Q: Can an issuer make changes to an e-prospectus during the offer period, and if so, does it have to revise and print the paper prospectus? Also, does the issuer have to suspend the offer pending the correction and what is the procedure for the suspension? Does an electronic prospectus have to be identical to the paper prospectus, and can our website contain information additional to the prospectus information?
A: The questions relating to an IPO or prospectus do not have a definitive answer as every public offer is different. However, here are some insights based on our IPO experience in the Hong Kong market.
In November 2010, Hong Kong Exchanges and Clearing (HKEx) and the Securities and Futures Commission (SFC) published their joint consultation conclusions on mixed media offers (MMOs), and in February 2011, HKEx published a document introducing the new regulatory regime relating to MMOs.*
Effective from 1 February 2011, issuers can distribute paper application forms not accompanied by a paper prospectus, but with an electronic version available online. Often, paper prospectuses are also displayed and distributed at designated locations such as receiving bank branches. The contents of the electronic and the paper prospectus should be identical, including any changes. Terms and conditions, including the listing timetable, published in a prospectus cannot be changed unless and until an announcement and appropriate steps have been cleared with the regulators. Therefore an issuer cannot ‘suspend’ a public offer per se.
Application monies should be returned to applicants if a public offer is postponed or does not proceed. Applicants are deemed to be refunded unless they re-confirm their applications if there is a change to the listing date disclosed in the prospectus.
If an issuer wants to make changes to an e-prospectus during the offer period, the sponsor (on behalf of the issuer) will need to consult with the listing division of the Stock Exchange. Agreed changes may be disclosed by (i) a supplemental prospectus (both electronic and paper version), or (ii) a clarification announcement, or (iii) any other ways required by the regulators.
Here are some examples from our experience:
1. An issuer inadvertently omitted an item in the accountants’ report section: the issuer was required to publish a clarification announcement on its and the HKExnews website.
- An issuer decided to reduce the size of the global offering. They were required to:
- issue an announcement disclosing that the company intended to alter the terms of the global offering
- issue a supplemental prospectus (both electronic and paper form), setting out the new information including the new listing timetable
- issue a confirmation form for applicants to re-confirm their application, and
- make an announcement on the supplemental prospectus and the changes in the listing timetable.
This illustrates that actions are decided on a case-by-case basis by the regulators. An e-prospectus is normally uploaded to both the HKExnews website and the issuer’s website. If the issuer adopts the White Form eIPO application channel, the White Form eIPO service provider will also host the e-prospectus on its website. The issuer’s website contains a lot of other information and the e-prospectus should be clearly displayed under one section of the website. Remember, an applicant is advised only to rely on information in your prospectus and will not take anything else on your website into account. If you have changed the prospectus while the offer is open, make sure it is linked from the home page so that everyone has the opportunity to view it and cannot claim that they have been disadvantaged in any way.
*Both documents are available on the HKEx website www. hkex.com.hk at the following links:
Joint Consultation Conclusions: www.hkex.com.hk/eng/ newsconsul/mktconsul/Documents/jcp200804cc.pdf
HKEx clarification on MMOs: www.hkex.com.hk/eng/rulesreg/ listrules/listpresent/documents/mmo_201102.pdf
Pamela Chung, Managing Director Computershare Hong Kong Investor Services Ltd