Statement of reasons
This notice, which comes into force on 1 October 2009, amends the Securities Act (Rights, Options, and Convertible Securities) Exemption Notice 2002.
Section 37A(1)(a) of the Securities Act 1978 requires an investment statement relating to securities to be given to a person before that person subscribes for those securities. The principal notice provides an exemption from this requirement if the subscription arises from the subscriber taking up a right that has been renounced by the person originally entitled to that right.
The exemption recognises that as rights trade on a securities market (when renounced), it is not possible for the issuer of securities to ensure that an investment statement is given to the eventual subscriber.
Offers of securities that are made using a simplified disclosure prospectus (an SDP) do not require an investment statement. However, section 37A(1)(ab)(i) of the Securities Act 1978 requires that in the case of a security offered in an SDP, the subscriber must receive a copy of the SDP before subscription. This raises the same difficulty as is encountered in respect of the investment statement.
The Securities Commission considers that it is appropriate to amend the principal notice because—
as rights that have been renounced trade on a securities market, it is not possible for the issuer of securities to ensure that an investment statement is delivered to the eventual subscriber. Accordingly, the principal notice exempts the issuer from the requirement to give an investment statement relating to securities to a person before that person subscribes for those securities in those circumstances:
this notice amends the principal notice to ensure that the relief that is provided for rights offers made under the Securities Regulations 1983 is also available for rights offers made under the Securities Regulations 2009:
offers made using an SDP will not have an investment statement. However, section 37A(1)(ab)(i) of the Securities Act 1978 requires that in the case of a security offered in an SDP, the subscriber must receive a copy of the SDP before subscription. This requirement raises the same difficulty as is encountered in respect of investment statements:
this exemption provides the same relief for renounceable rights offers under an SDP as is available for an offer in an investment statement.