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AIFC MARKET RULES
AIFC RULES NO. FR0003 OF 2017
(with amendments as of 29 June 2022, which commence on 29 June 2022)
Approval Date: 17 October 2017
Commencement Date: 1 January 2018
Nur-Sultan, Kazakhstan
CONTENTS
1 OFFER OF SECURITIES
1.1 Offer of Securities
1.1.1 Conditions for admission of Securities to trading and offer of Securities admitted or sought to be admitted to the Official List of an Authorised Investment Exchange
1.1.2 Conditions for the offer of Securities by way of placement
1.2 Exemptions
1.2.1 Exempt Offerors
1.2.2 Exempt Securities
1.2.3 Limitations
1.3 The Prospectus
1.3.1 Prospectus Structure
1.3.2 Risk factors
1.3.3 Final offer price and amount of Securities
1.3.4 Clarity of the information
1.3.5 Incorporation by reference
1.4 Prospectus Summary
1.4.1 Contents of the Prospectus Summary
1.4.2 Layout of the Prospectus Summary
1.4.3 Sections of the Prospectus Summary
1.4.4 Section 1: The Introduction
1.4.5 Section 2: Key information about the Issuer
1.4.6 Section 3: Key information on Securities
1.4.7 Section 4: Key information on the admission to trading
1.5 The Registration Document and the Securities Note
1.5.1 The Registration Document
1.5.2 The Securities Note
1.6 Supplementary Prospectus
1.6.1 Statement in the Supplementary Prospectus as to the right of withdrawal
1.6.2 Prospectus Summary to be updated
1.7 Approval and Publication of a Prospectus by an Authorised Investment Exchange
1.7.1 The requirement for an approval
1.7.2 Application for approval
1.7.3 Timescales for the submission of the application for approval
1.7.4 Approval by the Authorised Investment Exchange
1.7.5 Approved Prospectus
1.7.6 Publication of a Prospectus
1.7.7 Publication of Supplementary Prospectus
1.7.8 Text and format of published Prospectus
1.8 Approval of a Prospectus by the AFSA
1.8.1 The requirement for approval
1.8.2 Application for approval
1.8.3 Timescales for the submission of the application for approval
1.8.4 Approval by the AFSA
1.8.5 Approved Prospectus
1.9 Prospectus Liability
1.9.1 Persons liable for the content of a Prospectus
1.9.2 Limitations on the application of MAR 1.9.1
1.9.3 Expert’s responsibility
1.9.4 Exceptions from liability
2. GOVERNANCE OF REPORTING ENTITIES
2.1 Application
2.2 Corporate governance principles
2.2.1 Corporate governance principles
2.2.2 Principle 1 - Board of directors
2.2.3 Principle 2 - Division of responsibilities
2.2.4 Principle 3 - Board composition and resources
2.2.5 Principle 4 - Risk management and internal control systems
2.2.6 Principle 5 - Shareholder rights and effective dialogue
2.2.7 Principle 6 - Position and prospects
2.2.8 Principle 7 - Remuneration
2.2.9 Annual reporting on compliance
2.3 Directors duties and fair treatment of shareholders
2.3.1 Application
2.3.2 Directors’ duties
2.3.3 Equality of treatment
2.3.4 Reduction of share capital
2.3.5 Pre-emption rights
2.3.6 Communications with shareholders
2.3.7 Proxy solicitation
2.3.8 Other matters requiring shareholder approval
2.4 Dealings by restricted persons
2.4.1 Application
2.4.2 Prohibition on dealing
2.4.3 Definition of «closed period» and «dealing in Securities»
2.4.4 Clearance to deal
2.4.5 Exempt dealings
2.5 Related party transactions
2.5.1 Application
2.5.2 Definitions
2.5.3 Related party transaction procedures
2.5.4 Exemptions
3. FINANCIAL REPORTS
3.1-1 Application
3.1 Core obligations
3.1.1 Obligation to prepare financial statements and reports
3.1.2 Audit of annual financial statements
3.2 Annual Report
3.2.1 Contents of annual report
3.2.2 Signing of the annual report
3.3 Semi-annual report
3.3.1 Preparation of the semi-annual report
3.3.2 Contents of the semi-annual report
3.3.3 Signing of the semi-annual report
3.4 Disclosure of annual and semi-annual reports
3.4.1 Obligation to make market disclosure
3.4.2 Time period for making market disclosure
3.5 Accounting periods
3.5.1 Accounting reference date
3.5.2 Disclosure of changes to accounting reference date
4. SPONSORS AND COMPLIANCE ADVISERS
4.1 Sponsors
4.1.1 Appointment of sponsors
