Prospectus preparation is regulated by the Georgian Law on Securities Market and is the decisive stage of a public offer. A public offer is a proposal to at least 100 persons, or to a previously unspecified number, for the direct or indirect sale of securities in the name of the issuer; offers only to experienced investors are not public offers. The issuer must conclude an offering contract with a brokerage company or licensed financial institution, and a public offer proceeds only upon or after the publication of an approved emission prospectus.
Contents of the preliminary prospectus
To have the prospectus approved, the issuer submits to the National Bank of Georgia an application and 3 copies of the preliminary prospectus signed by the supervisory board chairperson and an authorised representative. The preliminary prospectus contains information about the issuer — name, address, date of foundation, the quantity and class of securities already placed, the controlling holders and the members of its governing body — together with a characterisation of the issuer's activity over the last 2 years and the principal related risks; where the issuer has operated for less than 2 years, this covers the period from foundation to the application. It is accompanied by the auditor-confirmed individual — and, where they exist, consolidated — financial statements for the last 2 financial years. A separate description covers the class and quantity of the securities to be issued, the subscription procedure, the interest calculation method, term and redemption conditions, and the expected use of the proceeds.
Review procedure and timelines
The National Bank of Georgia reviews the offer application within 15 days: where the preliminary prospectus does not comply with the law or the bank's rules, it requests additional information or documents in writing, and the corrected application is reviewed anew; otherwise it approves the prospectus or refuses in writing. If the issuer receives no information within that period, the prospectus is deemed approved. Current financial information in the final prospectus must not be older than 18 months, and the description must correspond to the most recent date. No later than 10 days after approval, the issuer also submits the document on the terms of the offer. Approval confirms only formal compliance — not the accuracy of the content or the value of the investments — and a statement to that effect must appear on the front page of every prospectus.
The prohibition on distribution before approval
It is prohibited to distribute the prospectus before its approval by the National Bank of Georgia, and equally prohibited, before approval, to offer the sale of the security or accept an agreement on its purchase in the issuer's name. Where the issuer is an accountable enterprise that has submitted all required reports over the last 2 years, the bank may refrain from requiring a full prospectus or require only part of the information.
Amendments and suspension of the offer
If a material circumstance changes during the offer period — for example, the quantity of securities or the final deadline — the issuer submits an amendment and publishes a notice in a newspaper or by another means determined by the bank. Subscribers may then refuse the securities, and the issuer must return the price without deduction within 10 days of the refusal. If the bank learns that a material circumstance in the approved prospectus is incorrectly stated or omitted, it may suspend the prospectus and set a deadline for correction, and, failing correction, cancel it; the public offer is then prohibited and buyers may refuse their purchases.
Liability and the emission report
Liability for a misstated or omitted material circumstance in the final prospectus may be imposed on the issuer, the authorised representative and the supervisory board chairperson solidarily, as well as on brokerage companies acting in the issuer's name and auditors or experts consenting to be named as authors of a part of the prospectus. An agreement limiting this liability is void unless stated on the cover; damaged buyers may claim compensation and cancel the purchase. Within 1 month of completion of the offer, the issuer submits a report on the emission and placement with the exact quantity and price of the securities offered and sold, reviewed within 14 calendar days.
Frequently asked questions
Within what period does the National Bank review the application?
Within 15 days of submission; if no information is sent within that period, the prospectus is deemed approved.
When is the emission report submitted?
Within 1 month of the completion of the public offer; the National Bank reviews it within 14 calendar days.
How current must the financial information be?
Not older than 18 months in the final prospectus.
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