The following are some of the steps a company preparing for an initial public offering (“IPO“) needs to take:

1. Get banks’ consent if there is any declaration of dividend prior to the IPO by the borrower company which is part of the listing group and there is covenant to obtain banks’ prior consent in the relevant banking facility documents. Such covenant needs to be complied with for any declaration of dividend by the borrower company regardless of the IPO.
2. Get banks’ and counterparties’ consent for change of shareholders of the relevant company within the listing group if there are any provisions in the banking facility documents and contracts which prohibit or restrict such change of shareholders.
3. Get major customers’ and major suppliers’ consent for disclosure of their names and certain details of business relationship with them in the prospectus, if there are terms which prohibit disclosure.
4. Get counterparties’ consent for disclosure of salient terms of material contracts in the prospectus and making available a copy of the contracts for inspection by the public, if there are confidentiality clauses in the contracts which prohibit such disclosure.

Hint: These are some of the “salient terms” to look out for when conducting legal due diligence for an IPO.

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This post was first posted on Linkedin on 19 January 2021.