Podcast
Questions and Answers
What must a prospectus contain to meet investor needs?
What must a prospectus contain to meet investor needs?
Who is responsible for preparing the prospectus?
Who is responsible for preparing the prospectus?
What type of liabilities can arise from omissions and misleading statements in a prospectus?
What type of liabilities can arise from omissions and misleading statements in a prospectus?
Which of the following is NOT a method of IPO marketing?
Which of the following is NOT a method of IPO marketing?
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What is one of the continuing obligations for companies post-IPO?
What is one of the continuing obligations for companies post-IPO?
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Which of the following is a periodic financial reporting obligation?
Which of the following is a periodic financial reporting obligation?
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What is a key component of corporate governance in the context of continuing obligations?
What is a key component of corporate governance in the context of continuing obligations?
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When conducting IPO marketing, which of the following is considered a traditional approach?
When conducting IPO marketing, which of the following is considered a traditional approach?
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What is a common reason for companies to issue shares?
What is a common reason for companies to issue shares?
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Which of the following is a source of private equity investment?
Which of the following is a source of private equity investment?
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What is a share subscription agreement primarily used for?
What is a share subscription agreement primarily used for?
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Which of the following describes a key step involved in the IPO process?
Which of the following describes a key step involved in the IPO process?
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Which of the following is NOT an applicable prospectus exemption?
Which of the following is NOT an applicable prospectus exemption?
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Which primary document provides protective provisions for investors?
Which primary document provides protective provisions for investors?
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What characterizes the SGX-ST Mainboard listing requirements?
What characterizes the SGX-ST Mainboard listing requirements?
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What is generally required during the IPO process after prospectus drafting?
What is generally required during the IPO process after prospectus drafting?
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Which of these describes exit mechanisms within a shareholders’ agreement?
Which of these describes exit mechanisms within a shareholders’ agreement?
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What is one of the main benefits of corporate venture capital investors?
What is one of the main benefits of corporate venture capital investors?
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Which of the following best describes the purpose of a prospectus?
Which of the following best describes the purpose of a prospectus?
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What is a cornerstone investor typically involved in during an IPO?
What is a cornerstone investor typically involved in during an IPO?
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Which of the following represents a continuing obligation for a company after an IPO?
Which of the following represents a continuing obligation for a company after an IPO?
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What is the role of roadshows in the IPO process?
What is the role of roadshows in the IPO process?
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Which of the following is NOT typically a method of IPO marketing?
Which of the following is NOT typically a method of IPO marketing?
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Which situation could lead to criminal and civil liability under a prospectus?
Which situation could lead to criminal and civil liability under a prospectus?
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Which of the following is a key aspect of corporate governance in the context of post-IPO ongoing obligations?
Which of the following is a key aspect of corporate governance in the context of post-IPO ongoing obligations?
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What is the most important characteristic of a prospectus as it pertains to investor protection?
What is the most important characteristic of a prospectus as it pertains to investor protection?
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What is one primary reason companies may opt for equity financing instead of increasing their debt?
What is one primary reason companies may opt for equity financing instead of increasing their debt?
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Which of the following is a type of exemptions for prospectus offers?
Which of the following is a type of exemptions for prospectus offers?
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What is a critical component of the shareholders’ agreement regarding investors?
What is a critical component of the shareholders’ agreement regarding investors?
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Which group represents a source of private equity investment?
Which group represents a source of private equity investment?
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In the IPO process, what is a prerequisite that may need to occur before due diligence?
In the IPO process, what is a prerequisite that may need to occur before due diligence?
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What regulatory body's approval is typically required for a company to be listed on the SGX-ST?
What regulatory body's approval is typically required for a company to be listed on the SGX-ST?
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Which aspect relates to the limitations on the number of shareholders in a private equity context?
Which aspect relates to the limitations on the number of shareholders in a private equity context?
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Which characteristic primarily differentiates the SGX-ST Catalist from its Mainboard?
Which characteristic primarily differentiates the SGX-ST Catalist from its Mainboard?
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Which document outlines the terms and conditions of share subscriptions?
Which document outlines the terms and conditions of share subscriptions?
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What aspect of public offer shares involves assessment by sponsors?
What aspect of public offer shares involves assessment by sponsors?
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Study Notes
Why issue shares?
