Capital markets and structured investments

• Agreements for investment services concluded with non-institutional investors shall be in writing and only such investors may invoke invalidity resulting from failure to comply with the form.
• In intermediation agreements signed with non-institutional investors for the execution of operations in Angola, the possible application of foreign law may not have the consequence of depriving the investor of the protection ensured by the Angolan Securities Code provisions on information, conflict of interest and asset segregation.
• Brokers must establish, in writing, an internal policy that allows them, always, to know the nature of each client, as a non-institutional or institutional investor, and to adopt the necessary procedures for its implementation.
• The Broker's information duties to non-institutional investors are far more extensive than to institutional investors.

Assessment of the Adequate Character of the Operation:

In the case of non-institutional investors, the broker must ask the client for information regarding their knowledge and investment experience with regard to the type of security and derivative instrument or the service considered, to enable them to assess whether the client understands the risks involved.

If the broker considers that the transaction under consideration is not suitable for that client, they should advise the client in writing.

In the case of institutional investors, the broker may assume that, in respect of securities and derivatives, operations and investment services, the client has the necessary level of experience and knowledge to assess the appropriateness of the operation.

• Public Offers:

An offer addressed to at least 150 people who are non-institutional investors resident or established in Angola is qualified as public.

Offers of debt securities can generally be made to institutional/professional investors without a disclosure document. Offers of debt securities to retail investors require a disclosure document prepared in accordance with the Corporations Act 2001 (Cth).

If the debt securities are offered solely to professional investors and no admission to trading on a regulated market of the debt securities is sought, no prospectus would be required, in line with the Prospectus Regulation/Law.

The issuer prepares an offering circular with certain information on the issuer and the securities offered, without FSMA approval.

The Belgian Prospectus Law however requires issuers in certain circumstances to prepare and publish a short-form information note which complies with the minimum information requirement set out in the Prospectus Law.

An offer to the public (retail issue) of debt securities is made under a placement agreement entered into before the offering period starts. In principle, a prospectus must be prepared, and it must be approved by the FSMA.

Institutional/professional investors benefit from an exemption from registration of a public offer with the Brazilian Securities Commission (CVM). On January 16, 2009, CVM enacted Instruction No. 476 which establishes that a public offering of certain securities will no longer be subject to registration with CVM or have to comply with CVM provisions relating to public offerings of securities, as established by Instruction No. 400, dated as of December 29, 2003 if they comply with the following requirements:

• involve one of the securities mentioned in Instruction No. 476, including, but not limited to: commercial notes, banking credit certificates that are not the responsibility of a financial institution, debentures not convertible or not exchangeable into shares, real estate or agribusiness rights certificates issued by securitization companies registered with the CVM as publicly-held companies, quotas of close-ended investment funds and financial notes (letras financeiras);
• be only targeted to qualified investors (as defined in the applicable regulation of CVM);
• be intermediated by members of the securities distribution system;
• be marketed to a maximum of 75 qualified investors and subscribed or acquired by no more than 50 qualified investors; and
• not involve marketing efforts through stores, offices and establishments open to the public or public communication services.

Public offers to any other type/number of investors are not covered by that exemption and have to comply with the applicable requirements of CVM.

Prospectus requirements do not create a distinction between institutional/professional or other investors. Investors that meet the prescribed eligibility criteria as an ‘accredited investor’ or a ‘permitted client’ may purchase debt securities offered by way of private placement.

In most cases there are no differences in the recipient of the offer, with the exemption of the offer made to certain ‘qualified investors’, which – under compliance of certain rules – can be done privately (in opposition to the general rule which is the public offering).

Colombian law does not make any distinction between offering debt securities to institutional/professional and other investors.

Differences are further described in Act No. 256/2004 Coll., on Capital Market Undertakings. The entity issuing debt securities is bound by Sections 15 to 15r when offering debt securities to professional investors, eg some information duties.