4.1.2 Procedures relating to appointment of sponsors
4.1.3 Independence of sponsors and their employees
4.1.4 AFSA’s power of direction
4.1.5 Obligations of a sponsor
4.1.6 Sponsor’s obligation when aware of non-compliance
4.1.7 Duty of care of sponsors
4.1.8 Co-operation with sponsors
4.1.9 Notifying the AFSA of failure to co-operate
4.1.10 Termination of appointment
4.1.11 Resignation of sponsor
4.2 Compliance advisers
4.2.1 Appointment of a compliance adviser
4.2.2 Procedure for appointing a compliance adviser
4.2.3 Provision of information to the AFSA
4.2.4 Conflicts of interest
4.2.5 Appointment of a compliance adviser for a specified period
4.2.6 Obligation of a Reporting Entity to rectify failure
4.2.7 Provision of information to the AFSA
4.2.8 Co-operation with the AFSA
4.2.9 Co-operation with compliance advisers
4.2.10 Termination of appointment
4.2.11 Resignation of compliance adviser
5. MARKET ABUSE
5.1 Definition of Market Abuse
5.1.1 Conduct amounting to Market Abuse
5.1.2 Conduct not amounting to Market Abuse
5.2 Definition of Inside Information
5.2.1 Definition of Inside Information (general)
5.2.2 Definition of Inside Information (execution of orders)
5.2.3 Definition of Information of a ‘precise nature’
5.2.4 Definition of Information likely to have a ‘significant effect’
5.2.5 Unlawful disclosure of Inside Information
5.2.6 Persons possessing Inside Information
5.3 Insider Dealing
5.3.1 Definition of Insider Dealing
5.3.2 Recommending or Inducing Insider Dealing
5.3.3 Persons to whom MAR 5.3.2 and MAR 5.3.1 apply
5.3.4 Behaviour that does not constitute Insider Dealing
5.3.5 Behaviour that does not constitute Insider Dealing - public Takeover
5.3.6 Behaviour that does not constitute Insider Dealing – use of own knowledge
5.4 Market Manipulation
5.4.1 Market Manipulation
5.4.2 Market Manipulation Activities
5.4.3 Market Manipulation Behaviour
5.4.4 Accepted Market Practice
5.5 Market Soundings
5.5.1 Definition of Market Sounding
5.5.2 Disclosure of Inside Information in the course of Market Sounding
5.5.3 Requirements on a Person conducting or intending to conduct Market Sounding
5.5.4 Information which ceases to be Inside Information
5.5.5 Record Keeping
6. MARKET DISCLOSURE
6.1 Public disclosure of Inside Information
6.1.1 Obligation to disclose Inside Information to the public
6.1.2 Requirements for public disclosure of Inside Information
6.1.3 Delaying disclosure
6.1.4 Delaying disclosure - protracted processes
6.1.5 Obligation to notify the AFSA and the Authorised Investment Exchange of delayed disclosure
6.1.6 Obligation to disclose to the public when confidentiality is no longer ensured
6.1.7 Disclosure of Inside Information in the normal course of the exercise of an employment, profession or duties
6.2 Insider lists
6.2.1 Obligation to draw up insider lists
6.2.2 Reporting Entity is responsible for complying with MAR 8.2.2 (Obligation to draw up insider lists)
6.2.3 Contents of the Insider List
6.2.4 Persons on the Insider List
6.2.5 Updating the Insider list
6.2.6 Provision of Insider Lists to the AFSA
6.2.7 Record Keeping
6.3 Managers’ transactions
6.3.1 Notification of transactions
6.3.2 Transactions on behalf of Persons discharging managerial responsibilities
6.3.3 Content of notification
6.3.4 Notification to be made promptly
6.3.5 Disclosure to the public
6.3.6 Notifying Persons discharging managerial responsibilities of their obligations
6.3.7 List of Persons discharging managerial responsibilities of their obligations
6.3.8 Closed period
6.3.9 Discretion to permit trading with the closed period
6.4 Dissemination of investment recommendations, statistics and information in the media
6.4.1 Investment recommendations
6.4.2 Dissemination of statistics
6.4.3 Disclosure or dissemination of information in the media
6.5 Other matters concerning market disclosure
7. LISTED FUNDS
7.1.1 Application
7.1.2 Conditions for admission of Units to trading
7.1.3 Application of MAR to Listed Funds
7.1.4 Disclosure of Financial Reports and Valuation
SCHEDULE 1: REGISTRATION DOCUMENT
SCHEDULE 2: SECURITIES NOTE
SCHEDULE 3: CORPORATE GOVERNANCE BEST PRACTICE STANDARDS
