UK: Offering Securities Into The United Kingdom

Last Updated: 13 February 2012
Article by Jonathan Deverill

With companies these days exploring an increasingly broad range of options when it comes to funding, London continues to be a popular target for corporate road-shows and calls to potential investors alike. Fortunately, from an English legal perspective, marketing to institutional investors in the United Kingdom from overseas should normally be pretty straightforward.

Will the company need a UK prospectus?

Not normally. A UK prospectus is only required for (i) offers of transferable securities to be admitted to trading on certain UK stock markets, including the UK's flagship "Official List" but not AIM, and (ii) offers of transferable securities "to the public" in the United Kingdom. In each case there are various exemptions. Where the company concerned is not listed or becoming listed in the United Kingdom at all, only the "offer to the public" head is relevant; and there is an exemption from the need for a UK prospectus where the offer is made in the United Kingdom only to (i) "qualified investors", defined to cover most institutional investors, and/or (ii) fewer than 150 persons, not including any "qualified investors" to whom the offer is made.

Care needs to be taken when marketing to a fund manager or stockbroker acting for clients on a non-discretionary basis, since the legislation requires a look-through to the underlying clients who, of course, could be numerous and are unlikely themselves to be "qualified investors".

What about the UK's "financial promotions" regime?

This regime regulates the communication in or into the United Kingdom, in the course of business, of any invitation or inducement to engage in a variety of activities relating to investments, including buying, selling, subscribing for or underwriting securities as principal or agent. The definition of "financial promotion" is very broad and is taken to include, amongst other things, phone calls to potential investors, road-show presentations and presentation slides, "pathfinder" and formal prospectuses (under foreign law) and subscription agreements and placing letters. Whilst compliance with the regime is achieved where a person duly authorised by the UK Financial Services Authority (see further below) (i) makes the communication, or (ii) approves the content of the communication, in practice in most cases like this the company offering the securities and its advisors will seek to bring themselves within the scope of one of the many exemptions.

Prominent among these are the exemptions for "investment professionals" and "high net worth companies, unincorporated associations, etc" contained, respectively, in paragraphs 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (FPO). Whilst there are detailed criteria for each exemption, most marketing to institutional investors in the United Kingdom in cases like this is done in reliance on them. Other potentially useful exemptions include those for promotions to members and creditors of certain bodies corporate (FPO paragraph 43) or relating to the sale of a body corporate (FPO paragraph 62).

Whilst the FPO does contain certain exemptions for promotions to high net worth individuals – see in particular FPO paragraphs 48, 50 and 50A – in our experience these are quite restrictive compared with our understanding of certain "accredited investor", and similar, regimes in other jurisdictions. A particular feature is the need to establish at the very outset, before any communication of marketing or other promotional materials, that the individual concerned does indeed fall within the relevant exemption. If this is not done, and the necessary paperwork exchanged at the beginning of the process, there is a real risk of non-compliance, which unfortunately cannot be cured by obtaining the requisite documentation and confirmations at the time of signature of an investment agreement.

What about the UK Financial Services Authority (FSA)?

Under the United Kingdom's regulatory regime, a person may only offer securities in the UK if either they have an authorisation to do so from the FSA or an exemption applies. However, most companies benefit from broad exemptions when offering their own shares. Furthermore, investment banks and other broking firms offering securities into the United Kingdom as agent for their own corporate client will also be exempted where both:

  1. the transaction is entered into in compliance with the UK's "financial promotions" regime, mentioned above; and
  2. such investment bank or other broking firm does not offer the relevant securities into the United Kingdom, or offer to do so, from a permanent place of business maintained by them in the United Kingdom.

Accordingly, unless a UK prospectus is required, an offering by an overseas company into the United Kingdom - either as principal or through an investment bank or other broking firm based outside the UK - should not normally entail dialogue with the FSA.

What about liability?

There are both civil and criminal consequences of (i) failure to comply with the regimes relating to UK prospectuses and financial promotions, and (ii) carrying on regulated financial services activity in the United Kingdom without the appropriate authorisation from the FSA. In particular, subject to the court's discretion an agreement made following a breach of the financial promotions regime or by a person lacking the requisite FSA authorisation is unenforceable against the innocent party, who is entitled to compensation and the return of money or other property transferred by them.

Where a UK investor subscribes based on inaccurate or misleading information, they may be able to rely on one or more English law remedies in addition to any other redress which may be available to them. (A detailed description of those remedies, and other possible heads of criminal liability, is beyond the scope of this note.)


XYZ Corporation is incorporated in the British Virgin Islands. Its shares are listed on the Toronto Stock Exchange and it does not currently have any shareholders in the United Kingdom. The company is undertaking a brokered private placement, seeking to raise C$20 million. The broker - which has no offices in Europe - suggests contacting a half a dozen pension funds, asset managers and insurance companies based in London by phone on behalf of the company, to see if they would be interested in participating in the private placement.

There should not be any particular issues for XYZ Corporation or its broker from an English regulatory perspective. Neither the company nor its broker will be contacting the prospective investors from within the United Kingdom, so there is no need to worry about having (or not having) an authorisation from the FSA. The institutions should all be "qualified investors", so no UK prospectus would be needed. Furthermore, all such institutions should also be exempt, as "investment professionals", for the purposes of the FPO. Confirmatory warranties could be added to any subscription agreement, and suitable selling restrictions added to marketing documentation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.