Cross-border Enforcement of Listed Companies' Duties to Inform (IVOR nr. 87) 2012/6.5.1:6.5.1 FSA Prospectus Rules

Cross-border Enforcement of Listed Companies' Duties to Inform (IVOR nr. 87) 2012/6.5.1

6.5.1 FSA Prospectus Rules

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

Rule 5.5.3 of the FSA Prospectus Rules1 stipulates that the following persons are responsible for the prospectus:

(a)

the issuer of the transferable securities;

(b)

if the issuer is a body corporate:

(i)

each person who is a director2 of that body corporate when the prospectus is published; and

(ii)

each person who has authorised himself to be named, and is named, in the prospectus as a director or as having agreed to become a director of that body corporate either immediately or at a future time;

(c)

each person who accepts, and is stated in the prospectus as accepting, responsibility for the prospectus;

(d)

in relation to an offer:

(i)

the offeror, if this is not the issuer; and

(ii)

if the offeror is a body corporate and is not the issuer, each person who is a director of the body corporate when the prospectus is published;

(e)

in relation to a request for the admission to trading of transferable securities:

(i)

the person requesting admission, if this is not the issuer; and

(ii)

if the person requesting admission is a body corporate and is not the issuer, each person who is a director of the body corporate when the prospectus is published; and

(f)

each person not falling within any of the previous paragraphs who has authorised the contents of the prospectus.

A person accepting responsibility for the prospectus as mentioned under paragraph c above or authorising its contents as mentioned under paragraph f above may state that he does so only in relation to certain specified parts of the prospectus, or only in certain specified respects. In that case, he is responsible only to the extent specified and only if the material in question is (substantially) included in the form and context to which he has agreed.3 Furthermore, the legislator explicitly mentions that nothing in this regulation is to be construed as making a professional adviser responsible for any prospectus by reason only of giving advice as to their contents in a professional capacity.4 In normal cases, only the issuer and its directors accept responsibility for the prospectus.5 Therefore, the sponsoring banks and underwriters cannot be held liable on this particular basis.6

The FSA Listing Rules7 require a company with, or applying for, a primary listing of its equity securities to appoint a sponsor on each occasion that it applies for admission of equity securities requiring the production of a prospectus or equivalent document.8 The sponsor9 must exercise his service to the issuer X plc with due care and ski11.10 The required service, among others, consists of taking reasonable steps to ensure that the issuer 's directors understand the nature and extent of their obligations under the Listing Rules.11 Furthermore, the sponsor needs to assure the FSA that the issuer met his responsibilities under the Listing Rules. The sponsor has to make a due and careful inquiry that the prospectus is drawn up in conformity with the Prospectus Rules.12

Even though the legislator and the FSA impose a duty to make inquiries whether the contents of the prospectus satisfy the FSA Prospectus Rules, the sponsoring banks, amongst them the lead manager Y plc, do not incur liability under section 90 FSMA 2000, unless they clearly state in the prospectus that they authorise (parts of) its contents and accept responsibility for it. However, the sponsoring banks underwriting the securities issue qualify as offeror under the abovementioned subparagraph d. Nonetheless, they might escape liability, because the FSA Prospectus Rules prescribe that the offeror is not responsible for the prospectus if:

1.

the issuer is responsible for the prospectus;

2.

the prospectus was drawn up primarily by the issuer, or by one or more persons acting on behalf of the issuer; and

3.

the offeror is making the offer in association with the issuer.

To the extent that the lead manager/underwriter/offeror is involved in the preparation and approval of the prospectus, he can be held liable for its contents. However, some scholars question the liability of the lead manager Y plc. Members of the syndicate of sponsoring banks that do not exercise control over the content of the prospectus cannot be held liable for it. Y plc's liability as such, without being underwriter, is questionable.13 Furthermore, depending on the circumstances of the case, it is more likely that sponsors are properly considered as advisers. The Prospectus Rules state that a person is not liable solely by giving advice in a professional capacity.14 However, the lead manager Y plc and the other sponsoring banks may be held liable under common law torts for deceit or, more likely, negligent misrepresentation. It is noteworthy that even though section 90(6) of the FSMA 2000 states that this section 'does not affect any liability which any person may incur apart from this section', subsection 8 limits the effect of this provision by providing that no person, by reason of being a promoter or otherwise, shall incur any liability for failing to disclose in a prospectus information which he would not have had to disclose, if he had been a person responsible for the prospectus or, if he was a person responsible, which he would have been entitled to omit by virtue of section 87B. It seems that the statutory liability regime of section 90 pre-empts and overrules any duty, which a promoter or other fiduciary might be under, to disclose in the prospectus particulars of matters additional to those required under the statutory regime.15

Deze functie is alleen te gebruiken als je bent ingelogd.