LEGAL PERSPECTIVE: Process to go-public companies by Dr AbdelGadir Warsama, Legal Counsel

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Dr AbdelGadir Warsama, Legal Counsel

For companies to go-public, the founders shall prepare Memorandum & Articles of Association. The docs shall include, name of new company, place of work including head office, duration and objects, names of directors and personal info, nationality and residence, amount of capital and number of shares into which capital is divided, value of each share, etc. Also, among necessary info the amount to be paid by founding directors and an undertaking to finalize incorporation within time. The detailed info is required for transparency purposes to give each investor full info regarding the company and to help investors to take decisions regarding participation, if any?

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As mentioned above all info mentioned in the docs is essential and required by law and in all cases the objects shall be stated very clearly so as to distinguish or identify the company to be established from other companies. This clarity and transparency is basically required for licensing purposes, as in some instances a license may be required from more than one institution. 

Directors of the new company shall forward the Memorandum and the Articles of Association along with a comprehensive feasibility study to the concerned departments in the Ministry/institution. Wherein, the concerned technical personnel will review the documentation and the feasibility study and the appropriate decision shall be taken and directors shall be informed. In some cases the authorities may reject the application, legally speaking, this administrative decision could be taken to the court after exhausting all possible appeals to the relevant executive bodies. 

Directors, after obtaining the go-ahead, are to start the duty of calling and inviting the public at large for subscription. The IPO along with the prospectus shall be published. The prospectus, shall be exhaustive and informative, however, it includes, statement to show that founders have paid their shares, maximum number of shares to be subscribed by each person, number of shares required by to qualify for board membership, places as banks or other places and other conditions for subscription. Directors shall sign the prospectus and, legally speaking, they are jointly responsible regarding the accuracy and contents of the prospectus. Before publishing the prospectus, they shall forward to the competent authority, all docs to show that they have paid their subscribed shares. The prospectus informs the public, names of certain banks to enable interested persons to subscribe. After closing the prospectus process, the equity shares of the company shall be allotted accordingly.

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