The Prospectus Directive does not make a distinction between professional and other investors for the purposes of its disclosure requirements but does include different disclosure regimes by reference to the minimum denomination of a single security. If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

The Prospectus Regulation is implemented in Finland by Chapter 3 of the Securities Markets Act and the Decree of the Ministry of Finance on the Prospectus referred to in Chapter 3–5 of the Securities Markets Act. The Act does not make a distinction between professional and other investors for the purposes of its disclosure requirements, however, different methods of disclosure apply. In relation to the obligation to prepare a prospectus, see the following answers in Issuing and investing in debt securities.

According to the Act, anyone who offers securities to the public and seeks admission to trading on a regulated market of a security shall publish a prospectus of the securities prior to the entry into force of the offer or the admission to trading on a regulated market of a security and keep it available to the public while the offer is open.

The Prospectus Directive does not make a distinction between professional and other investors for the purposes of its disclosure requirements but does include different disclosure regimes by reference to the minimum denomination of a single security.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

The issuance of unlisted notes to professional investors does not trigger a prospectus requirement while public offers of unlisted notes to retail investors requires the publication of a prospectus. Prospectuses for retail offers are typically based on a special format (the German retail format) containing integrated or consolidated German language terms and conditions.

Only primary dealers are eligible to participate in Bank of Ghana auctions. 

Trading on the GFIM is limited to authorized dealers.  Investors must therefore buy and sell listed securities through brokers.

The Prospectus Directive does not make a distinction between professional and other investors for the purposes of its disclosure requirements but does include different disclosure regimes by reference to the minimum denomination of a single security.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

The Prospectus Regulation (EU) 2017/1129 (the Prospectus Regulation) became directly effective in Ireland from July 21, 2019. Two Delegated Regulations (Commission Delegated Regulations (EU) 2019/980 and Commission Delegated Regulation (EU)2019/979) have also been implemented. The European legislation puts in place a harmonized framework which is intended to ensure investor protection and to drive supervisory convergence at the EU level where securities are offered to the public or admitted to trading on a regulated market in an EU Member State.

Domestic legislation in the form of EU (Prospectus) Regulations 2019 (S.I. No. 380/2019) (the Irish Regulations) was enacted in July 2019. The Central Bank of Ireland also published new rules to replace its existing market abuse, transparency and prospectus requirements and consolidate them into a single statutory instrument. The Central Bank (Investment Market Conduct) Rules 2019 (S.I. No. 366/2019) came into force in July 2019 and are supplemented by guidance documents which are published on the Central Bank of Ireland’s website.

The EU (Prospectus)(Amendment) Regulations 2019 (S.I. No 670 of 2019) increased the threshold of total consideration to EUR8 million for a public offer of securities below which a prospectus would not be required for offers to the public.

The Finance (Tax Appeals and Prospectus Regulation) Act 2019 commenced on December 18, 2019, and amended the prospectus law provisions in Part 23 of the Companies Act 2014 to reflect the transposition of the Prospectus Regulation.

Under the Prospectus Regulation, one of the circumstances in which a prospectus must be produced is where an offer of securities is made to the public within the EU. An exemption from this requirement to publish a prospectus applies where offers are made solely to qualified investors (which are defined as persons or entities under the professional investor classification in the MiFID II Directive (2014/65/EU) (professional clients, persons treated as professional clients, and persons recognized as eligible counterparties)). However, if the debt securities are to be admitted to trading on an EU-regulated market, a prospectus would still be required.

The nature of the information that has to be disclosed in a prospectus for the issue of debt securities under the Prospectus Regulation depends on whether the issue falls within the retail regime or the wholesale regime.

If the denomination of the securities is equal to or above EUR100,000 (or the equivalent in another currency), the wholesale rules apply. If the denomination is under EUR100,000, the retail rules apply. Additional disclosure requirements apply for retail securities.

