Private placingsSpecific regulation
Are there specific rules for the private placing of securities? What procedures must be implemented to effect a valid private placing?
A private placing is an offer for inscription and payment of securities:
- directed to not more than 20 persons individually named in the act for issuance of the securities, who are not shareholders of the joint-stock company and who are not related parties to the shareholders in the joint-stock company (the exception to this is when there is a legal requirement or if the obligation of the shareholder to increase the participation in the basic capital is at the request of a body or institution supervising joint-stock companies);
- directed only to institutional investors;
- in the case of an increase of the basic capital of the company;
- in the case of a conditioned increase of the basic capital; and
- in the case of a loan that is transformed into a share in the company in a procedure for increasing the basic capital of the company when the loan is given by the sole shareholder of the company.
No prospectus needs to be prepared and published for this purpose.
In the event of a private offering, the issuer must submit to the MSEC its request for approval of the private offering, an act of issuance of securities and a proposed announcement to the public for realisation of the private offering.
The MSEC shall decide within 15 days of the submission of the complete request. Certain special rules apply to this part of the procedure regarding pricing, which cannot vary by more than 20 per cent from the market value of the securities. The securities subject to a private offering are to be paid within 15 calendar days of the day the decision of the MSEC becomes final. If the identity of the buyer of the securities changes during the duration of the private offer, the issuer must acquire authorisation. Within five business days of closing a private offering, the issuer must inform the MSEC of the quantity of the securities subscribed for and paid for (ie, the realisation percentage). The issuer can make only one private offering of securities per calendar year. The MSEC prescribes the form and the contents of the request for approval, announcement and notice.Investor information
What information must be made available to potential investors in connection with a private placing of securities?
The same information that applies as per a public offering (see question 2).Transfer of placed securities
Do restrictions apply to the transferability of securities acquired in a private placing? And are any mechanisms used to enhance the liquidity of securities sold in a private placing?
Except for the restriction in the time period for placing a private offering (see question 7), no other restrictions apply to the transferability of securities acquired in a private placing.
The delivery versus payment settlement mechanism is used to enhance the liquidity of securities sold in a private placing. Obligations to transfer securities resulting from trade transactions shall be settled by a simultaneous change of the right in securities ownership from the seller’s account to the buyer’s account and payment of the purchase price of securities, in accordance with the delivery versus payment principle.