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Breaking down the prospectus what information are you going to need

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Title: Breaking down the prospectus what information are you going to need


1
Breaking 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
2
Contents
  • PROSPECTUS REGIME
  • MAIN MARKET PRIMARY LISTING OF EQUITY
    SECURITIES
  • GDRs
  • AIM
  • MINING, OIL GAS COMPANIES

3
Prospectus 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

4
Official 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.

5
Official 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.

6
Listing 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.

7
Listing 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.

8
IPO 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.

9
IPO Procedure and Timetable Contd
10
The 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
  • .

11
The 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?

12
Prospectus - 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

13
Prospectus 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

14
Prospectus 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 ?
15
Prospectus 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

16
Prospectus 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

17
Financial Information - Equity
  • Complex financial history or significant
    financial commitment Proforma financial
    information can be included in accordance with
    Annex II
  • CESR Guidance

18
GDRs
  • 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

19
AIM
  • 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

20
AIM
  • 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

21
AIM What document is required
  • Prospectus if a public offer is made. Very
    rare for AIM.
  • Admission Document UKLA approval not required.

22
Admission 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.

23
Admission 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

24
What 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)

25
What 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 ?
26
Additional 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.

27
Mineral, Oil and Gas Companies
  • Main Market Mineral Companies
  • AIM Resource Companies
  • Extra disclosures in prospectus/admission
    document
  • Competent Persons Report

28
Competent 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

29
Dewey LeBoeuf Worldwide
30
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