PRELIMINARY REQUESTS and ADDITIONAL SALES
Companies in the public offering process have the opportunity to collect tentative bids before the sale and to make additional sales in case of excess demand after the sale.
The investment/brokerage house authorized by the issuer company may opt to collect preliminary requests from buyers within a pre-determined price range prior to the approval of the prospectus by the CMB. However, these efforts are non-binding and they do not create a liability on the buyers’ side.
In order to process preliminary requests, the prospectus should already be submitted to the CMB pending approval. If desired, the collection of the preliminary requests could be processed without a public announcement. The Articles of Association, financial statements from the last three years, as well as the corresponding auditors’ reports, and annual reports of the issuer company should be readily available at the location(s) where the preliminary requests are to be collected, and they should be provided free of charge upon request.
In the case an announcement is made prior to the collection of the preliminary requests, priority and/or an incentive may be bestowed on the requesters during the actual sale of the shares.
The inception and conclusion dates of the preliminary request collection period should be reported to the CMB by the investment/brokerage house at least one day before the inception date. The duration of the preliminary request collection period may not exceed ten business days. The results of the preliminary requests should be reported to the CMB within the following two business days after the conclusion of the collection period. The public disclosure of these results and/or their utilization for promotion/publicity purposes are prohibited by the CMB.
In the event that finalized purchase requests exceed the amount of shares publicly offered, and providing that the prospectus includes the required disclosures regarding the right to offer additional shares, if appropriate, companies are eligible to offer additional shares in the amount up to 20% of the nominal value of the shares primarily offered in order to fulfill the requests. However, the amount of incumbent shares available for such an additional offering has to be pre-defined and be included in the prospectus and the sales announcement. Shares allocated for the additional sale could be directly offered by the incumbent shareholders or they could be borrowed from them by the investment/brokerage house.
The amount of shares allocated for the additional sale may not exceed the 20% of the nominal value of the shares primarily offered.