Initial public offerings are complex capital market transactions with high value. The preparation of the company, the drafting of the necessary documentation, the assessment of selling opportunities, the organization of marketing activities, and the monitoring of secondary market performance all require special professional expertise.[1] Companies going public and/or selling shareholders need the assistance of external consultants, and most importantly, investment service providers (also called investment banks). Because their role is complex and meaningful in the success of the transaction, their selection is a key element of initial public offerings. The various investment service providers may have various experience, market expertise, distribution abilities, - or they may share different values. The presence and handling of possible conflict of interests (for example, a suitable investment service provider has extensive business relations with a competitor) is also an important consideration. The putative or substantive prestige of the investment service provider may also influence the success of the transaction. So there are numerous factors which should be evaluated during the selection procedure, which is also referred as the "beauty contest". This article intends to provide a brief guidance for the above mentioned selection procedure; - with the identification of the most important tasks of investment service providers, and the most common considerations of their selection.
It is an important milestone in the lives of the shareholders of a private corporation (often family-owned in Western Europe) to decide to go public and to get listed on the stock exchange.[2] The first challenge they have to face after reaching this decision is finding the most skilful experts, who would support the realisation of the transaction and lead the company on the way to the stock exchange. The most prominent investment service providers (prestigious investment banks in case of significant international transactions), law firms,[3] tax advisors and auditors[4] are needed for the preparation of the initial public offerings.[5] The most important figure is doubtless the investment service provider that ensures contact between the issuer, its shareholders and the capital market.[6] With their deep insight in the market and their experience regarding initial public offerings, they significantly contribute to the preparation and structuring of the offering.[7] Therefore their selection and their participation has a great impact on the success of the transaction.[8]
Hungarian laws prescribe that the issuer or the bidder must assign an investment service provider to prepare for and implement the public selling of securities.[9] (This however is not necessary if by the public offering the company enters the regulated market as well.[10]) Due to the differences between the countries and the diversity of the transactions in size, international scholars use several different expressions for the investment service providers (investment banks) that participate in these deals.[11]
In Hungary an investment service provider is a company that on the basis of a permit issued pursuant to Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities (hereinafter: Investment Service Providers Act) offers investment services or performs investment activities as a regular business activity to third persons in exchange for compensation.[12] The act lists investment consulting and the placing of a financial instrument (security or other financial instrument) with or without an undertaking of sale (guarantee of underwriting) as investment services.[13] Investment services may only be offered by investment service providers or credit institutions.[14] Investment services may only be offered if the service provider complies with the conditions set forth in the Investment Service Providers Act and other laws.[15] For such services and other supplementary services the permit of the financial supervisory authority[16] is necessary as well.[17] Investment service providers registered in a third country may operate in Hungary through their branch offices,[18] and those registered in another EEA state may pursue their activities as cross-border services.[19]
The European Union also regulates the granting of permits and the operation of investment service providers. These laws are the Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the
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European Parliament and of the Council and repealing Council Directive 93/22/EEC, and Commission Directive 2006/73/EC implementing the above Directive as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.[20]
Investment banks, investment service providers may have various roles in the course of the initial public offering, and the designation of their function in the transaction varies accordingly. It is also to be noted that different designations can be used by the different markets. The so-called sponsor is a bank (frequently also an underwriter) responsible for keeping contacts with the regulatory authority and the stock exchange of the market targeted by the offering in relation to issues concerning the documentation, thereby warranting and sponsoring the public offering. The term originates from the United Kingdom.[21] The global coordinator is a senior level member of the underwriting syndicate. Generally, the global coordinator is entrusted with the overall coordination and implementation of the transaction. Naturally, this function can also be performed by several banks.[22] The bookrunner has a key role in the underwriting syndicate. The bookrunner keeps the book of demand containing the investor demands received from institutional investors and resolves share allocation to institutional investors. This position can be filled by several banks.[23] The position of a lead manager (lead bank) is a senior level among investment banks participating in the underwriting syndicate. The lead manager often also acts as a bookrunner.[24] As the same bank (or banks) can be appointed for the above listed functions, and often there is significant overlapping in respect of the sponsor, global coordinator, or lead manager functions in a specific transaction, hereinafter we refer to the members of the underwriting (banking) syndicate as lead managers (lead banks). There are also junior syndicate members in a banking syndicate, such as senior co-lead managers, co-lead managers and co-managers.[25]
