If an offer does not meet the criteria of an Exempt Offer, then the person offering securities would be making a Prospectus Offer and is able to offer securities to anyone in DIFC.
Article 15(2) of the Markets Law sets out clearly the purpose of a Prospectus:
“A Prospectus shall comply with the Offered Securities Rules and contain all information as investors would reasonably require for the purpose of making an informed assessment of:
a. the assets and liabilities, financial position, profits and losses, and prospects of the offeror or issuer or both; and
b. the nature of the Securities and the rights attached to those Securities.”
Before making a Prospectus Offer, a person must be able to satisfy that the Governing Body or the Board of the Issuer of the securities being offered is able to fulfill or has systems and controls to enable it to comply with any applicable requirements in relation to ongoing disclosure and corporate governance requirements as applicable.
There are a number of different matters that the issuer of a Prospectus Offer needs to address before the Prospectus Offer is sent out to potential investors. The person making the offer is responsible for ensuring the prospectus complies with relevant regulations. The main regulations are the following:
• The prospectus is written in English.
• The prospectus cannot be issued unless the DFSA has given their prior agreement; a copy should be filed with them beforehand. The DFSA requires at least 3 working days to consider the content.
• The filed prospectus should be published (ie appearing on the issuer’s website) before the offer is made.
• The issuer needs to make sure that there is a reporting entity.
• The securities should exist at the time the prospectus is filed or are to be issued according to the terms in the prospectus.
• The issuer can only sell or issue securities to anyone that has accepted the terms detailed in the prospectus offer where the acceptances have been received within 6 months after the date the prospectus was filed with the DFSA.
• The issuer must not issue any financial promotion or advertisement in any form, relating to the prospectus offer, unless the prospectus has actually been published and also that the issuer gives an address where the prospectus can be obtained anywhere in the DIFC.
• If an issuer has previously filed a prospectus but did not proceed with the offer, they must make sure that any prospectus filed by them that the original offer relates to clearly states that the securities have been the subject of a previous offer which did not succeed. The reasons why the previous offer did not proceed would then need to be stated.
• The issuer may be asked for the offer to be underwritten by someone acceptable by the DFSA.
• The issuer must appoint a sponsor giving them sufficient time to comply with the various regulations surrounding the prospectus offer. A sponsor is needed when an issuer is considering making an offer regarding securities and they will act as a point of contact between the issuer and the DFSA.
• If one or more members of the governing body of an issuer are offering shares they hold in the issuer, then the prospectus needs to clearly state the identity of each member of the governing body offering their shares and also the number of shares being offered by them. Members of the governing body are not allowed to dispose of any shares they hold in the issuer for at least 12 months from the date of the prospectus offer, unless the disposal is part of the prospectus offer itself.
• The issuer must ensure that the application form for the sale of issue of securities must be accompanied by the prospectus itself and only the same form is accepted.
In terms of content, the issuer must ensure that all the requirements under Chapter 5 and specifically, Appendix 1.1 and 1.2 of OSR are contained in the Prospectus.
Reporting Entities
A person who has made a Prospectus Offer in the DIFC or has securities admitted to an Official List becomes a Reporting Entity. A Reporting Entity is required to report certain information as prescribed in the OSR which relates to itself and the securities it has issued.
Refer to the relevant section under Being Supervised, Reporting Entities.