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Do We Need A Prospectus Notes

LPC Law Notes > Public Limited Companies Notes

This is an extract of our Do We Need A Prospectus document, which we sell as part of our Public Limited Companies Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Do We Need a Prospectus?
Structure:

a) Do we need to become a public company?
Companies Act 2006s755 Private companies may not offer shares to publics756(1) What is a public offer?s756(2) To any section of the public howsoever selected (including Shareholders) s756(3) Exceptions:Deal is a private matter between the VC and the company Deal is not going to allow the buyer to then resell onto the public s756(4) Connected persons are not the public

b) Do we need a prospectus?
FSMA 2000An approved prospectus is needed if:-

s85(1) There is an offer of Transferable Securities to the Public s85(2) There is a request for Transferable Securities to be admitted to trading on a Regulated Market

It is a criminal offence to not do this

Examples A Private Company offering Shares to Venture Capitalists and Existing Shareholders a) Do we need to become a public company?No, this is not an offer to the public as it is a private deal (s756(4))

b) Do we need a prospectus?
s85(1) Do we have Transferable Securities to the Public?
Transferable Securities?S102(A)(3) defines Transferable Securities MiFID (Shares are Transferable Securities)Therefore, any shares are always Transferable Securitiess85(5) provides exemptions to this rule:Sch 11A (para 9) Not Transferable Securities if the total value of the shares being offered is under
EU5,000,000PR 1.2.2 (See rule for more details)

To the Public?ss102(B)(1) - (3) Is there a communication which: Presents sufficient information on the securities To enable an investor to decide to buy or subscribe themIf yes, this is an offer to the publics86(1) provides exemptions to this rule:s86(1a) The offer is to qualified investors only

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s86(1b) The offer is to fewer than 150 people (other than qualified investors) s86(1c) Investing more than EU100,000 eachThis is a mixed offer, so s86(1) pushes the exemption through and this example does not constitute an offer to the publicTransferable Securities are present here. There are no exemptions. There is an offer to the public, but it falls under the s86(1) exception. Therefore, s85(1) is not triggered and a prospectus is not necessary.They are not looking to list so there is no need to consider s85(2)

Verdict

An Unlisted PLC offering EU10,000,000 of new shares to Professional Investors (also listing on LSE MM) a) Do we need to become a public company?No, we are already a public company (s755)

b) Do we need a prospectus?
s85(1) Transferable Securities to the Public?
Transferable Securities?S102(A)(3) defines Transferable Securities MiFID (Shares are Transferable Securities)Therefore, any shares are always Transferable Securitiess85(5) provides exemptions to this rule:Sch 11A (para 9) Not Transferable Securities if the total value of the shares being offered is under
EU5,000,000 (This is for EU10,000,000 so no)PR 1.2.2 (See rule for more details)

To the Public?ss102(B)(1) - (3) Is there a communication which: Presents sufficient information on the securities To enable an investor to decide to buy or subscribe themIf yes, this is an offer to the publics86(1) provides exemptions to this rule:s86(1a) The offer is to qualified investors only s86(7) A qualified investor is as described in MiFID Annex 11 s1 (1-4) s86(1b) The offer is to fewer than 150 people (other than qualified investors)

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s86(1c) Investing more than EU100,000 eachThis bypasses via exemption s86(1) (A) or (B).Transferable Securities are present here. There are no exemptions. There is an offer to the public. However, there are exemptions under s86(1). Therefore, s85(1) is not triggered and a prospectus is not necessary under this rule.

Verdict

s85(2) Transferable Securities to a Regulated Market?
Transferable Securities?S102(A)(3) defines Transferable Securities MiFID (Shares are Transferable Securities)Therefore, any shares are always Transferable Securitiess85(6) provides exemptions to this rule:Sch 11A (para 9) Not Transferable Securities if the total value of the shares being offered is under
EU5,000,000 (This is for EU10,000,000 so no)PR 1.2.3 (See rule for more details)

To the Regulated Market?ss103(1) and MiFID Definition of regulated market place Includes LSE Main Market but not LSE AIM

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