2.2 Liability for the Prospectus

Question 1

When is supplementary prospectus required?

Answer 1

Within relevant period, new factor/material/inaccurate, and ‘significant’

Question 2

Where are persons responsible for the prospectus set out

Answer 2

PR 5.5.3

Question 3

Who is unlikely to be liable for contents of prospectus and why

Answer 3

Offeror - 5.5.7 offers an exemption

Question 4

Is s.90 limited to purchasers at IPO

Answer 4

No - extends to subsequent purchasers too

Question 5

Name two people responsible for the prospectus

Answer 5

Ds + company itself

Question 6

Under what provision is sponsor responsible for assessing appropriateness of prospectus

Answer 6

LR 8.4.2R

Question 7

When is there a potential offence under the Fraud Act (s.2/3)

Answer 7

Dishonest false representation or omission of info that should have been disclosed

Question 8

Three examples of FCA powers against sponsor for prospectus

Answer 8

Enforcement action for breaching LR, broader powers under 88E and can cancel approval of sponsor under 88(4)

Question 9

Where to look for if supplementary prospectus required

Answer 9

87G

Question 10

Who has to make a responsibility statement to do with the prospectus

Answer 10

Persons responsible

Question 11

Main civil liability for prospectus is what

Answer 11

90 FSMA

Question 12

Before FCA can take action against sponsor, what must FCA do and per what provision

Answer 12

Warning notice per 88B

Question 13

What are withdrawal rights when SP issued

Answer 13

Can withdraw purchase within 2 BD

Question 14

When do the FSA criminal offences come into play

Answer 14

False/misleading statement/impression, or creating false benchmarks

Question 15

When are withdrawal rights applicable for SP

Answer 15

If shares were ‘offered to the public’

Question 16

Why should RIS announcement be made ASAP if mistake found in prospectus outside of relevant period

Answer 16

To have benefit of Schedule 10 para 3 defence (avoid civil liability under 90 FSMA)

Question 17

Who are only liable for specific sections of the prospectus

Answer 17

Reporting accountants

Question 18

What is the role of the sponsor to do with the prospectus

Answer 18

Assessing appropriateness

Question 19

3 kinds of criminal liability for prospectus

Answer 19

21 FSMA, 89 - 91 FSA and 2/3 Fraud Act

Question 20

When is s.90 FSMA relevant

Answer 20

Individual acquires securities to which prospectus relates and suffered loss as a result of MR/omission

Question 21

Three effects of issuing SP

Answer 21

Negative perception on market, liability for those who already bought, and withdrawal rights

Question 22

If there is a mistake in prospectus but not yet published, what should Ds do

Answer 22

Amend prospectus (87A(2))

Question 23

Must individual show reliance/inducement for s.90?

Answer 23

No

Question 24

What is a ‘significant’ factor to work out if SP needed

Answer 24

Informed assessment test - 87A(2)

Question 25

How can liability under s.90 FSMA be avoided (in the statute)

Answer 25

Schedule 10 exemptions

Question 26

What section of LR covers roles + duties of sponsor

Answer 26

LR 8

Question 27

How many kinds of criminal liability for the prospectus

Answer 27

3

Question 28

Under what provision might there be civil liability if SP required

Answer 28

90 FSMA

Question 29

Any D who consented to s.89 FSA offence may be liable under what

Answer 29

400 FSMA

Question 30

How can a correction be published, and thus liability under s.90 FSMA avoided

Answer 30

Supplementary prospectus

Question 31

Who two parties are not responsible for the content of the prospectus

Answer 31

S and sponsor

Question 32

Where are FCA powers in FSMA against sponsor

Answer 32

88

Question 33

What info needs to be provided in SP

Answer 33

Sufficient info to correct mistake

Question 34

What is the effect on any marketing if SP issued

Answer 34

Amend + re-issue ads that were inaccurate/misleading

Question 35

When must SP be submitted

Answer 35

ASAP (PR 3.4.3R)

Question 36

When do offences under 2/3 Fraud Act become relevant

Answer 36

Info wasn’t disclosed that should have been per 87A(2)

Question 37

What link must individual show for s.90 FSMA

Answer 37

Causal link between loss and MR/omission

Question 38

Three exemptions under Schedule 10 for s.90 FSMA

Answer 38

Reasonable belief true/properly omitted + 1/3 conditions, correction published or person acquiring knew the truth

Question 39

Where are withdrawal rights in the event of SP being issued

Answer 39

87Q(4) - (6)

Question 40

Under what provision can FCA impose penalties for breach of LPDT rules

Answer 40

91 FSMA

Question 41

What happens if mistake in prospectus but found outside of relevant period

Answer 41

90 FSMA applies w/ Schedule 10 exemptions

Question 42

What parts of prospectus do accountants take responsibility for

Answer 42

Parts of Annex I and II (Share Reg + pro-forma)

Question 43

What provision would accountants fall under regarding their responsibility for the prospectus

Answer 43

PR 5.5.3R(2)(f)

Question 44

What provision highlights that persons responsible make responsibility statement

Answer 44

PR App 3.1.1

Question 45

Although Ss not liable for prospectus under PR 5.5.3, what might they still be liable under

Answer 45

Contract/tort

Question 46

What civil penalties are unlikely for incorrect/misleading statements in prospectus (x5)

Answer 46

91 FSMA, MAR, NMS, MR or BoC

Question 47

What test is used to work out if matter is ‘significant’ for supplementary prospectus under 87G

Answer 47

Informed assessment test - 87A(2)