While being a public company is not easy, issuers accept the added costs and challenges because of the added benefits, like liquidity and increased access to capital.
However, regulators have recently increased the requirements for issuers who access that capital through a private placement. Issuers are struggling to meet this burden, which includes asking their investors intrusive questions or requiring more paperwork to be completed.
To help ease this strain, Clark Wilson LLP has developed an online system that makes it easier for investors to complete subscription agreements and automatically determine whether they are eligible for the offering.
One of the regulators’ main concerns is that the current subscription process is archaic. Investors are often presented with confusing subscription agreements that require in-depth reading and are difficult to understand. As such, regulators compel issuers to do more to ensure that the investors are eligible for the offering.
With our new system, investors will simply complete an online questionnaire, which generates a complete downloadable subscription agreement.
After reviewing the complete subscription agreement with their advisors, investors just need to sign the subscription agreement and return a copy to the issuer.
This system has key advantages for issuers and investors:
- Easy to use
- We have developed the online questionnaire to be user-friendly. Instead of presenting every option to the investor, the questionnaire presents only relevant options. For example, if the investor is an individual (i.e., not a corporation), he or she is not asked questions that apply only to corporations.
- Eliminates mistakes
- One of the most frustrating and costly aspects of conducting a private placement is going back to investors who incorrectly completed their subscription agreements. The questionnaire is designed so that an investor must answer all relevant questions prior to downloading the subscription agreement. Also, as the investor is not writing on a paper copy, this system eliminates any errors that may result from transcribing the information.
- As our new system is automatic, it provides cost-certainty to the issuer for those investors who complete their subscription agreements online.
If you have any questions about our new system or would like to see a sample, please contact any member of Clark Wilson’s Corporate Finance & Securities Group.