A different disclosure regime exists in the case of offers addressed to retail investors or institutional/professional investors (named 'qualified investors'). In the latter case, the Prospectus regulation clarifies that a prospectus is not necessary (unless the securities are subsequently traded on a regulated market).

The disclosure regime also depends on the denomination of the debt securities offered. To this extent, debt securities having a denomination amount that is lower than €100,000 are usually directed to retail investors and offered for subscription by means of a prospectus approved by CONSOB, whereby debt securities having a denomination that is equal to or higher than €100,000 shall be considered as a wholesale issue and a less rigid disclosure regime is applicable.

The main difference between offering debt securities to institutional/professional or other investors lies in the fact that

institutional and professional investors are more experienced and sophisticated and able to understand the information provided on the listing documents and make sound investment decisions.

Other investors, including retail investors, need more detailed information and advice to be able to understand the investment documents and make sound financial decisions. They also need more protection.

There is, generally, no essential distinction between professional and other investors. However, one distinction is the channel through which financial securities are issued; for instance, bonds issued through public offerings and bonds issued on the market through auction.

When financial instruments are issued through public offerings, an investment syndicate made up of brokerage firms handles the sale to investors and the general public. After they are issued, they are listed on the BRVM.

As for financial securities to be issued through auction, primary subscription of treasury bills and bonds is restricted to credit institutions, brokerage firms and regional financial investors with settlement accounts with the Central Bank. Other investors, whether they are private individuals or corporations, may also subscribe to bills and bonds on the primary market through credit institutions or brokerage firms established on the territory of the Union.

Securities issued through auction are not listed on the regional stock exchange (BRVM).

Offers exclusively to qualified institutional investors (QIIs) will constitute a private placement and will not trigger periodic disclosure obligations, provided that the securities allocated to such QIIs will not subsequently transfer to non-QIIs.

The Regulation (EU) 2017/1129 of the European Parliament of 14 June 2017 on the prospectus to be established when securities are offered to the public or admitted to trading on a regulated market, and repealing the Prospectus Directive (“Prospectus Regulation”) makes a distinction between professionals (qualified investors) and other investors for the purpose of its disclosure requirements. The obligation to publish a prospectus does not apply to the offers of securities to the public addressed solely to qualified investors. Moreover, this obligation does not apply neither to offers of securities whose denomination per unit amount to at least €100,000.

According to the provisions of the Luxembourg law dated 16 July 2019 on prospectuses for securities (“Prospectus Law”), the obligation to publish a prospectus does not apply to some types of investors, such as qualified investors, which are defined as:

• professional clients listed under Sections 1 to 4 of Annex II of Directive 2014/65/EU on markets in financial instruments (“MIFID II”), such as credit institutions and investment firms; and
• persons or entities that are, on request, treated as professional clients in accordance with Section II of that Annex II of MIFID II, or recognized as eligible counterparties in accordance with article 2430 of MIFID II, unless they have requested to be treated as non-professional clients.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

Under the Securities Act 2005, one of the circumstances in which a prospectus must be used is where an offer of securities is made to the public in Mauritius. An exemption from this requirement to publish a prospectus applies where offers are made solely to sophisticated investors (which include authorized entities, governments and central banks). However, if the debt securities are to be admitted to trading on the Stock Exchange of Mauritius, a prospectus would still be required.

Institutional investors are heavily regulated and subject to the supervision of regulatory authorities including the National Banking and Securities Commission (CNBV), National Retirement Savings System Commission (CONSAR) and Banco de México (BANXICO). Generally, institutional investors can only invest in those assets that applicable regulations explicitly permit.

The Securities Market Law defines institutional investors as any entity which, under federal law, is deemed as such or is a financial entity (that is, Mexican and foreign banks, broker-dealers, insurance companies, AFORES, investment funds, private pension funds, among others), including fiduciary divisions.

There is a difference between qualified investors and other investors.

