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1.3. The Prospectus
FINANCIAL SERVICES LEGISLATION
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MARKET RULES
Guidance: Purpose and application of MAR
SCHEDULE 4: ADDITIONAL CONTENT OF A PROSPECTUS FOR SECURITY TOKENS
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1.3. The Prospectus

Guidance: Prospectus Contents Section 69 of the Framework Regulations provides: A Prospectus must contain:

  1. (a) the necessary information which is material to an investor for making an informed assessment of:
  2. (i) the assets and liabilities, profits and losses, financial position, and prospects of the Issuer and of any guarantor;
  3. (ii) the rights attaching to the Securities; and
  4. (iii) the reasons for the issuance and its impact on the Issuer; and
  5. (b) such further documents and information as may be specified by the AFSA pursuant to Section 70 of the Framework Regulations

1.3.1. Prospectus Structure

A Prospectus may be structured either as:

  1. (a)     multiple documents comprising:
  2. (i)       a Prospectus Summary as set out in MAR 1.4; and
  3. (ii)      a Registration Document as set out in MAR 1.5.1 containing all the information relating to the Issuer; and
  4. (iii)     a Securities Note as set out in MAR 1.5.2 containing the information concerning the Securities to be admitted to trading on an Authorised Investment Exchange; or
  5. (b)    a single document containing a Prospectus Summary as set out in MAR 1.4 and all the information required to be included in the Registration Document and the Securities Note; or
  6. (c)    for an offer of Shares, a single document containing all the information required to be included in the Registration Document and the Securities Note in relation to the offer of Shares, provided that the expected aggregate market value of such Shares (together with any other Equity Securities admitted to trading on all Regulated Exchanges) at the time of admission to trading does not exceed USD200,000,000 (or an equivalent amount in another currency) (REMS Shares). A Prospectus in relation to REMS Shares must include a prominent disclaimer that the Issuer is eligible to rely on concessions granted to it as set out in MAR, which exclude such Issuer from being required to prepare a Prospectus Summary and disclose certain other information in its Registration Documents and Securities Notes.

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.

1.3.3. Final offer price and amount of Securities

Where the final offer price and/or amount of Securities to be offered, whether expressed in number of Securities or as an aggregate nominal amount, cannot be included in the Prospectus the following must be included in the Prospectus:

  • (a) the maximum price and/or the maximum amount of Securities, as far as they are available; or
  • (b) the valuation methods and criteria, and/or conditions, in accordance with which the final offer price is to be determined and an explanation of any valuation methods used.

1.3.4. Clarity of the information

The information in a Prospectus must be written and presented in an easily analysable, concise and comprehensible form, taking into account the nature of the Issuer, the type of Securities and the circumstances of the Issuer.

1.3.5. Incorporation by reference

Information that is required to be contained in a Prospectus (apart from information required to be contained in a Prospectus Summary) may be incorporated by reference, provided that:

  • (a) the source of information is publicly available on a continuing basis; and
  • (b) the information is clearly set out and easily accessible in that source; and
  • (c) the information is in the English language; and
  • (d) the information can be accessed without charge; and
  • (e) the reference contains sufficient information to enable an investor to decide whether to obtain the information or any part of it. Guidance: incorporation by reference Information that may generally be incorporated by reference includes instruments or statute of incorporation of a company, annual reports, periodic financial reports and listing particulars.