Guidance: Purpose and application of MAR
The purpose of the rules and guidance set out in MAR is to provide the necessary detail in relation to:
a. the manner in which Securities may be offered for sale;
b. the conditions for admission of Securities to trading and to the Official List of an Authorised Investment Exchange;
c. Exempt Offerors and Exempt Securities;
d. the content of a Prospectus;
e. the approval and publication of a Prospectus;
f. Prospectus liability;
g. Corporate Governance Principles;
h. Obligations of Reporting Entities including:
i. the obligation to prepare financial statements; and
ii. the obligation to appoint a sponsor or compliance adviser if required by the AFSA;
i. Market Abuse;
j. Market Disclosure; and
k. the conditions for admission of Units to trading and the application of the Market Abuse and Market Disclosure Rules to Listed Funds, Units of Listed Funds, and Fund Managers of Listed Funds.
The application of the Rules in MAR is stated in respect of each Rule or apparent from the context. However, by way of summary:
• MAR 1 (Offer of Securities) is applicable to all persons who may seek to have Securities admitted to trading and/or to offer Securities in or from the AIFC and to all persons who may be liable for the contents of a Prospectus (as identified in MAR 1.9.1).
• MAR 2 (Governance of Reporting Entities) applies to Reporting Entities other than a Reporting Entity that is a Listed Fund or a Fund Manager of a Listed Fund (in its capacity as such) and an Exempt Offeror.
• MAR 3 (Financial Reports) applies to Reporting Entities other than a Reporting Entity that is a Listed Fund or a Fund Manager of a Listed Fund (in its capacity as such) and an Exempt Offeror.
• MAR 4 (Sponsors and Compliance Advisers) applies to Reporting Entities (other than a Reporting Entity that is a Listed Fund or a Fund Manager of a Listed Fund (in its capacity as such)) and any person who intends to have Securities admitted to an Official List or admitted to trading on an Authorised Investment Exchange, as well as to sponsors and compliance advisers appointed by them.
• MAR 5 (Market Abuse) applies to all persons without limitation.
• MAR 6 (Market Disclosure) applies to Reporting Entities.
• MAR 7 (Listed Funds) is applicable to all persons who may seek to have Units admitted to trading and applies to Listed Funds, Units of Listed Funds, and Fund Managers of Listed Funds.
1. OFFER OF SECURITIES
1.1 Offer of Securities
1.1.1 Conditions for admission of Securities to trading and offer of Securities admitted or sought to be admitted to the Official List of an Authorised Investment Exchange
(1) An Authorised Investment Exchange may not admit Securities to trading unless:
(a) the Securities have been admitted to the Official List maintained by the Authorised Investment Exchange in accordance with section 66 of the Framework Regulations; and
(b) subject to MAR 1.2 (Exemptions), there is a Prospectus in relation to the relevant Securities that satisfies the requirements of this Part and has been approved by the Authorised Investment Exchange.
(2) Subject to MAR 1.2 (Exemptions), an Authorised Investment Exchange may not permit the offer of Securities, admitted or sought to be admitted to the Official List, in or from the AIFC, unless there is a Prospectus in relation to the relevant Securities that satisfies the requirements of MAR 1.1.1(1)(b).
1.1.2 Conditions for the offer of Securities by way of placement
(1) The Issuer may not offer Securities by way of placement (other than Securities admitted or sought to be admitted to the Official List of an Authorised Investment Exchange) in or from the AIFC, and an Authorised Firm may not conduct, facilitate or participate in such an offer, unless:
(a) there is a Prospectus in relation to the relevant Securities that satisfies the requirements of this Part and has been approved by the AFSA; or
(b) the offer satisfies one and one only of the conditions mentioned in subsection (2) below; or
(c) the offer satisfies one or more of conditions (a), (b) and (m) in subsection (2) below.
