5.9 Listing and the Information Management Regime 199prospectus with the SEC, and the Sarbanes-Oxley Act of 2002 imposes a stringent
set of corporate governance, reporting and other requirements on companies listed
in the US.
In practice, foreign issuers can benefit from important exemptions.
International companies may seek access to the US market through private
transactions that do not require listing or trading in the US public markets. The
exemptions that are of most significance in relation to international equity
offerings are: sales of securities outside the US (Regulation S); private placements
(section 4(2) and Regulation D); and resales to qualified institutional buyers (Rule
144A).^288 Already in 2000, approximately 50% of the proceeds raised by
international companies in the US were raised privately.^289
5.9.3 Prospectus
The Prospectus Directive^290 determines the minimum and maximum contents of
prospectuses that fall within its scope.
The Directive requires the issuer to publish a prospectus when securities are
either offered to the public or admitted to trading on a regulated market situated or
operating within a Member State. The main rule is thus that the Prospectus
Directive applies in relation to all public offers and not only to those in respect of
securities that are to be admitted to trading on a regulated market.
For example, a prospectus must be published: where a public offer is made on a
primary market such as the Main Market of the LSE or Deutsche Börse’s General
Standard or Prime Standard; where a large public offer is made on a second-tier
exchange-regulated market such as LSE’s AIM or Deutsche Börse’s Open Market
or Entry Standard; where a takeover bid consists of an exchange offer pursuant to
which the target’s shareholders would receive shares in the bidder for their shares
in the target (unless a document equivalent to that of the prospectus is
available);^291 or where a private-equity firm makes an exit by offering a
company’s shares to the public in an IPO. All IPOs will prima facie fall within the
scope of the mandatory prospectus requirement for public offers.
In the past, each country applied its own prospectus rules and the prospectus
had to be approved by the authorities of many different countries. It was difficult
to use the same prospectus in different countries, because each country had its
own language requirements and even rules on the substance of the prospectus
were different. The language requirements were a particular problem because of
the time and effort it took to translate the documentation into different languages
and the risk caused by different versions of same documents.
(^288) Ferran E, Principles of Corporate Finance Law. OUP, Oxford (2008) p 501.
(^289) Prospectus of NYSE Euronext, Inc., November 30, 2006, p 41.
(^290) Directive 2003/71/EC (Prospectus Directive).
(^291) For takeovers, see Articles 4(1)(b) of Directive 2003/71/EC (Prospectus Directive). For
mergers, see Article 4(1)(c).