Format of Prospectus

Question 1

What is the format of Prospectus

Answer 1

• A prospectus may be drawn up as a single document (as Funding Circle chose to do) or as separate documents (known as a “tripartite prospectus”). If tripartite, must include:
  i) Summary
  ii) Registration document
  iii) Securities note

PRR 2.2.1

Question 2

Why would issuer choose to do separate docs?

Answer 2

• One reason that an issuer may choose to keep a separate registration document is to take advantage of PRR 5.1.1EU/Art. 12(2), Prospectus Regulation which allows this part to remain valid for up to 12 months. It can therefore be re-used with a new securities note and a summary note during that period, together with a supplement to the registration document if there has been a significant new factor since it was published (PRR 2.2.2EU/Art. 10(1), Prospectus Regulation). However, this is a very unusual approach for equity issues.

Question 3

General disclosure obligation

Answer 3

• PRR 2.1.1EU/Arts. 6(1) and (2), Prospectus Regulation sets out the general duty of disclosure.
• The prospectus must contain the “necessary information” which is material to an investor for making an informed assessment of
  a) the assets and liabilities, profits and losses, financial position and prospects of the issuer;
  b) the rights attaching to the securities (i.e. the shares); and
  c) the reasons for the issuance and its impact on the issuer.
• The exact information to be included in response to this general disclosure obligation may vary, depending on the nature of the issuer, the type of securities and the circumstances of the issuer.
• PRR 2.1.1EU/Arts. 6(1) and (2), Prospectus Regulation: however, in every case, the information must be written and presented in an easily analysable, concise and comprehensible form.

Question 4

Specific disclosure - registration doc

Answer 4

• PRR 2.3.1EU/Art. 2, PR Regulation provides that the registration document for a share issue must contain the information referred to in Annex 1 of the PR Regulation

Question 5

Specific disclosure - securities doc

Answer 5

• PRR 2.3.1EU/Art. 12, PR Regulation provides that the securities note for this type of shares issue must contain the information referred to in Annex 11 of the PR Regulation.

Question 6

Specific disclosure - Complex financial history

Answer 6

• PRR 2.3.1EU/Art.18, PR Regulation would then require the pro forma information to follow the form set out in Annex 20, PR Regulation.
In addition, if the company was making an intermediaries offer, PRR

Question 7

Content requirements - Summary

Answer 7

• PRR 2.1.4EU/Art. 7(3), Prospectus Regulation: summary must have a maximum length of seven sides of A4-sized paper when printed, must be presented and laid out in a way that is easy to read (using characters of readable size), and must be written in language that is clear, non-technical, concise and comprehensible for investors
• PRR 2.1.2EU/Arts. 7(1) and (2), Prospectus Regulation – as a general requirement, a summary must contain the “key information” that investors need in order to understand the nature and the risks of the issuer and the relevant securities, and is to be read together with the other parts of the prospectus to aid investors when considering whether to invest.
  In setting out this key information, the summary must be accurate, fair and clear, and not misleading – and it must be consistent with the other parts of the prospectus.
• PRR 2.1.4EU/Art. 7(4), Prospectus Regulation – in terms of more specific content, summary is required to be made up of four sections:
  i) Introduction, containing warnings;
  ii) Key information on the issuer;
  iii) Key information on the securities; and
  iv) Key information on the offer of securities to the public and/or admission to trading on a regulated market
  PRR 2.1.4EU/Arts. 7(5) to (8), Prospectus Regulation then sets out the main points to be covered in each of these four sections, setting out the required headings for sub-sections in each one.