The AMMC provides for a list of qualified investors which are a legal entities with the skills and resources to necessary understand the risks inherent to transactions with financial instruments.

Are presumed qualified investors:

• banks;
• undertakings for collective investment in transferable securities;
• insurance and reinsurance undertakings;
• pension and retirement organizations;
• deposit and management fund;
• venture capital investment undertakings;
• undertakings for collective investment in securitisation, as governed by the legislation on the said bodies.

Unless certain exclusions or exemptions apply, it is unlawful to offer debt securities to the public in the Netherlands or to request that they be admitted to trading on a regulated market operating in the Netherlands unless an approved prospectus has been made available to the public.

Some exclusions and exemptions that could apply and relate to the type of investors are that no prospectus will need to be made publicly available for the offer of debt securities to the public in the Netherlands in the event that:

• the securities are offered exclusively to qualified investors;
• the securities are offered to fewer than 150 persons, other than qualified investors;
• the securities on offer can only be acquired for an equivalent value of at least €100,000 per investor; or
• the denomination per security is at least €100,000.

The Financial Markets Conduct Act 2013 (FMCA) regulates the issuing of debt securities to retail investors. Retail investors are investors who do not fall within the definitions of wholesale investors in the FMCA. Wholesale investors include:

• investment businesses;
• a person who meets certain 'investment activity' criteria;
• a person who is 'large' (net assets or turnover of more than NZD5million);
• a government agency; and
• an eligible investor who certifies that they fall within certain criteria.

A person is also a wholesale investor if the minimum amount payable by the person on acceptance of the offer is at least NZD750,000.

Warning statements and acknowledgements need to be given to eligible investors. Otherwise issuers of debt securities to wholesale investors only need to comply with the conduct obligations in Part 2 of the FMCA, which apply to all financial service providers.

The Norwegian prospectus rules do not make a distinction between professional and other investors for the purposes of its disclosure requirements but do include different disclosure regimes by reference to the minimum denomination of a single security.

However, for more information, see Issuing and investing in debt securities – requirement for prospectus. Section 7-4 number 8 of the Securities Trading Act of 2007 states that the provision of section 7-2 does not apply where the offer is addressed to professional investors pursuant to further rules laid down by the ministry in regulations.

An offering that exclusively targets institutional investors is considered as a private offer and the regulations established in the Securities Act (Ley del Mercado de Valores) will not be applicable.

In that scenario, securities acquired by an institutional investor cannot be transferred to third parties, unless such third party is another institutional investor or the security is previously entered in the Securities Registry conducted by the Superintendence of Securities Market (SMV).

Nevertheless, institutional investors can decide whether to register before the Securities Registry under a special regime the following issues targeted to institutional investors: (i) the ones registered as such before the SMV; (ii) the ones registered before the U.S. Securities and Exchange Commission – SEC under Rule 144A or Regulation S of the U.S. Securities Act of 1933; (iii) the registered as such before other stock exchanges member of the Latin American Integrated Market (Mercado Integrado Latinoamericano – MILA).   

The Prospectus Directive does not make a distinction between professional and other investors for the purposes of its disclosure requirements, but it does include different disclosure regimes by reference to the minimum denomination of a single security.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

According to Portuguese law the offer of debt securities to qualified investors (credit institutions, investment firms, insurance firms, pension funds and managing firms etc.) is classified as a private offer. On the other hand, the offer of debt securities to an undetermined pool of investors is a public offer, provided the offer is not addressed to qualified investors only. Portuguese law only imposes requirements for disclosure by way of an approved prospectus for public offers.

The main difference is that if the institutional/professional investor qualifies for an exemption of registration (for example, a private placement exemption) registration of a prospectus is not required. However, a disclosure document, such as a private placement memorandum, should be used to comply with the anti-fraud provisions of the Uniform Securities Act and US securities laws.

The preparation and publishing of a prospectus are not mandatory for an offer of securities addressed solely to professional investors.