(2) The conditions mentioned in subsection (1)(b) above are the following:
(a) the offer is made to or directed at only Accredited Investors; or
(b) the offer is directed at fewer than 50 Retail Investors in any 12-month period; or
(c) the offer is directed at investors who acquire Securities for a total consideration of at least USD100,000 (or an equivalent amount in another currency) per Person for each separate offer; or
(d) the Securities being offered are denominated in amounts of at least USD100,000 per unit (or an equivalent amount in another currency); or
(e) the total aggregate consideration for the Securities offered is less than USD100,000 (or an equivalent amount in another currency) calculated over a period of 12 months; or
(f) the Securities offered are Shares which are issued in substitution for Shares of the same class as already issued, where the issue of the new Shares does not involve any increase in the issued Share capital; or
(g) the Securities offered are convertibles issued under a Prospectus to existing members or creditors of the Issuer or a member of its Group and there is no additional consideration to be paid; or
(h) the Securities offered are offered in connection with a Takeover and an informational document is made available which is considered by the AFSA as being equivalent to that of a Prospectus; or
(і) the Securities offered are offered, allotted or to be allotted in connection with a merger if an informational document is available which is considered by the AFSA as being equivalent to that of a Prospectus; or
(j) the Securities offered are offered, allotted or to be allotted in connection with a rights issue where:
(і) the Securities are of a class subject to Reporting Entity disclosure; and
(ii) a document is made available to offerees containing information on the number and nature of the Securities including rights attaching to those Securities and the reasons for and details of the offer; or
(k) the Securities offered are Shares which are offered, allotted or to be allotted to existing Shareholders free of charge or dividends paid out in the form of Shares of the same class as the Shares in respect of which the dividends are paid, and a document is made available to offerees containing information on the number and nature of the Shares and the reasons for and details of the offer; or
(l) the Securities offered are offered, allotted or to be allotted to an existing or former Director or Employee, or any close relative of such a Director or Employee, of the Issuer or a member of the same Group as the Issuer and:
(і) the Issuer or the member of the Group already has its Securities admitted to trading on a Regulated Exchange; and
(ii) a document is made available to the offerees containing information on the number and nature of the Securities and the reasons for and details of the offer; or
(m) the offer is made to and directed at Retail Investors, provided that the total aggregate consideration for the offer of Securities made under this subsection to Retail Investors is not more than USD5,000,000 (or an equivalent amount in another currency) calculated over a period of 12 months; or
(n) the offer is made only through the Authorized Crowdfunding Platform to and directed at only Investors or lenders who are Clients of the Authorised Crowdfunding Platform within the limits set out in AMI.
(3) The following requirements apply to any offer of Securities to Retail Investors by way of placement conducted under subsections (2)(a) through (2)(m) of MAR 1.1.2:
(a) the Issuer shall make available to each Investor at a reasonable time prior to the purchase of Securities the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which the Issuer possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished under this section;
(b) the Issuer, and/or the Authorised Firm conducting, facilitating or participating in such an offer, shall take reasonable steps to verify the status of the Investors;
(c) the Issuer shall, if Retail Investors are participating in the offering, give any Retail Investor disclosure documents that contain the necessary information which is material to an investor for making an informed investment decision; and
(d) the Issuer shall file a notice on the results of the offer with the AFSA within 30 days after the sale of Securities in the offering.
(4) Where any Securities are offered by way of placement under subsections (2)(a) through (2)(m) of MAR 1.1.2, neither the Issuer nor any person acting on its behalf shall offer or sell the Securities by any form of general solicitation or general advertising, including, but not limited to, the following:
(a) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, and
(b) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(5) For the purposes of subsection (4) above, the advertisement made on the Issuer’s website or website of the Authorised Firm, which facilitates such an offer, is not considered as general solicitation or general advertising.
(6) For the purposes of MAR 1.1.2:
(a) “Accredited Investor” means:
(і) any natural person who acquires or intends to acquire Securities for a total consideration of at least USD100,000 (or an equivalent amount in another currency) per Person for each separate offer; or
(ii) an Authorised Person; or
(iii) a Body Corporate.
(b) “Retail Investor” means any natural person that is not an Accredited Investor, provided that the aggregate amount in current value of Securities which are the subject of the offer that were sold by the offeror to each Retail Investor, during the 12-month period preceding the date of any offer made under this rule, does not exceed the greater of USD2,000 or 10 percent of the annual income or 5 percent of net worth of such Retail Investor (excluding the value of the primary residence), whichever is lesser, but not to exceed a maximum aggregate amount sold of USD100,000.
