6.2 Legal obligation to publish a prospectus

The obligation to publish a prospectus before offering securities to the public in the UK or listing on a UK regulated market is laid down in section 85 of the Financial Services and Markets Act 2000 (FSMA 2000). In accordance with the Prospectus Directive, the FSMA 2000 provides exceptions1 and exemptions2 from this obligation to publish a prospectus.

The prospectus must provide all necessary information so as to enable an investor to make an informed assessment of the financial position and prospects of the issuer.3 This information must be presented in a form which is comprehensible and easy to analyse.4 More detailed requirements with respect to the contents, format and publication of the prospectus are laid down in the Prospectus Rules ("PR")5 issued by the UK competent authority, the Financial Services Authority (FSA).6 The Prospectus Rules also regulate the dissemination of advertisements related to the securities on issue.7

The aforementioned rules and regulations with respect to the prospectus have a public law nature. As a consequence, these rules primarily determine the legal relationship between the issuer and the FSA as competent authority. A prospectus cannot be published in the United Kingdom unless the FSA or the home competent authority has given its approval.8 This chapter focuses on the private law claims against the issuer and/or lead manager and/or other members of the syndicate of sponsoring banks for false or misleading information in the prospectus. The aforementioned public law norms codetermine the private law norms with respect to the publication and distribution of the prospectus.

If the issuer voluntarily publishes a prospectus as a marketing instrument despite the fact that an exception or exemption is applicable to this particular issue of securities, there is no public law enforcement with respect to the content of the prospectus; the FSA has no legal basis to (dis)approve the prospectus. The private law enforcement by application of section 90 FSMA 2000 or alternatively common law claims for damages on the basis of deceit or negligent misrepresentation are, however, applicable to all prospectuses or information documents published on the occasion that securities are listed or offered to the public. Exemptions or exceptions to the duty to publish a prospectus do not prevent private law enforcement.