About the obligation to publish a prospectus

The legal regulations in connection with the law providing for financial supervision are materially identical in Curaçao and Sint Maarten. For convenience sake we will mainly refer to Curaçao below.

The search for a prospectus requirement in the law on supervision will be in vain. The National Ordinance on the Supervision of Investment Institutions and Administrators (Landsverordening toezicht beleggingsinstellingen en administrateurs: ‘Ltba’) prohibits everybody in Section 3 subsection 1 from asking or obtaining in or from Curaçao funds or other assets in order to participate in an investment institution – which has not been granted a license by the Central Bank of Curaçao and Sint Maarten – or from offering participation rights in such an investment institution. The Central Bank can grant an exemption from this prohibition (Section 10 Ltba).

In Section 8 of the Directives on the Supervision of Investment Institutions and Administrators it issued, the Central Bank made a prospectus mandatory for any offering by an investment institution and in Annex B of this listed what information must be included in such a prospectus. The major requirement in this connection is that the prospectus includes the details which are necessary for the investors to be able to form a sound idea about the offer.

Thus there is not a generic prospectus requirement in Curaçao and St. Maarten. Therefore there is no prospectus requirement for offering securities one-to-one (just as in the Netherlands), unless it would involve – in short – offering participation rights in an investment institution. If securities are offered from Curaçao or St. Maarten in countries where a prospectus is a requirement, this would obviously have to be taken into account. In connection with offering securities via the internet this could easily give rise to problems.

Aside: that there is no generic prospectus requirement obviously does not mean that securities can randomly be offered to the general public. For instance Section 45 of the National Ordinance on the Supervision of Banking and Credit Institutions (Landsverordening toezicht bank- en kredietwezen) stipulates that anybody is prohibited from approaching the general public directly or indirectly with regard to raising funds unless these are credit institutions entered into the official register. It is generally supposed that offering bonds / debentures (bonds) to the general public is covered by this prohibition. In addition, the concept of ‘general public’ is then interpreted very broadly: as everybody except (registered) credit institutions.

This prohibition is not applicable to issuing shares or inviting limited partner participations. After all, in that case capital is raised and the capital provider will not be in the position of a creditor but that of a shareholder or limited partner.

Karel Frielink
(Attorney/Lawyer, Partner)

(11 February 2015)

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