Guidance
To verify the status of the investors Issuers, and/or the Authorised Firm which facilitates such an offer, could rely on Retail Investors’ self-certification (for example, questionnaires where investors self-report their income and net worth).
1.2 Exemptions
1.2.1 Exempt Offerors
The AFSA may publish a list from time to time identifying bodies to which the requirement in MAR 1.1.1(1)(b) and MAR 1.1.1(2) does not apply.
1.2.2 Exempt Securities
(1) An Authorised Investment Exchange may admit Securities to trading, and permit the offer of Securities (admitted or sought to be admitted to the Official List) in or from the AIFC, without a Prospectus, if such Securities satisfy one or more of the conditions specified below:
(a) the offer is made to or directed at only Accredited Investors (as defined in MAR 1.1.2(6)(a)); or
(b) the Securities being offered are issued and registered in the AIFC and the offer is directed at fewer than 50 investors in any 12-month period; or
(c) the offer is directed at investors who acquire Securities for a total consideration of at least USD100,000 (or an equivalent amount in another currency) per Person for each separate offer; or
(d) the Securities being offered are denominated in amounts of at least USD100,000 per unit (or an equivalent amount in another currency); or
(e) the total aggregate consideration for the Securities offered is less than USD5,000,000 (or an equivalent amount in another currency) calculated over a period of 12 months; or
(f) Securities fungible with Securities already admitted to trading on the same Authorised Investment Exchange, provided that they represent, over a period of 12 months, less than 10% of the number of Securities already admitted to trading on the Authorised Investment Exchange; and
(g) Shares resulting from the conversion or exchange of other Securities or from the exercise of the rights conferred by other Securities, where:
(і) the resulting Shares are of the same class as the Shares already admitted to trading on the same Authorised Investment Exchange; and
(ii) the resulting Shares represent, over a period of 12 months, less than 20% of the number of Shares of the same class already admitted to trading on the same Authorised Investment Exchange; and
(h) Shares issued in substitution for Shares of the same class already admitted to trading on the same Authorised Investment Exchange, where the issuing of such Shares does not involve any increase in the issued capital; and
(і) Securities offered in connection with a Takeover by means of an exchange offer, provided that a document is made available to the public in accordance with MAR 1.7, containing information describing the transaction and its impact on the Issuer; and
(j) Securities offered, allotted or to be allotted in connection with a merger or a division, provided that a document is made available to the public in accordance with MAR 1.7, containing information describing the transaction and its impact on the Issuer; and
(k) Shares offered, allotted or to be allotted free of charge to existing shareholders, and dividends paid out in the form of Shares of the same class as the Shares in respect of which such dividends are paid provided:
(і) that the said Shares are of the same class as the Shares already admitted to trading on the same Authorised Investment Exchange; and
(ii) that a document is made available to offerees containing information on the number and nature of the Shares and the reasons for and details of the offer or allotment; and
(l) Securities offered, allotted or to be allotted to existing or former Directors or Employees by their employer or an affiliated undertaking, provided:
(і) that the said Securities are of the same class as the Securities already admitted to trading on the same Authorised Investment Exchange; and
(ii) that a document is made available to offerees containing information on the number and nature of the Securities and the reasons for and detail of the offer or allotment; and
(m) Securities already admitted to trading on another Authorised Investment Exchange, Recognised Non-AIFC Market Institution or other Equivalent Regulated Exchange (“the other market”), where:
(і) the Securities, or Securities of the same class, have been admitted to trading and continuously traded on the other market for more than 18 months; and
(ii) the ongoing obligations for trading on that other market have been complied with; and
(iii) the Person requesting the admission to trading of the Securities under this exemption makes available to the public in accordance with MAR 1.7.6 a Prospectus Summary in accordance with MAR 1.4 (Prospectus Summary) in the English language, which is approved by the Authorised Investment Exchange and which states where the most recent Prospectus can be obtained and where the financial information published by the Issuer pursuant to its ongoing disclosure obligations is available. For the purpose of this sub-clause, references to a “Prospectus” in MAR1.4.1, MAR1.4.4 and MAR1.4.7 shall be deemed references to a “Prospectus Summary” and the provisions of MAR1.4.1(c), MAR1.4.4(a)(iv) and (b)(і) shall not apply.
