The SC which held a media briefing today, clarified this in response to feedback from the public and news reports stating that pursuant to the issue of the Guidelines on 18 September 2000, companies are no longer allowed to hold press conferences or issue press releases before prospectuses are issued.
The Securities Commission Act 1993 (SCA) differentiates the system of regulation for advertising before (pre-prospectus advertising) and after (post-prospectus advertising) the registration of a prospectus by the SC. Regulation of pre-prospectus advertising is more stringent than post-prospectus advertising.
The aim of the Guidelines is investor protection - to ensure that investors are not influenced by information not contained within the prospectus. Investor decisions should be made based on the prospectus. During the pre-prospectus period, issuers need not seek the SC's consent when carrying out some limited preparatory work such as:
Presentations;
announcements upon being given the mandate to act as underwriters;
announcements made on the joint signing of underwriting agreements; and
announcements containing certain concise statements.
However, conditions set out in the Guidelines in relation to the carrying out of these activities must be complied with.
Information as allowed by the guidelines, may be in written, visual or oral form. Written information should contain no more that the information set out in subsection 50(4)(b)(i) to (ix) of the SCA. In other words, written information may include:
The name of the issuer of securities
A concise statement of the general nature of the main business or undertaking or proposed main business or undertaking of the issuer
The names, address and, where appropriate, occupations of the directors or proposed directors, and
The name and addresses if stockbrokers, shareholders, underwriters and principal adviser in relation to the proposed issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase securities.
Paragraph 7(a)(vi) of the Guidelines, allowed companies to provide oral information, which may include:
Promoters' profile
History of business
Utilisation of proceeds
Statistics about the IPO (including Proformat Net Tangible Assets (NTA)), Earnings Per Share (EPS), Price-Earning (PE) ratios etc.); and
Historical performances of the company for the last five years.
Oral information does not fall under the definition of a `prospectus' under the SCA.
In relation to post-prospectus advertising, any information may be disseminated as long as the information is contained in the prospectus.
The Guidelines were introduced pursuant to the enactment of section 50 of the SCA on 1 July 2000. The SC stressed that it is not the intention of the Guidelines to restrict free flow of information of non-promotional information that is disseminated to raise public awareness of proposed offer of securities.