This investment service provider coordinates the transaction, provides consulting and investment services to the issuer, participates in the due diligence, the preparation of the documents and the pricing, and sets up the banking (underwriting) syndicate and thus takes care of the sale of the shares.[26] Therefore it is the first step of the transaction to select the investment service provider (investment bank),[27] which after participating in the organisation of the transaction, shall be the lead dealer as well.[28]
The investment service provider will be the primary appointed external consultant,[29] - besides the legal counsel and the auditor of the company - that will take part in the selection of all the further participants.[30] Its main task is to form the structure of the offer. It coordinates every aspect of the offering, manages the preparation of the documents, organises and supervises the due diligence.[31] The corporate finance / equity capital markets department of the selected investment service provider play the major roles in organising the transaction. ECM departments specialise in getting companies listed and organising public offerings. The department is usually operates separately, behind the so-called Chinese wall.[32],[33]
Based on the above, as soon as a decision is adopted on the initial public offering, the company faces a momentous decision: the selection of the investment service provider that coordinates the transaction.[34] This firm will give the company directions for example to reach the optimal capital structure, to formulate the investment story, to appoint outside members in the board of directors, to set the time for the issuing of the shares, and in any other matter that necessitates an insight in the market[35] - including the pricing of course. For this reason there are many aspects to consider during the selection.[36]
Investment service providers can be very diverse regarding their reputation and their abilities to provide a wide range of services in the field of initial public offerings. Some companies have experience in different industries, or may have contacts with the customers, suppliers or competitors of the company wishing to be listed. These relationships may be beneficial on one hand, however may be adverse on the other. Therefore even if an investment service provider is the most suitable for one company, it may not be such a good choice for another.[37] Therefore the selection must be carried out according to an individual set of viewpoints. If a transaction is attractive enough to seize the attention of the most significant investment service providers (investment banks), it is advisable to negotiate with several candidates concurrently. In this case all candidates must be informed that they are competing with other firms for the business. With regard to the selection it is important to note that it is not the costs of the transaction and not even the highest selling price should be the only aspect taken into consideration. A very high offer price may receive a reserved welcome and later on result in a relatively poor performance on the secondary market. For this reason some investment service providers advise for the sake of a favourable response to set the issue price a little bit below the price that would form on the secondary market, in other words to underprice the shares. This means a
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discount of 5-10% compared to the price of the first trading day. Before choosing an investment service provider, one should compare the aftermarket performance of the previous initial public offerings, in which the investment service provider participated with other similar offerings. Furthermore the head of the banking (underwriting) syndicate, the lead bank (lead manager) must have a significant experience in order to create cooperation between the investment service providers during the organisation of the distribution. This is the guarantee for a demand from the investors and for a strong performance on the aftermarket.[38]
The company intending to get listed usually selects the investment service provider by reviewing the most important elements of the planned transaction with several candidates, who hold presentations thereof. Such elements are the range of the offering price, the costs of the services of the investment service provider and the sales/distribution possibilities. The analysts specialising in the respective industry are also very important, as their activities will have a major role in creating the secondary market later on.[39] According to the relevant business literature[40], the application of the following aspects during the selection, the so-called beauty contest, is suggested.[41]
The abilities of the lead manager to sell the shares are highly dependent on how familiar it is with the company and its business activities.[42] Empirical studies show that the companies are more likely to pick the investment service provider that participated in the initial public offering for further offerings as well, because it already possesses information about the company. Although such relationship usually does not exist prior to the transaction, the investment service provider may compensate for that by specialising in certain industries, as it must have a remarkable professional experience in initial public offerings in the field of the company intending to get listed. It must be able to tell how the market would react to the offering at the scheduled time[43]
