An Exempt Offer is an offer of securities:
• By a recognised government or other person on the list of Exempt Offerors held by the DFSA
• Made to Professional Investors (These are investors whose normal activity involves them acquiring, holding, managing or disposing of investments as detailed in the OSR)
• Made in relation to a takeover bid; or it can also be
• As prescribed separately by the OSR; the OSR prescribes an exempt offer as one where the offer satisfies at least one of the following conditions:
- The securities are either commercial paper, certificates of deposits or bills of exchange;
- The offer is made to no more than 50 offerees in the DIFC in any 12 month period;
- The total amount paid for the securities does not exceed US$1 million; or
- The securities are debentures and the minimum paid by any person is US$ 50,000.
An Exempt Offer also applies to offers that are in relation to employee share plans or intra-group capital placements. Specifically:
• Shares that are offered by the issuer to members, creditors or employees of the issuer or their relatives;
• Securities issued and offered by a body corporate to a member of the same group as a body corporate;
• Securities that result from the conversion of convertible stock, where the Prospectus relating to the convertible stock has been published in the DIFC; OR
• Shares, certificates representing shares, or warrants to subscribe for shares in a body corporate offered by the body corporate in exchange for securities in the same body corporate and also where the offer does not result in any increase in the issued share capital of that body corporate.
What are the requirements for persons making Exempt Offers?
A person making an Exempt Offer is required to provide the offeree an exempt offer statement which contains, at minimum, the requirements under OSR rule 3.2.2. The minimum information that should be included in an exempt offer statement includes:
• The name of the issuer or offeror
• The address of the issuer’s or offeror’s main place of business
• The name and address of any professional advisors that may deal with the exempt offer
• The nature and rights attached to the securities
• A prominent warning statement as prescribed by OSR that must appear on its front page. The warning statement must cover certain details that help to protect the prospective customer, for example, the securities may be ultimately difficult to sell and that they should talk to an authorized financial adviser if they do not understand the contents of the document.
In addition, the person is also to maintain a register of offerees to whom an offer has been made.
You should also be aware that there are further exemptions in the case of Personal Exempt Offers. A Personal Exempt Offer is a type of exempt offer which is quite rare; since it is effectively a “one on one” sale of securities. A person making an Exempt Offer which is a Personal Exempt Offer or that which relates to employee shareplans or intra-group placements is not required to provide an exempt offer statement or maintain a register of offerees.