Introduction to the Prospectus in a Securities Offering

What is a prospectus?

The prospectus is a key document in the securities offering process. The content on a prospectus may vary depending on what type of securities are being offered, where the securities are being listed, what category of investor is being targeted and where the offer is being made.

What are the key purposes of a prospectus?

The key purpose of a prospectus is to provide

• An overview of the company issuing the securities
• The relevant terms and conditions of those securities

Why do investors look at the prospectus?

• To make an informed assessment of both the company and the securities
• To use it as a basis for making their investment decision

What was the Goal of the Prospectus Regulation of 2017?

The goal was to create adequate and equivalent disclosure standards across the EU so that investors benefit from standardised disclosure to underpin the transparency and investor protection that are among the goals of the EU's Capital Markets Union.

What is the purpose of the Prospectus Regulation of 2017?

The purpose of the Prospectus Regulation of 2017 is to:

• Set out in detail what must appear in the prospectus and the order in which it must appear
• To make the content included in prospectuses simple to navigate and easy to understand

What should appear in a bond prospectus?

A description of the transaction should be on the cover page, followed by a clear and precise table of contents. Risk factors covering the issuer’s ability to fulfil its obligations under the securities, and material factors allowing an assessment of the market risk associated with them, need to be upfront.

What is Stabilisation?

Stabilisation is when the underwriters support the price of the bonds and could constitute market abuse for example, insider dealing.

What does the Prospectus Regulation say about the contents of the prospectus?

A prospectus shall contain the necessary information which is material to an investor for making an informed assessment of:

• The assets and liabilities, profits and losses, financial position, and prospects of the issuer and of any guarantor
• The rights attaching to the securities
• The reasons for the issuance and its impact on the issuer

That information may vary depending on any of the following:

• The nature of the issuer
• The type of securities
• The circumstances of the issuer
• Where relevant, whether or not the non-equity securities have a denomination per unit of at least 100 000 euros or are to be traded only on a regulated market, or a specific segment thereof, to which only qualified investors can have access for the purposes of trading in the securities.