The investment service provider must have analysts that are well-known in the respective industry.[44] As Professor Langevoorth[45] marks, investment analysts are important agents in the mechanisms of marketplace efficiency, because their involvement contributes to optimal allocations of capital resources.[46] In the world of investments, all investors need information in order to make informed decisions. Generally, investment analysts are persons who are employed to discover that information, to reach established conclusions on investment opportunities and - on the basis of these - to make appropriate recommendations.[47]
In case of initial public offerings, the analysts advise on the positioning of the offer, taking into consideration that the investment possibility should be accessible for the widest range of investors. An analyst with a good reputation may have a positive impact on the pricing of the shares; however their involvement became limited due to regulatory reforms of the investment banking industry after the dot.com bubble[48] One of the reasons is that conflict of interest situations may arise in the case of analyst involvement. The source of these interest conflicts can be the pressure of investment banks, or also personal holdings. It is important to note, that analysts are forced to provide investors independent and objective analysis of companies with one hand, while proffering positive research reports and recommendations to corporate insiders with the other. According to Kelly S. Sullivan, because the brokerage firm's investment banking business can result in "kickbacks" in the form of increased salaries and bonuses to analysts involved in the business, the allure of money often weakens (if not trumps) the objectivity of research.[49]
The detailed community regulation on investment recommendations is set down in Directive 2003/125/EC. According to the directive the fair presentation of investment recommendations is a general principle.[50] Consequently the effective Hungarian Capital Markets Act also stipulates that the investment recommendation clearly distinguishes facts from interpretations, estimates, opinions and other types of non-factual information; it also must include the qualification of the information used with regard to their trustworthiness; furthermore it must be indicated if all estimations, forecasts and price targets are clearly reliable and also the material assumptions made in producing or using them.[51] Pursuant to the general standard for disclosure of interest and conflicts of interests[52], the European and Hungarian regulation sets forth that the investment recommendation must indicate all legal relationships and circumstances that is relevant from the aspect of the objectivity of the investment recommendation, including any financial interests regarding the financial instrument that is the subject of the investment recommendation.[53]
An investment service provider with a good reputation[54] gives a green light to those investors
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who do not know the issuing company, but are familiar with the reputation of the participating investment service provider.[55] Supposedly a prestigious investment service provider carries out a more thorough due diligence than another with a limited background. For withholding important information or putting a false or misleading data in the prospectus both the issuing company and the investment service provider may be held accountable. As the outline of the due diligence requirements is uncertain and the management of the issuing company is usually not too familiar with the process, it is advisable to assign a well-reputed investment service provider.[56]
It can be observed that generally the prestigious investment service providers (investment banks) sell the shares to institution'al investors, while less appreciated ones tend to aim at small, individual investors. This difference in the clientele should draw the attention of the issuer to two important factors. On one hand, institutional investors may expect a stricter due diligence then small investors. This can probably be explained by their wide knowledge of the process of initial public offering and their professional refinement. Institutional investors on the other hand represent a more serious market power. It is also a noticeable tendency that prestigious underwriters tend to sell the IPO shares for long-term institutional investors. So these institutional investors (chosen by prestigious investment service providers) tend to keep the IPO shares for a longer period of time. This fact should be considered by the company planning to go public, as the short-term mindset and trading behaviour may increase the volatility of the newly issued shares and may escalate the investors' expectations regarding the required return on equity. Therefore selecting an investment service provider with a good reputation that mainly sells securities to institutional investors may result in a more stable share price and lower costs of capital later on. A prestigious investment service provider is also necessary for the support (price stabilization) of the securities of the listed corporation on the secondary market. An investment service provider with prestige (and resources) may ensure a calmer market to the shares of the company following the offering than a less significant one.[57] As a summary, one can expect higher income and a more successful transaction if the company cooperates with a well-reputed investment service provider.[58]
