WORKSHOP ON proposed CMA regulations OFFERS OF

What is offering securities? An offer of securities means:
Issuing securities
Inviting the public to subscribe for securities
Making a securities advertisement for a new issue of securities
Making any statement or communication that has the effect of selling, issuing or offering securities
May be a public offer or an exempt offer
An offer of securities in Lebanon must comply with the Regulation
Covers any type of securities regulated by the Authority Offers of Securities 3<br>

public offers An offer of securities for subscription by public investors made under the Law and the Regulation
All offers of securities are public offers unless qualify as an exempt offer
Must be made through an approved institution licensed for dealing and advising on corporate finance
Must file application with CMA including a draft prospectus
CMA must approve the offer + the prospectus
Offeror must appoint a financial advisor (AI) to review its application
Advisor must confirm to CMA that offeror meets the requirements Offers of Securities 4<br>

PUBLIC OFFER APPLICATION REQUIREMENTS File application with CMA at least 1 month* before proposed date of offer:
Application form
Draft prospectus
Checklist for prospectus requirements
Notarized copy of any document incorporated by reference
Certificate from legal counsel re issuance of securities
Letter from financial advisor re review of application
Signed copy of any expert’s report referred to in prospectus
Any other information required by CMA
Details in Annex 1
CMA has 1 month to review application and give notice of decision. Offers of Securities 5<br>

prospectus To contain all information necessary to make an assessment of the issuer, its business, financial position, management + details of the type and terms & conditions of the securities
Mandatory disclaimer that CMA not responsible for contents
See Annex 2 for minimum contents
CMA may set additional requirements for issuers in specific business or industry
Prospectus requirements for a CIS / investment fund will be in CIS Regulation
CMA must approve prospectus prior to publication
May defer decision if further analysis needed
May refuse approval if 1) requirements not met, or 2) CMA considers an offer is not in the public interest Offers of Securities 6<br>

liability for prospectus Prospectus is a binding contract between issuer and investor
Liability for any false or misleading information, or omissions:
Offeror
Chairman and members of governing body of the offeror
Senior management of the offeror
A person who accepts, and is stated in the prospectus to accept, responsibility for the prospectus or part of it (experts)
Any other person who has authorized the contents of the prospectus or any part of it.
4 defenses available, including a “reasonable enquiries” defense Offers of Securities 7<br>

PROSPECTUS REQUIREMENTS Offers of Securities 8 + Declaration of the Directors<br>

other requirements A Prospectus must be made public at least 2 days before offer starts
Must be posted to issuer’s website + made available in printed form
Supplementary prospectus is required if a material change or new material information arises
Must include all details of change or new information
File with new Directors’ Declaration
CMA must approve it
Subscribers have right to cancel subscriptions for 1 week after supplementary prospectus is published Offers of Securities 9<br>

exempt offers of securities Exempt offer – any offer that qualifies for an exemption from the public offer requirements
Must comply with the Regulation
including requirements for the type of exempt offer
Exempt offer of CIS must also meet requirements of CIS Regulation
May be made through an approved institution or, in many cases, by an issuer directly
Also a person who has acquired securities in an exempt offer may resell them in another exempt offer
Marketing of exempt offers to public is prohibited
Can market to professional clients only Offers of Securities 10<br>

exempt offer requirements Issuer or AI must notify CMA of a proposed exempt offer at least 14 days before the proposed date of offer
Notice of an exempt offer > see Annex 4
Must file all disclosure documents for the offer + a summary of all key information in the documents > see Annex 5
CMA will review all notices of exempt offers
May require changes to disclosure documents
May exercise same powers as for a public offer, including delaying or prohibiting an offer it considers is not in the public interest
If CMA has no changes or objections then offeror may proceed with offer after 14 days
3. Disclosure documents must be provided to all offerees Offers of Securities 11<br>

list of exempt offers Offers of Securities 12<br>

Private Placements Private sale of issue of securities to raise equity or debt financing for a company under exemption # 3 (sale to a maximum of 20 professional investors + minimum subscription of $100,000)
File private placement memorandum with notice of exempt offer at least 14 days before date of offer
must include all information necessary to asses issuer + the securities
include a summary of key information that must be in memo > see Annex 5 B
Offer must be made through an approved institution
CMA will review memorandum and may exercise any powers it has under a public offer
Offeror is responsible and liable for contents
Memorandum must be sent to all offerees Offers of Securities 13<br>

offers of foreign securities Foreign new issues of securities could be sold in 3 ways:
Public offer in Lebanon under this Regulation.
Exempt offer in Lebanon that qualifies under this Regulation.
Distribution of a CIS / fund under the CIS Regulation.
In all cases the sales of securities will be subject to the provisions of the Law and Regulations (notably the Business Conduct Regulation).
Sales of foreign securities to Lebanese clients by foreign firms will be subject to the requirements of the Licensing Regulation on soliciting securities business in Lebanon. Offers of Securities 14<br>