1.3.2. Risk factors
The information in a Prospectus must include:
- (a) risks which are relevant to the Issuer and/or the Securities and which are material for taking an informed investment decision, as corroborated by the content of the Registration Document and Securities Note; and
- (b) where there is a guarantee attached to the Securities, the material risk factors pertaining to the guarantor to the extent that they are relevant to the guarantor’s ability to fulfil its commitment under the guarantee.
Guidance: risk factors
(1) The materiality of the risk factors should be based on the probability of their occurrence and the expected magnitude of their negative impact.
(2) The assessment of the materiality of the risk factors may also be disclosed by using a qualitative scale of low, medium or high.
(3) Each risk factor should be adequately described, explaining how it affects the Issuer or the Securities.
(4) The risk factors should be presented in a limited number of categories depending on their nature. In each category the most material risk factors must be mentioned first.
(5) Risk factors should also include those resulting from the level of subordination of a Security and the impact on the expected size or timing of payments to holders of the Securities in the event of bankruptcy, or any other similar procedure.