Title: Breaking down the prospectus what information are you going to need
1Breaking down the prospectus what information
are you going to need?
- Presentation toThe London Stock Exchange Russian
Regional Road Show
September 16, 2008Ekaterinburg
James Lewis Dewey LeBoeuf Tel 44 20 7459
5002 Email james.lewis_at_dl.com
2Contents
- PROSPECTUS REGIME
- MAIN MARKET PRIMARY LISTING OF EQUITY
SECURITIES - GDRs
- AIM
- MINING, OIL GAS COMPANIES
3Prospectus Regime
- Requirement to publish a prospectus if
- transferable securities are offered to the
public or - a request is made for admission to trading on a
Regulated Market - Useful exemptions
- In the UK AIM is not a Regulated Market
4Official List of UKLA/Main Market of London Stock
Exchange plc Primary Listing of Equity
Securities
- Dewey LeBoeuf Comparative Chart.
- Pre-vetting of prospectus by the UKLA (Financial
Services Authority). - Minimum 25 shares in public hands.
- 3 financial years of consolidated audited
accounts, the last 2 prepared or restated to IFRS
or (for a non EEA issuer only) equivalent. - Last year of audited accounts must not be older
than 6 months. - 75 of business supported by 3 year historic
revenue earning record. - Interims or quarterly information to be included
with comparables for prior period if produced
since last audited accounts.
5Official List of UKLA/Main Market of London Stock
Exchange plc Primary Listing of Equity
Securities Contd
- Full compliance with Listing Rules
- Sponsors required for IPO and certain
transactions. - Minimum market capitalization (700,000).
- FTSE Indices?
- Distribution of securities.
6Listing of GDRs by Non-UK Issuer Key Listing
Requirements
- Pre-vetting of prospectus by the UKLA (Financial
Services Authority). - At least 25 of certificates for the GDRs to be
in public hands. - 3 financial years of consolidated audited
accounts (or such shorter period issuer has been
in operation), the last 2 prepared or restated to
IFRS or (for a non EEA issuer only) equivalent. - Last year of audited accounts must not be older
than 18 months if audited interim statements are
included or 15 months if unaudited interim
statements are included. - If audited accounts are older than 9 months
interims for first 6 months required. - Interims or quarterly information to be included
with comparables for prior period if produced
since last audited accounts.
7Listing of GDRs by Non-UK Issuer Key Market
Listing Requirements Contd
- Expected market cap of GDRs to be listed
700,000. - No requirement for a sponsor but Issuer must have
a contact person for FSA. - No corporate governance requirements (but
marketing and reputational issues) or
requirements for shareholder approval for
transactions.
8IPO Procedure and Timetable
- Approximately 4-6 months.
- UKLA formal review within 20 working days after
submission of a draft prospectus. - Once approved by UKLA prospectus is filed and
made available to the public.
9IPO Procedure and Timetable Contd
10The Prospectus Overiding Requirements
- The Financial Services and Markets Act 2000 and
Prospectus Rules require - the prospectus to contain all information to
enable investors to make an informed assessment
of - the assets and liabilities
- financial position
- profits and losses
- prospects and
- rights attaching to the securities,
- of the issuer.
- Information must be comprehensible, easy to
analyze and prepared having regard to particular
nature of the securities and the issuer - .
11The Prospectus Overiding Requirements Contd
- The Directors, whose names appear in paragraph
below, and the Company accept responsibility
for this document and have taken all reasonable
care to ensure that the information contained in
this document is, to the best of their knowledge,
in accordance with the facts and contains no
omission likely to affect the import of such
information - GDRs Directors do not give responsibility
statement - Criminal liability for misstatements and material
omissions - Materiality?
12Prospectus - Components
- Summary
- Equity
- Single prospectus document
- Building blocks - Prospectus Rules Annexes I, II
and III - NB Guidance CESR/05-054b of The Committee of
European Securities Securities Regulators for
certain matters
13Prospectus Contents - Equity
- Business overview
- Details of issuer and organizantional structure
- Property, plant and equipment
- Operating and financial review
- Capital resources
- Research and development, patents and licences
- Significant Trends since year end
14Prospectus Contents - Equity Contd
- Key information
- working capital statement
- The Company is of the opinion that, taking into
account the bank facilities available to the
Group, the Group has sufficient working capital
for its present requirements, that is, for at
least the next 12 months from the date of this
prospectus - capitalization and indebtedness
- interest of persons involved in the issue
- reasons for offer and use of proceeds
- Risk factors specific to issuer and industry and
securities offered - Profit Forecasts or estimates
continued ?