Professional investors are defined as clients who have the experience, knowledge and ability required to take investment decisions and assess the risks involved, and include, inter alios, the following:

• credit institutions;
• investment firms;
• other financial institutions authorized or regulated;
• insurance companies;
• Undertakings for Collective Investments In Transferable Securities (UCITS) and their management firms;
• pension funds and their management firms;
• traders; and
• firms which meet two of the following requirements:
  • aggregate balance sheet – €20 million;
  • net turnover – €40 million; and
  • equity – €2 million.

In some cases, securities can only be offered to qualified investors. Such offerings are possible without a prospectus and disclosure of information (but it is still required for listing by an exchange).

Securities for qualified investors can only be acquired or sold through a broker in some cases.

The main difference between offering debt securities to institutional/professional or other investors lies in the fact that institutional and professional investors are more experienced and sophisticated in understanding the information provided on the listing documents and make sound investment decisions.

Other investors, retail ones, need more detailed information and advice to be able to understand the investment documents and make sound financial decisions. They also need more protection from authorities entrusted with the regulation of the financial market.

There is, generally, no essential distinction between professional and other investors. However, one distinction lays on the channel through which financial securities are issued, for instance, bonds issued through public offerings and bonds issued on the market through auction.

When financial instruments are issued through public offerings, an investment syndicate made up of brokerage firms handles the sale to investors and the general public. After they are issued, they are listed on the BRVM.

As for financial securities to be issued through auction, primary subscription of treasury bills and bonds is restricted to credit institutions, brokerage firms and regional financial investors with settlement accounts with the Central Bank. Other investors, whether they are private individuals or corporations, may also subscribe to bills and bonds on the primary market through credit institutions or brokerage firms established on the territory of the Union.

Securities issued through auction are not listed on the regional stock exchange (BRVM).

There are additional requirements that would have to be met in order to offer debt securities to retail investors, including the preparation of prospectuses.

The Monetary Authority of Singapore has, however, recently introduced two new frameworks, namely the Bond Seasoning Framework and the Exempt Bond Issuer Framework which will enable retail investors to invest if certain criteria are satisfied.

The Slovak Securities Act makes no distinction between professional and other investors for the purposes of public offering of securities.

However, the obligation to publish a prospectus does not apply to an offer which is addressed solely to qualified investors (ie professional clients).

The disclosure requirements

Section 96 of the Companies Act sets out types of offers that are not offers to the public.

They are:

• an offer to persons that deal with securities in the ordinary course of business, banks, mutual funds, financial institutions and financial services providers and wholly owned subsidiaries of banks, mutual funds, financial institutions and financial services providers; and
• an offer where the total acquisition cost of the securities for any single offeree is equal to or greater than a certain threshold, which is currently ZAR1 million.

Where the offer is not to the public, the offer does not require a prospectus.

 

The legal regime on public offerings of securities in Spain is governed by the Regulation (EU) 2017/1129 of 14 June 2017 on the prospectus to be published when securities are offered to the public and admitted to trading on a regulated market (Prospectus Regulation), the Securities Market Law and Real Decreto 1310/2005, de 4 de noviembre, por el que se desarrolla parcialmente la Ley 24/1988, de 28 de julio, del Mercado de Valores, en materia de admisión a negociación de valores en mercados secundarios oficiales, de ofertas públicas de venta o suscripción y del folleto exigible a tales efectos (Royal Decree 1310/2005).

Definition of public offering

According to the provisions of Article 35 of the Securities Market Law and Article 38 of Royal Decree 1310/2005, an ‘offer of securities to the public’ or ‘public offering’ means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for those securities.

Any offer of securities in Spain which is deemed to be considered as ‘public’ under the terms of the above referred definition, would entail the obligation for the issuer to have approved by and filed with the Comisión Nacional del Mercado de Valores (Spanish Securities and Exchange Commission, CNMV), an informative prospectus (folleto informativo), comprising:

• a registration document (documento de registro) disclosing information about the issuer;
• a securities note (nota de valores) describing the main terms and conditions of the offering; and
• a summary note (resumen) thereto (the Prospectus) (the Prospectus should be published through the CNMV's website).

