Is it possible to advertise share issues?

The entities offering securities must comply with regulations governing the advertising of public offerings and the promotion of their activities. These regulations stem from the Public Offering Act and Regulation 2017/1129 of the European Parliament and the Council, defining, among other things, the conditions for advertising a securities issue within the European Union.

Definition of “advertising” of a public offering

According to the Law on Public Offering, advertising should be understood as a concept derived from Article 2(k) of Regulation 2017/1129. Public offering advertising means a communication with both of the following characteristics:

• relating to a specific public offering of securities or to admission to trading on a regulated market;
• intended to promote specifically a potential subscription or potential acquisition of securities.

This definition is quite broad. Accordingly, any information provided to the public that meets these criteria will be considered public offering advertising.

Rules for advertising a public offering

Pursuant to Article 53 of the Law on Offering, advertising of a public offering covered by the exemption under Article 1(4)(b) of Regulation 2017/1129 (i.e., an offering directed to fewer than 150 persons in the territory of a single member state) is subject to restrictions:

• the advertisement may only be addressed to a specified number of persons, not exceeding 150 addressees;
• the advertisement may not be addressed to an unspecified addressee, meaning that it may not be made available to a wide, anonymous audience.

For an offeror of securities (e.g., shares), this means that if it does not want to draft an information document/memorandum/prospectus for the purpose of conducting a public offering, taking advantage of the exemption referred to in Article 1(4)(b) of Regulation 2017/1129 (i.e., an offering to fewer than 150 persons in the territory of a single member state), advertising of that offering will also be allowed only to a specific number of persons not exceeding 150.

The desire to advertise a public offering to an unspecified addressee excludes the possibility of waiving the preparation of an information document/information memorandum/prospectus.

Information contained in the advertisement

Where a prospectus is not required to be made available pursuant to the provisions of Regulation 2017/1129, the advertising content shall be consistent with the information contained in the information memorandum or other document required pursuant to the provisions of the Law or Regulation 2017/1129 made available to the public, or with the information that should be included in such memorandum or document in accordance with the provisions of the Law, Regulation 2017/1129 and delegated and implementing acts issued pursuant thereto, when the information memorandum or such document has not yet been made available to the public, as well as not to mislead investors as to the situation of the issuer and the evaluation of the securities.

Where a public offering requires the release of a prospectus, publicity may not begin until the appropriate application has been formally submitted to the Financial Supervisory Commission, in accordance with Articles 27(1) and 30(1) of the Act on Offering. This is a step that safeguards the transparency and reliability of information reaching investors.

Penalty for violating the rules

Public offering advertising regulations are designed to ensure that communications to investors are reliable, transparent and directed to the right audience. An ASI that intends to promote an offering without drafting an information document/memorandum/prospectus must limit the audience and make sure that the message is not available to the public. If these rules are violated, the entity may be fined up to PLN 10,000,000.00 or even imprisoned for up to 2 years (or both together).