3.4.0 Introductie

Before the different legal bases to make damage claims with regard to a misleading prospectus are discussed, a short description of the IPO process by use of the book building method will be provided. Book building is a method to determine the introduction price in the pre-listing market in order to establish the most accurate price. The purpose of this method is to prevent high volatility in the after-listing market.1 If the issuing company X N.V. sets the introduction price too high, there is a risk that it will be unable to sell the securities on offer. If the sponsoring banks guarantee the securities price or the banks have taken over the issue, they will incur these losses. An introduction price that is too low creates an overstressed after-listing market. The book building market resolves this problem by creating a pre-listing market in which market forces determine the introduction price.

At first, the lead manager (and if necessary the other sponsoring banks) determines the bandwidth of a reasonable introduction price on the basis of an analysis of the issuer 's commercial activities and the position it takes in its market sector. This bandwidth will be included in the draft prospectus (voorlopig prospectus)2 instead of a fixed sales price. Separate advertisements will be published on the same day as the publication of the draft prospectus. These advertisements contain an invitation to subscribe for securities; the investor has to indicate the number of securities and the price for which the investor wants to buy this number of securities. The subscription qualifies as making an offer in the sense of section 6:217(1) DCC3 and also in the sense of section 1:1 onder caption "offer of securities" FSA.

The professional investors can subscribe by use of different orders. Non-professional investors can subscribe only by market order (bestensorder). In order not to overburden the administrative process, only the subscription of large institutional investors are taken into account. After this subscription process, the introduction price can be established on the basis of the subscriptions and the securities will be distributed.4 This introduction price will published in the definitive prospectus.5 As a result of the book building method, the underwriters are no longer subject to the risk that the securities cannot be placed with investors and that they have to pay the fixed introduction price to the issuer.