Acknowledging that reputation and prestige are two essential factors, we must highlight another aspect that the most well-known investment service providers tend to grant less attention to smaller offerings than the less noted ones.[59]
The investment service provider competing to be the lead bank and the company planning the offering should review the possible structure of the transaction. It is important to consider if the shares would be sold outside of the local market and which group of investors are targeted. One must determine accordingly if the respective investment service provider has the distribution abilities that covers both local and international markets, furthermore retail investors and institutional investors alike. Obviously one must take into account the contact maintained with the primarily targeted group of investors.[60] Also an important issue, whether the investment service provider guarantees the subscription of all shares offered to the public. One significant advantage of the so-called firm-commitment offerings for the company going public is that the banking syndicate purchases the entire issue of shares from the company, thereby assuming all risks associated with distribution. In contrast with this method, so-called best effort offerings do not provide this kind of guarantee, and so they hold less risk for the investment service provider participating in the transaction (and more risk for the company going public). In best effort offerings the participating investment service providers assume an obligation only to employ their best efforts to sell an agreed amount of securities to the public.[61]
The investment service provider needs to have a good reference with regard to previous initial public offerings that it had coordinated. The aftermarket price shows how well it had priced the shares in the previous transactions.[62] Nevertheless, aftermarket stabilization is a sensitive activity, which is regulated by strict legal rules. For example, attempts to induce aftermarket bids or purchases can give prospective IPO purchasers the impression that there is a scarcity of the offered securities and the balance of their buying interest therefore can only be satisfied in the aftermarket. So such activities are prohibited (both in EU and US legislation).[63] Aftermarket stabilization needs to correspond with legal rules established to mark off such activities from market manipulation, and stabilization activities have to be carried out thoroughly transparently.[64]
In the European Union, Directive 2003/6/EC on insider dealing and market manipulation aims at preventing insider dealings and market abuse, manifesting itself as manipulation. It stipulates that all Member States shall prohibit any person from
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engaging in market manipulation.[65] Commission Regulation 2273/2003/EC however sets forth exceptions.[66] Pursuant to Article 8 of Directive 2003/6/EC the prohibitions provided for therein shall not apply to trading own shares in 'buy-back' programmes or to the stabilisation of a financial instrument provided such trading is carried out in accordance with implementing measures. Exceptions set forth by the provisions of 2273/2003/EC apply only for conducts directly related to the purpose of the stabilisation (and buy-back) activities. All other conducts not relating directly to the purpose of the stabilisation (and buy-back) activities shall therefore be considered as any other action within the scope of Directive 2003/6/EC, which may be subject to administrative measures or sanctions, if in the view of the competent authority they qualify as market abuse.[67]
It is advisable to regard the possible conflicts of interests, such as if the investment service provider is concerned in any other offering within the industry or sector concurrently with the initial public offering of the company.[68]
Generally the investment service provider that coordinates the transaction sets up the banking syndicate. It will also have a role in maintaining a suitable demand on the secondary market, in which it may serve as market maker. In an ideal case the lead manager continuously acts as market maker with regard to the offerings it manages. The investment service provider also may advertise the shares to the investors.[69]
This investment service provider may provide further services to the company later on, for example it may assist in acquiring the necessary resources for the financing of the company, may advise on acquisition matters, or perhaps offer business consulting services. As a summary, it is beneficial for the company to choose the most significant, strongest investment service provider that is willing to handle the offering. However if the company picks above its level, the investment service provider may not find the transaction that important, as it has several other more significant transactions to take care of. In this case it is possible that the investment service provider will not grant the necessary attention to the supplementary services that are essential for the company. Therefore for a less notable company it may be the right decision to assign a smaller investment service provider, or one that is strong only in the region. It is important for the company planning to go public to be an honoured client of the investment service provider, to have the most experienced experts at its disposal and to get the highest and quickest service possible.[70] For this reason it is advisable to put the assignment out to tender, in which the investment service provider that would coordinate the transaction would be selected in accordance with previously set evaluation aspects. These aspects certainly do not only have to focus on the price. The familiarity with the company, the industry and the concerned investors, the reference transactions or the range of experts and analysts may be important factors too.[71]