15Prospectus Contents - Equity Contd
- Administrative, management and supervisory bodies
and senior management - Remuneration and benefits
- Board practices/Corporate Governance
- Employees
- Selling shareholders
- Major shareholders
- Related party transactions
- Dividend policy
- Legal or arbitration proceedings
16Prospectus Contents - Equity Contd
- Significant change to financial position
- Material contracts
- Securities offered, terms and conditions of the
offer and admission to trading and dealing
arrangements - Expenses of the offer
17Financial Information - Equity
- Complex financial history or significant
financial commitment Proforma financial
information can be included in accordance with
Annex II - CESR Guidance
18GDRs
- A GDR prospectus must include the necessary
information to enable investors to make an
informed decision on (i) the assets and
liabilities, financial position, profits and
losses and prospects of the Company and (ii) the
rights attaching to the GDRs - Information contained in Annex X of Appendix III
to the Prospectus Rules - Disclosure items not required by Prospectus
Rules - Key Information
- Working Capital Statement
- Capitalization and indebtedness
- NB Market Practice
19AIM
- No minimum of shares to be in public hands
- No minimum market capitalisation on IPO
- No minimum trading record required but NB
Lock-ins - Maximum market capitalisation?
- Following Admission, only reverse takeovers
require prior shareholder approval and disposals
resulting in a fundamental change of business
(ie disposals exceeding 75 on class tests) - NOMAD required at al times
- Broker required
20AIM
- Rule 7 Lock-ins for new businesses where main
activity has not been independent and revenue
earning for at least two years - All related parties (directors and related
interests and 10 shareholders) and applicable
employees (0.5 shareholders) must agree not to
dispose of any interest in the Companys
securities for one year from admission to AIM
21AIM What document is required
- Prospectus if a public offer is made. Very
rare for AIM. - Admission Document UKLA approval not required.
22Admission Document Financial Information
- EEA Issuer IFRS
- Non-EEA Issuer accounts to be prepared in
accordance with - IFRS
- US GAAP
- Canadian GAAP
- Australian IFRS or
- Japanese GAAP.
23Admission Document - Financial Information
- Must include consolidated audited historical
financial information covering the latest 3
financial years or such shorter period issuer
has been in operation - So, no minimum operating history required if none
exists - Last period of audited accounts must not be older
than 18 months if audited interim statements are
included or 15 months if unaudited interim
statements are included but NB requirement to
publish annual accounts within 6 months of year
end once admitted to AIM - If audited accounts are older than 9 months,
interims for first 6 months required - Interims/quarterly information to be included
with comparables for prior period if produced
since last accounts
24What Information is not required in an Admission
Document
- Schedule Two AIM Rules and AIM PD
- Operating and financial review
- Capital resources
- Research and development, patent and licences
- Profit forecasts or estimates (but NB AIM
specific rules)
25What information is not required in an Admission
Document
- Pro-forma financial information
- Display documents
- Working capital statement (AIM specific rules)
- The Directors are of the opinion that, having
made due and careful enquiry, the working
capital available to the Group will be
sufficient for its present requirements, that is
for at least 12 months from Admission - Capitalization and indebtedness
continued ?
26Additional AIM Specific Information
- Where lock-ins are required, details of such
arrangements - Details of contracts or arrangements relating to
fees exceeding 10,000 (whether securities or
cash) - Details of financial products referenced to the
issuers securities held by directors or their
families - If the issuer is an investing company details
of investing strategy - Primary business of investing in securities of
other companies of the acquisition of a
particular business, in LSEs opinion - Must raise at least 3 million in cash via equity
fundraising on, or immediately before, admission
(Rule 8) - All other information which is reasonably
considered necessary to enable investors to form
a full understanding of the assets, and
liabilities, financial position, profits and
losses and prospects of the issuer, its
securities, the rights attaching to the
securities and any other matter in the admission
document.
27Mineral, Oil and Gas Companies
- Main Market Mineral Companies
- AIM Resource Companies
- Extra disclosures in prospectus/admission
document - Competent Persons Report
28Competent Persons Report
- Not more than 6 months prior to date of
prospectus/admission document - AIM Competent Person must have certain minimum
professional qualifications and be independent - Main Market Competent Person should be a
qualified and experienced independent expert - AIM Guidance Note for Mining, Oil Gas
Companies - Main Market
- CESRs Recommendations for Consistent
Implementation of the European Commissions
Regulation on Prospectuses No. 809/2004 - Consult with UKLA
29Dewey LeBoeuf Worldwide
30(No Transcript)