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Pre-Deal Research Reforms.

15 February, 2012

 

On October 31, 2011, the new pre-deal research rules came into effect, which expanded the scope of conflicts-of-interest requirements governing analyst conduct when preparing investment research reports. 
 
The key changes to the regulatory framework for pre-deal research are:
 
  • sponsors are required to take reasonable steps to ensure that all material information, including forward-looking information (whether quantitative or qualitative) disclosed or provided to analysts, is contained in the relevant prospectus or, where the proposed listing does not involve a prospectus, the relevant listing document, offering circular or similar document (paragraph 5.10 of the Corporate Finance Adviser Code of Conduct); and 
  • paragraph 16 of the Code of Conduct regulating the conduct of analysts and their employers is now extended to PreIPO Research Reports. The SFC has confirmed that analysts may conduct their own due diligence when preparing pre-deal research reports, such as undertaking site visits.

Update: Rule 8.21B has been repealed with effect from 1 February 2012. This means that inclusion of a profit forecast / estimate in an IPO prospectus will no longer be a prerequisite for the inclusion of profit forecasts in pre-deal research reports. 
 
For the revised Code of Conduct for Persons Licensed by or Registered with the SFC, please click here: 
 
For the Corporate Finance Adviser Code of Conduct, please follow the link: 
 
 

 

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