(2) For the purposes of MAR 1.2.2 (1)(m):
(a) “Equivalent”, in relation to a Regulated Exchange, means that the AFSA has determined, either on the application of an Issuer or upon its own initiative, that investors in Securities admitted to trading on the facilities of such Regulated Exchange are afforded protection equivalent to that which they would be afforded, if the Issuer were required to comply with MAR 1.1.1(1) without regard to MAR 1.2.2(1)(m), having regard to the law and practice of the country or territory in which the head office of the Regulated Exchange is situated and to its rules and practice; and
(b) the AFSA may publish a list from time to time identifying Regulated Exchanges it has determined to be Equivalent.
1.2.3 Limitations
(1) The exemptions in MAR 1.2.2(1) from (a) through (e) shall not apply to an offer of Equity Securities if such offer could lead to the immediate or deferred admission to trading on an Authorised Investment Exchange over a period of 12 months of more than 10% of the number of Shares of the same class, to which such Equity Securities are linked, already admitted to trading on the same Authorised Investment Exchange, without a Prospectus being published.
(2) Offerors relying on the exemptions in MAR 1.2.2(1) from (a) through (e) must comply with the requirements of MAR 1.1.2(4) and (5) relating to limitation of general solicitation or general advertising, as if they were directly referred to therein.
1.3 The Prospectus
Guidance: Prospectus Contents
Section 69 of the Framework Regulations provides:
A Prospectus must contain:
(a) the necessary information which is material to an investor for making an informed assessment of:
(і) the assets and liabilities, profits and losses, financial position, and prospects of the Issuer and of any guarantor;
(ii) the rights attaching to the Securities; and
(iii) the reasons for the issuance and its impact on the Issuer; and
(b) such further documents and information as may be specified by the AFSA pursuant to Section 70 of the Framework Regulations.
1.3.1 Prospectus Structure
A Prospectus may be structured either as:
(a) multiple documents comprising:
(і) a Prospectus Summary as set out in MAR 1.4; and
(ii) a Registration Document as set out in MAR 1.5.1 containing all the information relating to the Issuer; and
(iii) a Securities Note as set out in MAR 1.5.2 containing the information concerning the Securities to be admitted to trading on an Authorised Investment Exchange; or
(b) a single document containing a Prospectus Summary as set out in MAR 1.4 and all the information required to be included in the Registration Document and the Securities Note; or
(c) for an offer of Shares, a single document containing all the information required to be included in the Registration Document and the Securities Note in relation to the offer of Shares, provided that the expected aggregate market value of such Shares (together with any other Equity Securities admitted to trading on all Regulated Exchanges) at the time of admission to trading does not exceed USD200,000,000 (or an equivalent amount in another currency) (REMS Shares). A Prospectus in relation to REMS Shares must include a prominent disclaimer that the Issuer is eligible to rely on concessions granted to it as set out in MAR, which exclude such Issuer from being required to prepare a Prospectus Summary and disclose certain other information in its Registration Documents and Securities Notes.
1.3.2 Risk factors
The information in a Prospectus must include:
(a) risks which are relevant to the Issuer and/or the Securities and which are material for taking an informed investment decision, as corroborated by the content of the Registration Document and Securities Note; and
(b) where there is a guarantee attached to the Securities, the material risk factors pertaining to the guarantor to the extent that they are relevant to the guarantor’s ability to fulfil its commitment under the guarantee.
Guidance: risk factors
(1) The materiality of the risk factors should be based on the probability of their occurrence and the expected magnitude of their negative impact.
(2) The assessment of the materiality of the risk factors may also be disclosed by using a qualitative scale of low, medium or high.
(3) Each risk factor should be adequately described, explaining how it affects the Issuer or the Securities.
(4) The risk factors should be presented in a limited number of categories depending on their nature. In each category the most material risk factors must be mentioned first.
(5) Risk factors should also include those resulting from the level of subordination of a Security and the impact on the expected size or timing of payments to holders of the Securities in the event of bankruptcy, or any other similar procedure.
1.3.3 Final offer price and amount of Securities
Where the final offer price and/or amount of Securities to be offered, whether expressed in number of Securities or as an aggregate nominal amount, cannot be included in the Prospectus the following must be included in the Prospectus:
(a) the maximum price and/or the maximum amount of Securities, as far as they are available; or
(b) the valuation methods and criteria, and/or conditions, in accordance with which the final offer price is to be determined and an explanation of any valuation methods used.
