Regulations for Offers of Securities (prospectus requirements)

What is a prospectus and what are the requirements of issuing one?


  • A prospectus is a document that presents a business to the investing public. It includes information such as the businesses assets and the nature of the company in order to give investors an informed decision on whether or not to purchase the companies securities. MAS has the final say as to whether or not to register or decline a prospectus if it does not comply with the SFA or for any other specified reasons. 

    Legal Definition

    “prospectus” means any prospectus, notice, circular, material, advertisement, publication or other document used to make an offer of securities or securities based derivatives contracts, and includes any document deemed to be a prospectus under section 257, but does not include —

    (a) a profile statement;

    (b) any material, advertisement or publication which is authorised by section 251 (other than subsection (5)); or

    (c) a product highlights sheet;

    Prospectus and Product Highlights Sheet (PHS)

    A prospectus is usually required when a person makes an offer of securities, unless the offer falls within one of the safe harbour provisions in the SFA. Where a prospectus is required to be issued, the SFA requires that it be made available on the MAS web site (on a section of the site called "OPERA" or "Offers and Prospectuses Electronic Repository and Access") for a minimum exposure period of seven days.

    Where a prospectus is required to be issued, issuers will also have to issue a PHS in addition to the prospectus. This requirement applies to any offer of plain vanilla debentures, preference shares, perpetual securities, convertible bonds, ordinary shares, units in a real estate investment trust, or units in a business trust. Prior to this, a PHS only had to be issued for debentures in the form of asset-backed securities and structured notes (including exchange-traded notes), unlisted collective investment schemes, and exchange-traded funds.

    A PHS must set out key information on the investment product that the investor will reasonably need to decide whether to invest in it, and must not exceed the maximum number of pages specified for that product. The PHS must also comply with the templates prescribed by the MAS.

    Source: Wong Partnership Country Guide on Securities and Banking

     

    Registration process

    After lodgment Registration

    • Public exposure of prospectus on MAS' website (OPERA)

    • Public can submit comments on lodged prospectus to MAS

    • MAS' regulatory review

    • Issuer can conduct roadshow presentations to institutional and accredited investors and commence book-building exercise

     • MAS will register prospectus within 7-21 days of lodgment unless:

    • MAS extends time period (max. 28 days)
    • Issuer requests registration at later date o MAS decides to refuse registration

    • Issuer can launch offer and distribute registered prospectus after registration

     

    Propectus must be registered in their final form before investors can apply for the any offer of capital market products. There are safeguards to ensure that investors are prevented from making premature decisions based on lodged prospectus.

    According to MAS FAQ

    The purpose of exposing the prospectus for public comment is to allow MAS to tapmarket expertise, especially in areas where we do not have specialist knowledge. Offerors are prohibited by law from using the lodged prospectus to offer securities, securities-based derivatives contracts or units in a CIS. It is also an offence for an offeror to accept applications before its prospectus is registered by MAS.

    OPERA (the prospectus database on MAS' website) is the only means by which the public will have access to lodged prospectuses. There are clear warnings on OPERA that the lodged prospectus is not registered and that investors should not make investment decisions on the basis of the lodged prospectus. Such unregistered prospectuses will not be allowed to be put up on any other website or disseminated in any other way

     

    Issuers are not allowed to distribute prliminary prospectuses to the general public.

    According to MAS FAQ

    A preliminary prospectus does not contain certain material information about an offer, such as the price and quantity of securities, securities-based derivatives contracts or units in a CIS being offered. If such a document is distributed to the general public (particularly retail investors), it could potentially mislead them. Instead, the SFA provides an exception for preliminary prospectuses to be distributed to institutional and accredited investors, who are the usual participants in book building exercises.

     

    Offers through ATMs and Mobile Phones

    According to MAS FAQ

    Offers through ATMs or mobile phones fall within the regulatory ambit, and are subject to the same legal requirements as offers made through conventional channels. However, it would be impractical for offers made through ATMs to make available prospectuses to prospective investors at the point of application through the ATMs. The SFA therefore exempts the offer from being made in or accompanied by a prospectus and profile statement. This is subject to the requirement that prospective investors be alerted to the availability of the prospectus and be advised to read the prospectus before proceeding to apply for the securities, securities-based derivatives contracts or units in a CIS through the ATMs.

     

    Offers through the internet (e.g. crowd funding websites)

    According to MAS FAQ

    A person who raises funds through the internet (e.g. through a crowd funding platform) may be subject to the requirements under the SFA if it involves an offer of securities, securitiesbased derivatives contracts or units in a CIS to investors in Singapore. Under the SFA, any person who makes an offer of securities, securities-based derivatives contracts or units in a CIS to investors in Singapore, whether through a crowd funding platform or otherwise, will be required to provide a prospectus (in respect of the offer) that is registered with MAS, unless an exemption applies. Depending on its business model, the operator of a crowd funding platform may also be subject to other requirements in the SFA if it engages in other regulated activities (e,g, carrying on the business of dealing in capital markets products that are securities, securities-based derivatives contracts or units in a CIS, advising on corporate finance, or operating an organised market).