The Concept of a Public Offer
The foundation of an IPO is the public offer of securities. Under the Law on Securities Market, a public offer is a proposal to at least 100 persons, or to an unspecified number of persons, for the direct or indirect sale of securities in the name of the issuer. A proposal of the same kind connected with the securities of an unlisted enterprise, raised in the name of a person who is not the issuer, is also treated as a public offer. The issuer must conclude with a brokerage company or a licensed financial institution an agreement on the offer of securities for their placement. It is important that an offer and sale only to experienced investors is not treated as a public offer, while during a public offer the holder of securities of another issuer may also propose to the issuer that his or her own securities be included in the offer. This threshold definition determines from the outset whether the transaction falls within the strict public-offer regime or remains a private placement.