The Amsterdam Stock Exchange (Euronext Amsterdam) has announced new rules for initial public offerings (IPOs). The reform was initiated after the IPO of internet service provider World Online in March 2000 which gave rise to much debate and litigation.
The new rules are tougher in several respects:
- An issuing company is no longer allowed to advertise the IPO after publication of the prospectus.
- The rules provide for more detailed lock-up regulations that apply to founders and directors.
- Special rules apply to new economy companies.
- Euronext Amsterdam has full discretion to decide whether a company is a new economy company.
- Sale of shares by founders or directors before or at the IPO must be mentioned in the prospectus.
- Also, the prospectus must state any involvement of the founders and directors with bankrupt companies in the previous five years, and any personal bankruptcies.
- The management has to identify any relevant risks in a paragraph containing 'Management Discussion & Analysis'.
- The prospectus must contain a paragraph on 'Management Discussion & Analysis', in which management is required to identify any relevent risks.
As for further changes to the rules, the end is not yet in sight. According to a spokesman for Euronext, future harmonization of the Amsterdam, Brussels and Paris rules will lead to the introduction of more new rules.
Gijs van Leeuwen
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