Information memorandum at so-called rolling offers

The government’s draft law on amending certain laws in connection with ensuring the development of the financial market and the protection of investors in that market (the “Draft”) provides for modifications regarding the information memorandum required for so-called rolling offerings.

In the current legal state, this issue is regulated by Article 3(1a) of the Act on Public Offering and the Conditions for Introducing Financial Instruments to the Organised Trading System and on Public Companies of 29 July 2005 (the “Act on Public Offering”).
Pursuant to its regulation, a public offer of securities referred to in Article 1(4)(b) of Regulation 2017/1129, where the number of persons to whom it is addressed, together with the number of persons to whom public offers referred to in Article 1(4)(b) of Regulation 2017/1129 of the same type of securities made during the preceding 12 months were addressed, exceeds 149, requires the publication of an information memorandum referred to in Article 38b of the Act on Public Offering, which is subject to approval by the Commission.

Under the proposed amendment, the words: “which is subject to the Commission's approval” are replaced by the words: “and its transmission to the Commission on the date of its publication”.
The source of this legislative change is to be found in the temporary solution adopted in Article 31zb of the COVID-19 Act. Namely, as part of the so-called “crisis shield”, the legislator waived the requirement of approval by the FSA of the information memorandum referred to in Article 38b(1) of the Act on Public Offering. Nevertheless, the rigour of preparing and publishing such a memorandum, as well as submitting it to the FSA after publication, remained in force.
The above facilitation was originally to be in force during the period of the declared state of epidemic threat or state of epidemic and in the period of one month after their cancellation. In the opinion of the authors of the draft, the abandonment of the obligation to approve the information memorandum translated into significant facilitation and acceleration of the procedure of offering documents required to raise capital by entrepreneurs.

Absolutely.
Firstly, because the need to draw up and publish an information memorandum prevents circumvention of the provisions of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC (“Regulation 2017/1129”) in respect of so-called rolling offers.
Secondly, the necessity to submit the information memorandum to the FSA on the date of publication encourages self-control by the issuer. In addition, the notification of the memorandum to the FSA engages the vigilant eye of the supervisor, who can use a whole range of remedies.
Pursuant to Article 16 of Act on Public Offering, in the event of a breach of the law in connection with a public offering by the issuer, the offeror or other entities participating in the offering on behalf of or by order of the issuer or the offeror, the FSA may:

• order that the commencement of the public offering be withheld or that the public offering be interrupted, for a period not exceeding 10 working days, or
• prohibit the commencement of the public offering or its further conduct, or
• publish, at the issuer’s or the offeror’s expense, information on an unlawful action in connection with a public offering.

Where the gravity of the breach of the law in connection with the public offering is minor, the FSA may issue a recommendation to cease the breach.
Thirdly, the provisions of Regulation 2017/1129 do not contain any more far-reaching requirements to be met in order for a public offering addressed to less than 150 addressees, who are not qualified investors, to be exempted from the prospectus obligation. Therefore, with a view to banishing so-called gold-plating (i.e. redundant national regulation, more restrictive than the EU prototype), the appropriate proposal is to dispense with the document approval requirement and to remain with the publication and notification requirements.