1.3.4 Clarity of the information
The information in a Prospectus must be written and presented in an easily analysable, concise and comprehensible form, taking into account the nature of the Issuer, the type of Securities and the circumstances of the Issuer.
1.3.5 Incorporation by reference
Information that is required to be contained in a Prospectus (apart from information required to be contained in a Prospectus Summary) may be incorporated by reference, provided that:
(a) the source of information is publicly available on a continuing basis; and
(b) the information is clearly set out and easily accessible in that source; and
(c) the information is in the English language; and
(d) the information can be accessed without charge; and
(e) the reference contains sufficient information to enable an investor to decide whether to obtain the information or any part of it.
Guidance: incorporation by reference
Information that may generally be incorporated by reference includes instruments or statute of incorporation of a company, annual reports, periodic financial reports and listing particulars.
1.4 Prospectus Summary
1.4.1 Contents of the Prospectus Summary
The Prospectus Summary must:
(a) provide the key information that investors need in order to understand the nature and the risks of the Issuer, the guarantor and the Securities;
(b) contain information that is accurate, fair, clear and not misleading and which is consistent with other parts of the Prospectus; and
(c) not contain cross references to other parts of the Prospectus or incorporate information by reference.
1.4.2 Layout of the Prospectus Summary
The Prospectus Summary must be:
(a) drawn up as a short document written in a concise manner and of a maximum length of seven sides of A4-sized paper when printed; and
(b) written in a language and a style that facilitate the understanding of the information, in particular, in language that is clear, non-technical, concise and comprehensible for investors; and
(c) presented and laid out in a way that is easy to read, using characters of readable size.
1.4.3 Sections of the Prospectus Summary
The Prospectus Summary must be made up of the following four sections:
(a) an introduction, containing warnings; and
(b) key information on the Issuer; and
(c) key information on the Securities; and
(d) (where relevant) key information on the admission to trading.
1.4.4 Section 1: The Introduction
The introduction must contain:
(a) the following information:
(і) the name and international securities identification number (ISIN) of the Securities; and
(ii) where applicable, the identity and contact details of the Issuer, including its legal entity identifier (LEI); and
(iii) where applicable, the identity and contact details of the Person asking for admission to trading on an Authorised Investment Exchange; and
(iv) the identity and contact details of the authority that approved the Prospectus; and
(v) the date of approval of the Prospectus; and
(b) the following warnings:
(і) the Prospectus Summary should be read as an introduction to the Prospectus; and
(ii) any decision to invest in the Securities should be based on a consideration of the Prospectus as a whole by the investor; and
(iii) where applicable, that the investor could lose all or part of the invested capital and, where the investor’s liability is not limited to the amount of the investment, a warning that the investor could lose more than the invested capital and the extent of such potential loss; and
(iv) civil liability attaches only to those Persons who have tabled the summary including any translation thereof, but only where the summary is misleading, inaccurate or inconsistent, when read together with the other parts of the Prospectus, or where it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such Securities.
1.4.5 Section 2: Key information about the Issuer
This section must contain the following information:
(a) under a sub-section entitled 'Who is the Issuer of the Securities?', a brief description of the Issuer of the Securities, including at least the following:
(і) its domicile and legal form, its LEI (if applicable), the law under which it operates and its country of incorporation;
(ii) its principal activities;
(iii) its major shareholders, including whether it is directly or indirectly owned or controlled and by whom;
(iv) the identity of its key managing directors; and
(v) the identity of its Auditors; and
(b) under a sub-section entitled 'What is the key financial information regarding the Issuer?' a selection of historical key financial information presented for each financial year of the period covered by the historical financial information, and any subsequent interim financial period accompanied by comparative data from the same period in the prior financial year. The key financial information must, where applicable, include:
(і) pro forma financial information;
(ii) a brief description of any qualifications in the audit report relating to the historical financial information; and
(c) under a sub-section entitled 'What are the key risks that are specific to the Issuer?' a brief description in declining order of severity of the most material risk factors (not exceeding 15 risk factors) specific to the Issuer contained in the Prospectus.
1.4.6 Section 3: Key information on Securities
This section must contain the following information:
(a) under a sub-section entitled 'What are the main features of the Securities?', a brief description of the Securities being admitted to trading on an Authorised Investment Exchange including at least:
(і) their type, class and ISIN; and
