Basic concepts:
1. What is a public offering?
A public offering of securities means a communication addressed to recipients in any form and by any means, presenting sufficient information on the terms of the offer and the securities offered to enable an investor to decide whether to acquire or subscribe for those securities.
To qualify a communication as a public offering it is enough to make available, for example via the Internet, the press or TV, information about:
- the entity conducting the offer, and
- the subject of the offer, i.e. the type, series, number, nominal value and issue price of the securities offered
Since 21 July 2019, a communication with the above content addressed to at least two persons is considered a public offering.
2. What can be the subject of a public offering?
Under the Public Offering Act, only securities may be the subject of a public offering.
Securities include, among others, shares, subscription warrants and bonds.
3. Who may conduct a public offering?
A public offering may be conducted by:
- the issuer, i.e. an entity that issues new securities and intends to offer them to more than one party
- the offeror, i.e. an entity that intends to resell securities it already holds and offer them to more than one party
4. Does conducting a public offering always require an investment firm?
Not always.
There is no obligation to involve an investment firm for an offer:
with a value of up to EUR 1,000,000, or
addressed exclusively to qualified investors, or
addressed to fewer than 150 natural or legal persons other than qualified investors, or
referred to in Article 1(4)(e) or (h)–(j) of Regulation (EU) 2017/1129.
5. When does a public offering start?
A public offering of securities starts when information related to the public offering that is sufficient for an investment decision is first made available (information constituting a public offering — see Q. I.1).
Making information about a public offering available means publishing that information via, among other channels, the Internet, the press or TV, so that the communication can reach an unrestricted circle of addressees. Where a public offering is addressed to a specified addressee, making the information available means transmitting it to the parties to whom the offer is directed.
6. For how long may a public offering be conducted?
The rules do not set a fixed time frame for conducting a public offering. A public offering starts when information sufficient for an investment decision is first made available (when a public offering starts — see Q. I.5), and ends on the last day of the subscription or sale period.
There is, however, a limit on the period during which subscriptions for the offered securities may be accepted.
For:
- shares,
- subscription warrants,
- bonds
— it may not exceed 3 months from the start of accepting subscriptions.
7. May a public offering be advertised?
Yes. You may advertise a public offering that has already started as well as one not yet announced. An advertisement of a public offering means a communication that meets both of the following conditions:
it relates to a specific public offering of securities or to admission to trading on a regulated market,
it aims in particular to promote a potential subscription for or acquisition of securities.
8. What should you remember when advertising a public offering?
When advertising a public offering you should remember that:
marketing communications must not contradict information about the public offering and the securities offered as set out in the offering document;
advertising of a public offering for which a prospectus must be made available may not start before a prospectus approval application is filed with the KNF (Polish Financial Supervision Authority);
advertising of a public offering addressed to fewer than 150 persons may be directed only to those persons (more on advertising such an offer — see Q. II.1);
activity by third parties engaged to advertise a public offering, e.g. so-called influencers, consisting in encouraging and promoting the securities offered, must not be directed at individually identified addressees, because such activity would be classified as carrying on brokerage business without authorisation, which is subject to criminal sanctions.
9. Must an intention to advertise a public offering be notified to the KNF?
No. Since 30 November 2019 there is no obligation to notify the KNF of an intention to advertise a public offering.
10. Is an offer addressed to fewer than 150 persons a public offering?
Yes. Since 21 July 2019 the definition of a public offering has changed so that an offer addressed to at least 2 persons is a public offering. Consequently, an offer addressed to fewer than 150 natural or legal persons other than qualified investors, often called a “private placement” in market practice, is a public offering.
A qualified investor is an investor who has the experience, knowledge and expertise to make independent investment decisions and properly assess the risks involved. Qualified investors include, among others, investment firms, banks, insurance undertakings, investment fund companies (TFI) and institutional investors whose business includes investing in financial instruments.
11. What documents must be made available in connection with a public offering?
Conducting a public offering requires preparing and publishing a prospectus previously approved by the KNF.
Certain exceptions apply. The most important are:
1) by offer value:
a) offers below EUR 100,000 — no obligation to publish any offering document
b) offers from EUR 100,000 to EUR 1,000,000 — obligation to publish an information document that is not approved by the KNF
c) offers from EUR 1,000,000 to EUR 2,500,000 — obligation to publish an information memorandum not approved by the KNF
2) by the circle of addressees, regardless of offer value:
a) offers addressed to no more than 150 natural or legal persons other than qualified investors (qualified investor — see Q. I.10) — obligation to provide the parties to whom the offer is directed with:
a purchase proposal — where the subject of the offer is bonds
an offer to subscribe for / acquire shares — where the subject of the offer is shares.
Note! Even if the offer value would otherwise require an information document (e.g. EUR 900,000) or a prospectus (e.g. EUR 3,000,000), those documents are not prepared if the offer is addressed to no more than 150 persons.
However, if the offer referred to in point (a) above is a further such offer conducted within the previous 12 months, you must check whether the total number of persons to whom such offers will be addressed does not exceed 149. Otherwise an obligation arises to publish an information memorandum that must be approved by the KNF.
When counting the persons to whom such public offerings will be addressed, take into account the number of persons to whom previous such offerings of the same type of securities were addressed in the previous 12 months (how to count the previous 12 months — see Q. V.7) and the number of persons to whom the current offer will be addressed.
If the total number of persons to whom:
the current offer is addressed, and
previous such offers were addressed
— exceeds 149 persons — an obligation arises to publish an information memorandum that must be approved by the KNF.
12. Does publishing the offering document after a public offering has started allow that offering to continue?
No. The offering document must be made available together with announcing the public offering if the rules require that document (offering documents — see Q. I.11).
Making the offering document available means publishing it on the website of the issuer, the offeror or the investment firm intermediating in the public offering of those securities (entities conducting the offer — see Q. I.3).
Starting an offer without simultaneously making the offering document available is a breach of law and is subject to criminal sanctions. If the issuer does not voluntarily discontinue the offer, the KNF may apply a supervisory measure in the form of a ban on continuing that offer.
Later publication of the offering document does not change the fact that the offer was conducted in breach of law and therefore may not be continued.