Exceptions to the definition of public offering

Notwithstanding the above, according to the provisions of Article 35 of the Securities Market Law and Article 38 of Royal Decree 1310/2005, the obligation to publish a prospectus would not apply to the following types of offerings (which, therefore, will not be considered as public offerings):

• an offer of securities exclusively addressed to qualified investors (as defined below);
• an offer of securities addressed to less than 150 natural or legal persons per EU member state, without including the qualified investors;
• an offer of securities addressed to investors who acquire securities for a minimum amount of €100,000 per investor, for each separate offer;
• an offer of securities the unit par value of which is not less than €100,000; and
• an offer of securities where the total consideration of the offer is less than €5 million within the EU, which limit shall be calculated over a period of 12 months.

Private placement

As opposed to a public offering, a private placement entails an offer to a relatively small number of selected investors as a way of raising capital. Every offer that does not qualify as a public offering will be considered a private placement. Thus, when any of the exceptions described above apply, the offer will not qualify as a public offering in Spain and, therefore, the issuer will not be required to complete any registration or filing or obtain any approval or consent from the CNMV, as Spanish competent authority, or from the relevant market, for making the offer available to investors in Spain.

Qualified investors

For the purposes of the exceptions referred to above, the principal categories of ‘qualified investors’ under Spanish law include:

• financial institutions and other entities which are required to be authorized or regulated to operate in the financial markets by a state, irrespective of whether it is a member state or a non-member state, including credit institutions, investment firms, insurance and reinsurance companies, collective investment schemes and their management companies, private equity funds, closed-ended investment schemes and their management companies, pension funds and their management companies, securitization funds and their management companies, commodity and commodity derivatives dealers and other institutional investors;
• national and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the International Monetary Fund, the European Central Bank, the European Investment Bank and other institutions of a similar nature;
• companies meeting at least two of the following capacity requirements on an individual basis:
  • total balance sheet total equal to or above €20 million;
  • annual net turnover equal to or above €40 million; and
  • own funds equal to or above €2 million;
• institutional investors, beyond those specified in the bullet point above, whose main activity is to invest in securities and other financial instruments; and
• individuals and small- and medium-sized companies which request in advance to be treated as qualified investors and expressly waive their treatment as retail customers, and which are registered as such in the relevant client registries of the relevant entities providing investment services.

The Prospectus Directive (implemented in Swedish law mainly through the Financial Instruments Trading Act 1991 (Lag (1991:980) om handel med finansiella instrument)) does not make a distinction between professional and other investors for the purposes of its disclosure requirements but does include different disclosure regimes by reference to the minimum denomination of a single security.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

Under the laws of Thailand, offering debt securities to institutional/professional or other investors is differentiated by whether the offering is by way of private placement or public offering.

A private placement of debt securities can be made by way of:

• limited offer of debentures:
  
  • to not more than ten investors within a four month period – calculation of investors will base on the actual beneficiary whose shares may be held via broker, dealer or underwriter;
  • to Institutional Investors;
  • to High Net Worth (HNW) Investors regardless of whether the offer is made to Institutional Investors or not;
  • to existing creditors for purpose of a debt restructuring;
  • which are made with specific relaxation from the Securities and Exchange Commission (SEC); or
• limited offer of bills:
  • to Institutional Investors (short-term bills);
  • to High Net Worth (HNW) Investors whereby an issuer shall be a financial institution, securities company or a life insurance company regardless of whether the offer is made to Institutional Investors or not (short-term bills); or
  • to limited to persons related to the issuer which does not exceed 10 bills at any time.