If the investment service company has been selected, the parties sign a non-obligatory letter of intent, in which they set (without undertaking any obligation) the size of the offering, the type of the offered shares, the fee of the investment service provider and the cap of the transaction costs. An estimated range of price[72] for the shares is also included, or at least a method by which it can be determined later on.[73]
This article intended to present the manifold and important role which investment service providers (investment banks) play in initial public offering transactions. This diversified activity can be easily demonstrated by the fact, that investment service providers may have various titles in IPO transactions. The most common factors, which should be taken into consideration during their selection has been presented. However, it may occur that a company does not really have the opportunity to sort, or to pick an investment bank with notable reputation. This should not mean that the initial public offering would be unsuccessful. The predestinated attention and the sharing of common values can bring off any cooperation and lead to a successful transaction. Also an important consideration is the possible emergence of interest conflicts, which may influence the implementation of the transaction. Because IPOs are transactions of a great value, which also hold out significant profit, the presence of interest conflicts is not rare. Such interest conflicts can appear in numerous diversing manners, and sometimes the recognition of their presence requires significant professional knowledge, experience in IPO transactions and informational background. And this is why the contribution of legal and academic experts in the selection procedure is needed: with their independence and know-how they can advise the company going public
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(and/or the selling shareholder) how to avoid interest conflicts, and how to get the most suitable investment service provider for the implementation of the transaction. These independent experts have also a greater experience in negotiating an appropriate remuneration for the services of the investment service provider, so to achieve the "best value for money". The drafting and negotiation of the investment service provider's contract also requires sophisticated legal knowledge, and a deep experience with IPOs. The most important factors in this regard are to ensure an adequate motivation for the investment service provider for the achievement of the (predetermined) objectives of the transaction, and to handle potential conflicts of interest and liability issues. ■
NOTES
* This paper was supported by the János Bolyai Research Scholarship of the Hungarian Academy of Sciences.
[1] A similar trend can be read off the corresponding provisions of the Basic Law of Hungary in the economic order, which shall decide the merits, intrusive state duties at - among other things, fair competition and consumer protection - to the realization of the proper functioning of the economy. See Bencsik, András: A fogyasztóvédelem alkotmányi szabályozásáról. In: DRINÓCZI, Tímea (ed.): Magyarország új alkotmányossága. PTE ÁJK, Pécs 2011. p. 40
[2] See Bencsik, András: A versenyjog szerepe a fogyasztóvédelemben. Jura Vol. 2. (2012) p. 30
[3] See Utset, Manuel A.: Producing Information: Initial Public Offerings, Production Costs, and the Producing Lawyer, Oregon Law Review, Vol. 74. Issue 1. (1995) p. 305
[4] See Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust, Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) p. 31
[5] See Lahmann, Dirk: Germany: The Investment Banker's View, International Legal Practitioner, Vol. 22. Issue 2. (1997) p. 59
[6] See Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) p. 187
[7] See Lahmann, Dirk: Germany: The Investment Banker's View, International Legal Practitioner, Vol. 22. Issue 2. (1997) p. 59
[8] See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 48-49.
[9] Article 23 paragraph (1) of Act CXX of 2001 on capital markets
[10] Article 23 paragraph (1) point a of Act CXX of 2001 on capital markets. Pursuant to points b, c and d of the same paragraph further exceptions are if government bonds are offered by the issuer; if a credit institution or an investment service provider offers securities that have been issued by itself; or if a foreign credit institution or foreign investment service provider offers securities that have been issued by itself through its branch office. These however are not relevant with respect to initial public offerings.
[11] See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 49.
[12] Article 4 paragraph (2) point 10 of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities. Article 3 of the act stipulates exceptions for this definition.
[13] Article 5 paragraph (1) points e, f and g of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities. Further investment services are listed under Article 5 paragraph (1) points a, b, c, d and h.
[14] Article 7 paragraph (1) of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities
[15] Article 7 paragraph (2) of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities
[16] As of October 2013 the financial supervisory authority became the National Bank of Hungary
[17] Article 8 paragraph (1) of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities
[18] Article 7 paragraph (3) of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities
[19] Article 7 paragraph (4) of the Act CXXXVIII of 2007 on investment service providers, commodity exchange service providers and their activities; See KECSKÉS, András, HALÁSZ, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 49-50.
