#15679 - Do We Need A Prospectus - Public Limited Companies

Structure:

Companies Act 2006

• s755 Private companies may not offer shares to public

  • s756(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

FSMA 2000

• An 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

• No, this is not an offer to the public as it is a private deal (s756(4))

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(5) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

  • 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 them

• If yes, this is an offer to the public

• s86(1) provides exemptions to this rule:

  • s86(1a) The offer is to qualified investors only

  • s86(1b) The offer is to fewer than 150 people (other than qualified investors)

  • s86(1c) Investing more than 100,000 each

• This is a mixed offer, so s86(1) pushes the exemption through and this example does not constitute an offer to the public

Verdict

• Transferable 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)

• No, we are already a public company (s755)

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(5) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

    • (This is for 10,000,000 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 them

• If yes, this is an offer to the public

• s86(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)

  • s86(1c) Investing more than 100,000 each

• This bypasses via exemption s86(1) (A) or (B).

Verdict

• 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.

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(6) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

    • (This is for 10,000,000 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

Verdict

• Transferable Securities are present here. There are no exemptions.

• There is an offer to a regulated market here.

• Therefore, s85(2) is triggered and an approved prospectus will be necessary.

• No, we are already a public company (s755)

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(5) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

    • (Unknown – 20p par value, unsure what market value is now though (we don’t know what 1,000,000 x ? will be.))

  • Sch 11A (para 8)

    • 5,000,000 issue must be over 12 months

    • (Prior listing was 2014 so may have full 5,000,000 quota available)

  • 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 them

  • Already listed, so likely

• If yes, this is an offer to the public

• s86(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)

  • s86(1c) Investing more than 100,000 each

• This will bypass via exemption s86(1b) (provided there are less than 150 directors)

Verdict

• Transferable Securities are present here. It’s not clear if we have an exemption via the 5,000,000 rule.

• There is an offer to the public. However, it will pass via the exemption at s86(1b)

• Therefore, s85(1) is (probably) not triggered and a prospectus is not necessary under this rule.

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(6) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

    • (Unknown – 20p par value, unsure what market value is now though)

  • Sch 11A (para 8)

    • 5,000,000 over 12 months

    • (Depends on when prior listing was as to whether the prior listing will affect this total)

  • PR 1.2.3

    • 1.2.3(6) Exemption applies to:

      • Transferable Securities offered or allotted to existing or former directors

        • If those securities are of the same class as the securities already admitting to trading on the same Regulated Market

        • And if a document is made available containing information on the number and nature of the transferable securities

        • As well as the reasons for and the details of the offer.

To the Regulated Market?

• ss103(1) and MiFID

  • Definition of regulated market place

    • Includes LSE Main Market but not LSE AIM

Verdict

• Transferable Securities are present here. There is an exemption to directors under 1.2.3(6).

• (There is an offer to a Regulated Market here, but we already got out via exemption)

• Therefore, s85(2) is not triggered and an approved prospectus will not be necessary.

• No, we are already a public company (s755)

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• Therefore, any shares are always Transferable Securities

• s85(5) provides exemptions to this rule:

  • Sch 11A (para 9)

    • Not Transferable Securities if the total value of the shares being offered is under 5,000,000

    • (Unknown – 20p par value, unsure what market value is now though)

  • Sch 11A (para 8)

    • 5,000,000 over 12 months

    • (Depends on when prior listing was as to whether the prior listing will affect this total)

  • 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 them?

  • Already listed, so likely

• If yes, this is an offer to the public

• s86(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)

  • s86(1c) Investing more than 100,000 each

• This bypasses via exemption s86(1a).

Verdict

• Transferable Securities are present here. It’s not clear if we have an exemption via the 5,000,000 rule.

• There is an offer to the public. However, there are exemptions via s86(1a)

• Therefore, s85(1) is not triggered and a prospectus is not necessary under this rule.

Transferable Securities?

• S102(A)(3) defines Transferable Securities

  • MiFID (Shares are Transferable Securities)

• ...