- Increase the company's capital
- Reduce the company's borrowing
- Improve the company’s credit rating
Common methods of equity financing
- Private investment via subscription agreement (e.g. venture capital)
- Public offer of shares (e.g. Initial Public Offering (IPO))
Sources of private equity investment
- Friends and family fundraising rounds
- Angel investors
- Government schemes (e.g., Startup SG)
- Singapore accredited start-up incubators
- Corporate venture capital investors
Applicable prospectus exemptions
- Small offer
- Offer to no more than 50 persons
- Offer to accredited and/or institutional investors
Additional considerations
- Limit on the number of shareholders
- Approval of existing shareholders
Principal documents
- Share subscription agreement
- Sets out terms and conditions of subscription
- Includes warranties as to the state of the company
- Shareholder’s agreement
- Protective provisions for the investors - corporate governance rights
- Anti-dilution mechanisms
- Transfer restrictions
- Exit mechanisms
Public Offer of Shares
-
Singapore Exchange Securities Trading Limited (SGX-ST)
-
Mainboard:
- Higher entry and listing requirements
- Profitability or market capitalisation requirements
-
Catalist:
- No minimum quantitative entry criteria
- Assessment of suitability by approved sponsors
-
Mainboard:
Key steps for an IPO
- Pre-IPO restructuring
- Conduct due diligence
- Prospectus drafting
- Submission of listing application to the SGX-ST
- Submission of the draft prospectus to the Monetary Authority of Singapore (MAS)
- Review by and responding to queries from the SGX-ST and the MAS.
- Negotiation of legal documentation such as the underwriting agreement
- Registration of prospectus with the MAS
- Pricing and allocation of shares/units
- Admission of issuer the Official List of the SGX-ST and listing and quotation of shares/units
Prospectus
- Must contain all the information necessary for investors to make an informed assessment of the shares
- Prepared by the issuer and its advisers
- Criminal and civil liability for omissions and misleading statements
Methods of IPO Marketing
- Pre-IPO placements
- Cornerstone investors
- Roadshows
- Advertising/other publicity
Continuing obligations
- Disclosure of material information
- Periodic financial reporting
- Interested person transactions
- Corporate governance
Equity Financing Overview
- Issuing shares can be a good funding option when debt financing is insufficient, restricted or expensive
- Common equity financing methods include private investment through subscription agreements (e.g. venture capital) and public offers of shares (e.g. IPO)
Private Equity Financing
- Common sources of private equity include friends and family fundraising rounds, angel investors, government schemes (e.g. Startup SG), Singapore accredited start-up incubators, and corporate venture capital investors
- Applicable prospectus exemption methods for private equity financing include small offers, offers to no more than 50 persons, and offers to accredited and/or institutional investors
- Additional considerations for private equity financing include limits on the number of shareholders and approval from existing shareholders
Private Equity Financing Documents
- A share subscription agreement sets out the terms and conditions of the subscription, often including warranties about the company's state
- A shareholders' agreement sets out protective provisions for investors, often including corporate governance rights, anti-dilution mechanisms, transfer restrictions, and exit mechanisms
Public Offer of Shares
- The Singapore Exchange Securities Trading Limited (SGX-ST) has two boards: Mainboard and Catalist
- The Mainboard has higher entry and listing requirements, including profitability or market capitalisation, while the Catalist board has no minimum quantitative entry criteria but involves assessment of suitability by approved sponsors
IPO Key Steps
- Prior to an IPO, restructuring may be necessary
- The IPO process typically involves the following steps: conducting due diligence, drafting the prospectus, submitting a listing application to the SGX-ST, submitting the draft prospectus to the Monetary Authority of Singapore (MAS), reviewing and responding to queries from the SGX-ST and the MAS, negotiating legal documentation, registering the prospectus with the MAS, pricing and allocating shares/units, and admitting the issuer to the Official List of the SGX-ST
IPO Prospectus
- The prospectus must contain all information reasonably required by investors to make an informed assessment of the shares
- The prospectus is prepared by the issuer and its advisors
- There is criminal and civil liability for omissions and misleading statements in the prospectus
IPO Marketing Methods
- IPO marketing methods for public offers include pre-IPO placements, cornerstone investors, roadshows, and advertising/other publicity
Public Company Continuing Obligations
- Public companies have continuing obligations including disclosing material information, periodic financial reporting, managing interested person transactions, and adhering to corporate governance requirements
Copyright Notice
- The video content covered in these notes is protected by copyright laws and can only be redistributed, reproduced or edited with explicit permission from the Singapore Institute of Legal Education.
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Description
Explore the critical aspects of equity financing, including why companies issue shares and the common methods utilized for raising capital. This quiz covers private equity investments, applicable prospectus exemptions, and essential documents like subscription and shareholder agreements.
