Presentation on private placement (sec)
- 1. IBD REGULATORY STUDY SESSION I Regarding SECURITIES AND EXCHANGE COMMISSION RULES & REGULATION (2011) SECTION F3: PRIVATE PLACEMENT AND COLLECTIVE INVESTMENT SCHEME November11, 2011
- 2. Table of Contents 1. What is A Private Placement 2. Limitations of A Private Placement 3. Key Requirements For a SEC Approval 4. Post Transaction Filing Requirements Page 2
- 3. Definition of Private Placement Private Placement (PP) is the issue of securities not involving public offering with the approval of * this points the Securities and exchange commission(“the Commission”). should be noted when considering Private Placements by public companies are subject to the following conditions: a Private Placement. The company shall show evidence of its need for fresh funds and satisfy the Commission that Private Placement is the only viable option to achieve its objective* The subscribers of the securities must not exceed fifty consisting of Institutional and High Net Worth Individuals. The resolution of the company authorizing the placement stating clearly the number of shares being issued and the price offered, which must be special as defined by Company and Allied Matters Act,2004 (CAMA) * The notice of the general meeting authorizing the Private Placement shall be published in two national dailies with evidence of publication filed with the Commission* Page 3
- 4. Definition of Private Placement * this points The aggregate number of shares offered by a public company should not exceed 30% of its should be noted when considering existing issued and paid-up capital prior to the offer. Where the company is ailing, it may a Private Placement. offer a higher number of shares, subject to the approval of the Commission* The price of the securities of the company, if quoted, shall be on technical suspension during the period of Private Placement The offer shall be for a period not exceeding 10 working days. However, the Commission may extend the period under special circumstances Page 4
- 5. Limitations On Private Placement No Issuer or any person acting on its behalf shall offer for subscription, offer for sale or sell Manner securities by any form of public invitation, general solicitation or general advertising, including but not limited to:- Of Any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television and radio; Any seminar or meeting to which those attending have been invited by any general solicitation Offering or general invitation There shall be no more than 35 purchasers of securities offered pursuant to this Regulation. Provided that the total number of members in the case of private companies shall not exceed 50 after the issue The Issuer shall exercise reasonable care to ensure that the purchasers of the securities are Disposal not and did not become underwriters which reasonable care may be demonstrated by the following of Making reasonable enquiry to determine whether the purchasers were acquiring the securities for themselves or for other persons Securities Page 5
- 6. Limitations On Private Placement Obtaining signed written agreement (Investment Letters)from the purchasers that they would Disposal not sell the securities without registering them or qualifying for an exemption from registration Making written disclosure to each purchaser prior to sale that the securities have not been of registered under the Act and therefore, cannot be resold unless they are registered pursuant to the Act or unless an exemption from registration is available Securities Page 6
- 7. Post Transaction Filling Requirement The issuing house shall within ten working days of the close of offer, file a report on the offer with the Commission The report shall contain the following information: • Names and addresses of the purchasers • Amount purchased by each Offeree and the mode of payment • Date of Payment • Nature of the Offeree • Amount the company is raising The report shall be signed by duly authorized persons Every Issuer or Issuing house shall submit to the Commission at the beginning of every quarter (January, April, July and October), all proposed private placements giving details of the amount, price, proposed opening and closing dates among others for the purpose of regulating the timing of issues Page 7