For the purposes of the above:

• 'Institutional Investors' means specific institutional investors, e.g. finance companies, securities companies, insurance companies and mutual funds.
• 'HNW Investors' means a juristic person or a natural person having shareholdings or investments in securities or derivatives contracts reaching the amount specified by the Securities and Exchange Commission (SEC), as follows:
  
  • for a juristic person HNW – shareholders' equity of at least THB100 million, or direct investment in securities of at least THB20 million or at least THB40 million (including deposits) based on the latest audited financial statements; and
  • for a natural person HNW – net assets of at least THB50 million (excluding main residence), annual income of at least THB4 million, or funds for direct investment in securities of at least THB10 million or at least THB20 million (including deposited funds).

The laws of Thailand also make a distinction between the offering of securities by Thai and non-Thai issuers.

The main distinction between the offering of debt securities by private placement or public offering largely concerns approval and disclosure requirements.

The public offering of debt securities requires the approval of the SEC, rating requirements and detailed disclosure and reporting requirements. Private placement is simpler as rating requirements and approval from SEC are not normally required.

Ukrainian law does not yet have sophisticated regulation in respect of institutional/ professional investors. There is, however, the draft law 'On Amending Certain Legislative Acts of Ukraine in relation to Investment Attraction and Introducing of New Financial Instrument’ approved by the Ukrainian Parliament in the first reading relating to investor (client) categorization. In particular, investors will be distinguished between qualified and non-qualified investors in line with Markets in Financial Instruments Directive II 2014/65/EU (MiFID II). The nature of the investor, their experience in the financial market and awareness about market products are relevant to the determination of the category. As a result, the different protection regimes will apply to investors. Non-qualified investors will be protected with the highest degree of regulatory protection, while qualified investors will have less protection.

On 25 June 2019, the Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 (SI 2019/1043) were published. These Regulations make UK legislation compatible with the EU Prospectus Regulation (2017/1129) (Prospectus Regulation) and ensured that the Prospectus Regulation is effective and enforceable in the UK from 21 July 2019.

Under the Prospectus Regulation one of the circumstances in which a prospectus must be produced is where an offer of securities is made to the public within the European Union. An exemption from this requirement to publish a prospectus applies where offers are made solely to qualified investors (which are defined as persons or entities under the professional investor classification in the MiFID II Directive (2014/65/EU) (professional clients, persons treated as professional clients, and persons recognised as eligible counterparties)). However, if the debt securities are to be admitted to trading on an EU-regulated market a prospectus would still be required.

The nature of the information that has to be disclosed in a prospectus for the issue of debt securities under the Prospectus Regulation depends on whether the issue falls within the retail regime or the wholesale regime.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

The Prospectus Directive does not make a distinction between professional and other investors for the purposes of its disclosure requirements but does include different disclosure regimes by reference to the minimum denomination of a single security.

If the denomination of the securities is equal to or above €100,000 (or the equivalent in another currency), the ‘wholesale’ rules apply. If the denomination is under €100,000, the ‘retail’ rules apply. Additional disclosure requirements apply for retail securities.

In summary, the promotion of debt securities or trading service to any person in the UAE requires a Securities and Commodities Authority (SCA) license or approval. The SCA does, however, make certain exclusions from this requirement:

• There is a distinction between institutional ‘Qualified Investors’ and other investors for the purposes of offering and selling debt securities under UAE law, and promoting to (or introducing) institutional investors and licensed financial institutions, or government bodies (and entities owned by them) is permitted.
• Acting on the basis of a reverse solicitation may also be permitted in certain circumstances.

However, promoting or introducing in relation to UAE retail or high net worth individuals is not permitted without the relevant license or approval (which may involved a locally authorised firm).

If in any doubt as to the scope or application of an exemption, we would always recommend contacting the SCA directly to clarify the latest position in this regard.

The US debt securities market is dominated by institutional investors. Non-institutional investors typically participate in the debt securities market through institutional vehicles such as Exchange Traded Funds (ETFs) and mutual funds.