Plan ahead for ECM transaction

Equity capital markets (ECM)

Plan ahead.

For transactions which fall within the ambit of the Prospectus Guidelines (e.g., IPO and rights issue) or the Listing Requirements (e.g., certain Chapter 10 transactions), consents from third parties may be required.

For example, for a rights issue, consents from banks may be required for issuance of new shares by a listed company pursuant to the terms of banking facilities granted by the banks to the listed company or its subsidiaries.

For a rights issue, disclosure of material contracts outside ordinary course of business entered into by the listed company or its subsidiaries within 2 years preceding the date of the abridged prospectus is required.

Therefore, if there are confidentiality provisions in the material contracts, consents from the counterparties to the material contracts should be obtained to disclose the material contracts in the abridged prospectus.

Look out for clauses which restrict or prohibit the transactions when conducting legal due diligence.

Take into account the time required to obtain consents from the relevant third parties for the transactions or disclosure of certain information in prospectuses or circulars.

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This post was first posted on Linkedin on 15 October 2021.

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