Prospectus Drafting and Fundraising

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What is a Prospectus

A Prospectus is used for public offerings or where the securities offered are to be traded on a regulated stock exchange, while an Information Memorandum (or Offering Memorandum) is more frequently used for private placements or for smaller, more limited fundraises. A Prospectus is a legal document that is required by, must be submitted to, and approved by the relevant regulator, such as FCA (Financial Conduct Authority in its capacity as UK Listing Authority), PRA (Prudential Regulation Authority or BoE (Bank of England) and must follow the UK Prospectus Regulation Rules (PRR). It is important to note that the PRR is in the process of being updated. The Prospectus will also need to be approved by an ‘authorised person’, in accordance with the Financial Services and Markets Act 2000. Where a prospectus is being produced in respect of a financial promotion and placement, it must be published prior to the offer to the public or the securities are admitted to trading on a regulated market. There are two types of Prospectus, a Summary Prospectus (also known as Preliminary Prospectus), and a Final Prospectus. The Summary Prospectus is an abridged version of the Final Prospectus; however, it does not contain specific details on (say) the number of shares to be issued or price information. Usually, the Summary Prospectus is used to judge the general market interest in the proposed offering. The Final Prospectus contains the complete details of the investment offering including number of shares to be issued and the offer price, together with items such as:

Regulatory disclosures regarding the type of prospective investor that can receive the document and those that cannot; further noting the requirement for a barrier to entry system;
Geographical disclosures detailing which regions (or citizens) are prohibited for viewing and acting upon the private placement or public placement;
Background history of the company (the issuer);
The market the company operates in;
What its products or services are;
Who its customers are;
How it differs from its competitors;
What opportunities exist for the company;
Reasons and background of the fundraise;
Detailed financial history (latest set of audited accounts);
Financial forecasts for the company showing how the corporate finance will be used and how it will be repaid (if the capital raise is via private equity, pre-initial public offering “Pre-IPO” or private debt aka Bond);
Whether there are tax considerations such as whether the offer is SEIS or EIS eligible or approved (Seed Enterprise Investment Scheme or Enterprise Investment Scheme);
Who the directors and senior managers are and what experience they have;
The risks associated with the investment;
What are the terms and conditions of the investment;
Exit strategy for the potential investor;
Subscription agreement

A Prospectus is similar in many ways to an Information Memorandum with the exception that a Prospectus goes in to far more detail and potentially, allows for a broader market to gain access to the material and underlying investment. Because of the general disclosure standard for a Prospectus that “all necessary information” must be disclosed, a Prospectus is therefore more costly to produce than an Information Memorandum. Fortunately for Issuers, there are a few exemptions. Some of these exemptions are;

Where the total consideration offered to the public over a 12-month period is less than €1mn
Where an offer is addressed solely to qualified investors
Where the offer is to fewer than 150 people not including the qualified investors
Where the price per unit (share) is €100k or more
Where the minimum investment per investor is €100k or more

Each year at Marshall Sterling we assess hundreds of businesses globally, and our team consists of high calibre individuals with pedigrees spanning decades at top Tier Investment Banks, Asset and Wealth Managers, Brokerages and Hedge Funds and subsequently, we are well positioned to review your business proposition, provide advice or guidance on your requirements and structuring options, and conduct the work required in a timely, cost effective and legally compliant and professional standard. At Marshall Sterling, we are driven by long term relationships and your ongoing success is key to our philosophy, be it by way of additional rounds of private equity or private debt (bond) Issuance, stock market listings, merger, acquisition, or sale. If you are interested in raising capital for your business and would like to discuss all the associated services we can support you with, such as Corporate Advice, Corporate Finance, Investment Banking, Capital Raising, Stock Market Listing, Crest and Euroclear facilities, Security Trustee, Share and Bond Registrars, please contact us using the form on this page and a member of our team will get back to you to arrange a time to speak.

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