How investors can use a company’s pre-listing statement

As a general rule, a company offering securities is mandated to provide disclosure documents to potential investors. One such document is a Pre-Listing Statement which is a document that contains facts about the company, its finances, management and other information. The Pre-Listing Statement contains information and particulars given in compliance with the exchange listing requirements and is necessary to enable investors to make an informed assessment of the financial position of the issuer and prospects of the securities. The Pre-listing Statement does not constitute an offer for the sale of, or subscription for, or the solicitation of an offer to buy or subscribe for the securities, but is produced for information and compliance purposes ahead of the listing and commencement of trading of the securities on an exchange.

Some statements in the Pre-Listing Statement as well as written and oral statements that the Issuer or their respective representatives make from time to time in the Pre – Listing Statement may be deemed to be “forward-looking statements”. Forward-looking statements include statements concerning the Issuer’s plans, objectives, goals, strategies and future operations and performance and the assumptions underlying these forward-looking statements. When relying on forward-looking statements, prospective investors should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Issuer and the Guarantor operate. Such forward-looking statements speak only as of the date on which they are made.

The terms of the listing outline a background to the listing including the rationale behind the listing that is the principal reasons for the listing and anticipated benefits to the business and its shareholders, brief history and nature of the company’s business, information on the guarantor and any relevant internal processes undertaken by the issuer.

It is imperative for the investors to know the historical as well as projected financial information of the issuer prior to the listing. The Pre- Listing statement should contain a comprehensive income, statement of financial position and a statement of cash flows. The investors are also informed on how the proceeds from the listing will be used.

Investors and readers of the Pre-Listing Statement should note that the Pre-Listing Statement focuses specifically on information pertaining to the listing. The directors, whose names will be listed in the statement, collectively and individually accept full responsibility for the accuracy of the information contained therein and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the Pre-Listing Statement contains all necessary information.

Basically, investors can use a pre-listing statement to evaluate whether or not an investment makes sense for them based on their goals, risk tolerance and asset allocation strategy. Though most investors do not read the PreListing statement the summary information and discussion of risks can be instrumental in making wise choices for their portfolio. Investors are always advised to carefully read a prelisting statement and where possible to consult their financial advisors for expert advice in interpreting the contents of a pre-listing statement.

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