An investor presentation can be a great way for companies to share their story with prospective investors and provide important information about the company. This can include the company’s achievements to date as well as plans and projections for the company’s future.
It can also be a minefield for potential liability if used incorrectly.
An investor presentation generally aims to provide prospective investors with accurate information about a company, including its management team, capitalization, business structure and reasonable expectations and financial projections for that business.
As a best practice, a company using an investor presentation should ensure that that such presentation includes: (i) appropriate disclaimers and forward-looking language in order to limit the company’s legal exposure in the event that things do not go according to plan; and (ii) complies with the securities laws of each Canadian province and territory where its securities are being offered.
This blog sets out some best practices that a company should consider if it intends to use an investor presentation in connection with a private placement offering of securities in Canada.
Disclaimers
An investor presentation should generally include a disclaimer(s) that alert’s prospective investors to the various limitations that the company is placing on the information that it is including in that presentation. The disclaimer should be clear and legible. It is usually located on the second page of the presentation after the cover page.
The disclaimer may include a statement (or a combination of statements) that:
- Any securities that may be sold will be sold subject to the terms and conditions of a definitive sales document that contains the sole representations and warranties of the company in connection with the offering of those securities and that no written or oral statement by or on behalf of the company will be deemed to be a representation, warranty or covenant of the company;
- The investor presentation is confidential and that by receiving the presentation, the prospective investor agrees not to transmit, reproduce or make the document available to anyone without the consent of the company;
- The investor presentation does not constitute investment advice and that prospective investors should thoroughly review any sales documents and should consult with their own legal, regulatory, tax, business, investment, financial, accounting or other advisors, as needed to make their own decision to purchase securities of the company.
- There are risks associated with any investment in securities of the company and that a return is not guaranteed;
- Any securities will only be offered in jurisdictions where they may be lawfully offered by the company;
- No securities regulatory authority has expressed an opinion about the merits of the securities of the company;
- While the company believes the third party information contained in the presentation is accurate, that the company has not independently verified it;
- The information provided is of a certain date and that the company is not obligated to update or revise such information to reflect new events or circumstances;
- With respect to forward-looking statements in the presentation of a company, see “Forward-Looking Statements” below for more information; and
- With respect to future-orientated financial information (“FOFI”) in the presentation of the company, see “Future Orientated Financial Information (FOFI)” below for more information.
Forward-looking statements
Forward-looking statements are statements in a document, such as an investor presentation, that relate to future events or future financial performance of a company.
In Canadian securities law, there is generally a defence for the use of forward-looking statements by a person or company that is a reporting issuer if the company includes a statement with reasonable cautionary language identifying the forward-looking information as such and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information and a statement of the material factors or assumptions that were applied in drawing the conclusions or making the forecast or projection. The person or company should also have a reasonable basis for drawing the conclusions or making the forecasts or projections set out in the forward-looking information.
In some cases you can identify forward-looking statements by the use of terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology.
A company that wishes to add legal protection should consider reviewing their investor presentation thoroughly and soften the language by switching absolute statements to forward-looking statements.
For example, changing a statement that management will achieve a certain goal by the third quarter of the financial year (an absolute statement) to a statement that management anticipates or hopes that it will achieve a certain goal by the third quarter of the financial year (a forward-looking statement).
While Canadian securities law with respect to forward-looking statements only applies to companies or persons that are reporting issuers, it is generally considered a best practice for all companies.
Future Orientated Financial Information (FOFI)
If an investor presentation contains FOFI, management should consider adding a statement confirming the same, which may include that:
- While an investor presentation should be dated, if it is not dated, the date that management approved the FOFI;
- The FOFI has been prepared by management to provide an outlook of the company’s future activities and results and may not be appropriate for other purposes;
- The FOFI has been prepared based on a number of assumptions and list those assumptions;
- Actual results of future operations and the resulting financial results may vary from the projections in the investor presentation and such variations may be material;
- Management believes that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments as of the date of the investor presentation; and
- The FOFI has been prepared in accordance with International Financial Reporting Standards (IFRS), if applicable.
While Canadians securities law with respect to FOFI only applies to companies and persons that are reporting issuers, it is generally considered a best-practice for all companies.
Obligations with respect to statutory rights in Saskatchewan, Ontario, Nova Scotia & New Brunswick
An investor presentation that is prepared in connection with the sale of securities of a company will often be considered an offering memorandum under applicable Canadian securities law. You will need to consult the laws, regulations, local rules and policies that are applicable to you and your private placement offering.
Without limitation, in some provinces, there are additional content and filing requirements for investor presentations that should be considered.
- For Saskatchewan, Ontario, Nova Scotia and New Brunswick, the investor presentation must include summaries of the statutory rights for damages and recission contained in the applicable securities legislation of those provinces.
- For Saskatchewan, Ontario and New Brunswick, companies that use an investor presentation in connection with a private placement offering of securities must file a copy of that investor presentation with the applicable commissions.
MLT Aikins securities and corporate governance practice group has extensive experience assisting individuals and organizations as they navigate the changing corporate and securities landscape. Please contact us to learn more about how to put together a legally compliant and appropriate investor presentation.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.