[20] See Kecskés, András, Halász, Vendel, Stock Corporations -A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 50.
[21] See Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) pp. 33-34, 330.
[22] See Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) pp.34-35, 297-298.
[23] See Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) pp.35-37, 282.
[24] See Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) p. 37., 304.
[25] See Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) pp.37-40.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 50-51.
[26] See Sher, Noam: Negligence Versus Strict Liability: The Case of Underwriter Liability of IPO's, DePaul Business & Commercial Law Journal, Vol. 4. Issue 3. (2006) p. 455
[27] See Barondes, Royce de R.: NASD Regulation of IPO Conflicts of Interest - Does Gatekeeping Work?, Tulane Law Review, Vol. 79. Issue 4. (2005) p. 872
[28] See Sjostrom, William K. Jr.: Going Public Through an Internet Direct Public Offering: A Sensible Alternative for Small Companies?, Florida Law Review, Vol. 53. Issue 3. (2001) p. 534.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 51.
[29] See Sher, Noam: Underwriter's Civil Liability for IPO's: An Economic Analysis, University of Pennsylvania Journal of International Economic Law, Vol. 27. Issue 2. (2006) pp. 393-394
[30] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 33
[31] See Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) p. 187, 74.
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[32] Chinese Walt: this is barrier between different divisions of investments banks (investment service providers). Advisory, financing, security, etc. divisions are separated from each other by such barrier. The function of the Chinese Wall is to prevent and resolve conflicts of interest between the various activities conducted by investment banks. Compliance with the rules applicable to such separation is controlled by the compliance division. See: Espinasse, Philippe, IPO - A Global Guide (Hong Kong University Press, Hong Kong, 2012) p 285.
[33] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) pp. 31-32; Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust, Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) pp. 58-59; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 51.
[34] See Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust, Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) p. 29
[35] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 33
[36] See Kecskés, András, Halász, Vendel, Stock Corporations -A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 51-52.
[37] See Schneider, Carl W. and Manko, Joseph M.: Going Public - Practice, Procedure and Consequences, Villanova Law Review, Vol. 15. Issue 2. (1970) p. 287; Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) p. 187
[38] See Schneider, Carl W. and Manko, Joseph M.: Going Public - Practice, Procedure and Consequences, Villanova Law Review, Vol. 15. Issue 2. (1970) p. 288.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 52.
[39] See Sjostrom, William K. Jr.: Going Public Through an Internet Direct Public Offering: A Sensible Alternative for Small Companies?, Florida Law Review, Vol. 53. Issue 3. (2001) p. 534
[40] In this regard see: Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 34. and Gieenstein IA, JN Korff, CV Reicin, PL Colbrand and JK Robinson (2000) An Insider's Guide to Going Public. Chicago: RR Donnelley Financial.
[41] See Barondes, Royce de R.: NASD Regulation of IPO Conflicts of Interest - Does Gatekeeping Work?, Tulane Law Review, Vol. 79. Issue 4. (2005) p. 872., See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 52-53.
[42] See Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust, Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) p. 31
[43] See Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) pp. 192-193.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 53.
[44] See Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust, Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) p. 56., See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 53.
[45] Donald C. Langevoorth currently is the Thomas Aquinas Reynolds Professor of Law at the Georgetown University.
[46] See Langevoort, Donald C, Investment Analysts and the Law of Insider Trading, Virginia Law Review, Vol. 76. Issue 5. (1990) p. 1024.
[47] See Langevoort, Donald C, Investment Analysts and the Law of Insider Trading, Virginia Law Review, Vol. 76. Issue 5. (1990) pp. 1025-1026.
[48] See Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) pp. 190-191.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 53.
[49] See Sullivan, Kelly S., Serving Two Masters: Securities Analyst Liability and Regulation in the Face of Pervasive Conflicts of Interest, UMKC Law Review, Vol. 70. Issue 2. (2001) p. 415.
