Corporate Briefing - September 2011

Government moves to reduce cost of raising equity capital

Whenever a company is looking to raise additional equity capital there are always two questions to consider: Firstly, is a Prospectus required? Secondly, if the answer to question 1 is 'no', does the fund-raising document the company is proposing to issue to potential investors require approval by an authorised person as a Financial Promotion, or can an exemption or exemptions be found that will allow it to be sent to its intended recipients without such approval?

Requirement for Prospectus

Following a review by the European Commission in 2010, certain changes were made to the Prospectus Directive and the Government has taken rapid steps to introduce two of the changes into UK law. These changes, which came into effect on 31 July 2011 – nearly a year ahead of the timetable required by the amending Directive – alter two of the triggers which require a Prospectus to be prepared: