibility under 5.5.3(2)(c) or 5.5.3(2)(f) or 5.5.8 (in relation to PART of the contents)
What is the responsibility of the Sponsor?
NOT for the prospectus but if breaches certain LRs, FCA may take enforcement action against the (s.88A FSMA)
Difference between offeror and issuer?
Offeror is shareholder piggybacking off the IPO
Issuer is the selling company
Are selling shareholders (offerors) always responsible?
Prima facie under PR 5.5.3(d) but not if 5.5.7 cumulative conditions apply
Who is NOT responsible for a prospectus?
Solicitors giving advice as to its contents in a professional capacity (PR 5.5.9R)
Requirements of a summary?
Key information
Liability under s.90(12) FSMA for misleading, inaccurate or inconsistent information.
Warning (PR 2.1.7R)
What is the structure for a financial promotions question?
Is it an FP?
Made or approved by authorised person?
Exemptions in FPO 2005?
Penalties
Advertisement regime?
What does NOT fall within advertisement regime?
Prospectus as it has been approved by the FCA.
How can websites fall within the exemptions of the FPO?
Website restrictions or entry disclaimer
Which type of prospectus does not fall within Art 70(1)(c)?
Pathfinder as not APPROVED by FCA.
What are the heads of liability under the Fraud Act?
S.2 fraud by false representation
S.3 fraud by failing to disclose information
What are the other heads of criminal liability?
S.21 FSMA
S.89 FSA
S.90 FSA
Why is s.90 FSMA the most commonly used head of civil liability?
No need to show reliance (only need causal connection)
No need to show inducement
Available to original investors and subsequent purchasers
Applies to prospectuses and supplementary ones.
What is the defence to s.90 FSMA?
Sch 10 para 1(2): if person reasonably believed that statement was true and not misleading.
Para 3: if mistake, change or new matter comes to light after admissions but correction published.
What are the requirements for a claim under negligent misstatement?
Duty of care
Duty breached
Reliance
Loss
Other heads of civil liability?
Breach of contract
Misrepresentation
Market abuse
Structure for a supplementary prospectus question?
Call urgent BM (key representatives of sponsor and company’s solicitors) Any person responsible who is aware should give notice to issuer.
Within RP?
New factor, material mistake or inaccuracy arisen?
Is the factor ‘significant’, for the purposes of making an informed assessment?
Should a supplementary prospectus be published? i.e. what info and by when?
Penalties if not published
Publication a defence to s.90 FSMA?
How is a supplementary prospectus a defence to s.90 FSMA?
Sch 10 para 3, amounts to a ‘correction’.
What happens if the new info comes to light after the relevant period?
i.e. after trading has commenced.
Only possible defences are Sch 10 para 1 ‘reasonable’ belief or para 3, RIS NOTIFIED to prevent further liability for those acquiring shares in the FUTURE, (para 3)
Why is a pathfinder a financial promotion?
Constitutes an invitation or inducement to engage in investment activity as it is encouraging investment and is a financial promotion.
What is the relevant period?
For an institutional offer (i.e. with no offer to the public)
Period beginning with publication of the prospectus and ending the day trading begins.