[50] Article 3 of Directive 2003/125/EC
[51] Article 205/C paragraph (3) of Act CXX of 2001 on capital markets, cf. Article 3 paragraph 1. of Directive 2003/125/EC
[52] Article 5 of Directive 2003/125/EC
[53] Article 205/D paragraph (1) of Act CXX of 2001 on capital markets, cf. Article 5 paragraph 1 of Directive 2003/125/EC; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 173-174.
[54] See Rueda, Andres: The Hot IPO Phenomenon and the Great Internet Bust. Fordham Journal of Corporate & Financial Law, Vol. 7. Issue 1. (2001) pp. 30-31
[55] See Ferris, Stephen P., Hiller, Janine S., Wolfe, Glenn A., Cooperman, Elizabeth S.: An Analysis and Recommendation for Prestigious Underwriter Participation in IPO's, The Journal of Corporation Law, Vol. 17. Issue 3. (1992) pp. 583-584
[56] See Ferris, Stephen P., Hiller, Janine S., Wolfe, Glenn A., Cooperman, Elizabeth S.: An Analysis and Recommendation for Prestigious Underwriter Participation in IPO's, The Journal of Corporation Law, Vol. 17. Issue 3. (1992) pp. 587-588.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 54.
[57] See Ferris, Stephen P, Hiller, Janine S., Wolfe, Glenn A., Cooperman, Elizabeth S.: An Analysis and Recommendation for Prestigious Underwriter Participation in IPO's, The Journal of Corporation Law, Vol. 17. Issue 3. (1992) p. 588
[58] See Draho, Jason: The IPO Decision - Why and How Companies Go Public (Edward Elgar Publishing, Northampton, 2005) p. 203.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 54-55.
[59] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 34.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 55.
[60] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 34.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by:
- 61/62 -
Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 55.
[61] See HESS, Brianne M, Google, Inc.: The Dutch Auction Approach as an Alternative to Firm Commitment Underwriting, Duquesne Business Law Journal, Vol. 7. (2005) pp. 91-92.
[62] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 34.; See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 55.
[63] See Securities Act of 1933: 8563-8565, SEC Docket, Vol. 85. Issue 3. (August 15, 2005) pp. 267-269
[64] See Kecskés, András, Halász, Vendel, Stock Corporations -A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 157-160.
[65] Article 5 of Directive 2003/6/EC
[66] Commission Regulation (EC) No 2273/2003 (22 December 2003) implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments
[67] See Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) pp. 157-158.
[68] See Geddes, Ross: IPOs and Equity Offerings (Butterworth-Heinemann, 2008) p. 34.; Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 55.
[69] See Schneider, Carl W. and Manko, Joseph M.: Going Public - Practice, Procedure and Consequences, Villanova Law Review, Vol. 15. Issue 2. (1970) pp. 288-289.; Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 55.
[70] See Schneider, Carl W. and Manko, Joseph M.: Going Public - Practice, Procedure and Consequences, Villanova Law Review, Vol. 15. Issue 2. (1970) p. 289
[71] See Kecskés, András, Halász, Vendel, Stock Corporations -A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 56.
[72] See Sher, Noam: Underwriter's Civil Liability for IPO's: An Economic Analysis, University of Pennsylvania Journal of International Economic Law, Vol. 27. Issue 2. (2006) p. 411
[73] See Sjostrom, William K. Jr.: Going Public Through an Internet Direct Public Offering: A Sensible Alternative for Small Companies?, Florida Law Review, Vol. 53. Issue 3. (2001) pp. 534-535.; Kecskés, András, Halász, Vendel, Stock Corporations - A Guide to Initial Public Offerings, Corporate Governance, and Hostile Takeovers, Translated by: Anna Tolnai and the Authors, (HVG-ORAC-LexisNexis, Budapest-Wien 2013) p. 56.
Lábjegyzetek:
[1] The author is associate professor Department of Business & Commercial Law, Faculty of Law, University of Pécs.
Visszaugrás
