Bill spreads liability for false IPO information

A draft bill on stockmarket IPOs places responsibility for the company’s financial statements, as they appear in the firm’s prospectus, on more people and extends the liability for misrepresentation of a company’s financial position. Alexis Pilavios, chairman of the Capital Market Commission, the stock market watchdog, presented the provisions of the bill to reporters yesterday. He said that, with the new bill, responsibility for the accuracy of the statements included in the prospectus extends to the chartered accountants who have signed the statement. Under previous legislation, responsibility rested with the company itself, the board of directors and the IPO lead managers and advisers. Fines for falsified figures are imposed by the commission and can reach 1 million euros. If investors have lost money on an IPO as a result of misrepresented figures in the prospectus, they can sue the above within three years instead of 12 months previously. The bill, which is expected to be passed by Parliament next week, also obliged the Capital Market Commission to approve an IPO prospectus within 20 days of the submission of all required material. In the case of an already listed firm seeking additional capital, approval must be granted within 10 days. Another provision allows a listed company to proceed with a capital increase without issuing a prospectus should the number of new shares issued not exceed 10 percent of existing shares. In this case, a general shareholders’ meeting must decide that bearers of old shares will not take part in the new issue. Pilavios said that the bill also provides for ways to finance non-listed companies at times when listing on the stock market is not a viable option. Pilavios also announced that he will tighten rules on companies making questionable financial reports. If chartered accountants express doubts about the validity of financial statements or were unable to check the facts, such stocks would automatically be placed under supervision. In some cases, depending on the accountants’ remarks, the commission may ask the Athens Stock Exchange to suspend companies from trading. Pilavios told reporters that he is concerned with the decline in the stock price of recent IPOs, adding that he is considering a more radical overhaul of the listing process. Another bill related to the market, this time on buyouts and listed firms’ public offers, will be submitted next month. In a move that has brokers up in arms and contributed to the ASE’s 1 percent fall yesterday, Pilavios announced he will start consultations toward abolishing the T+3 rule, which gave purchasers the ability to pay for shares they acquired within three sessions, or not pay at all should they sell them at a profit within that period. He claimed the practice, which accounted for 5-10 percent of daily turnover, encouraged speculative moves.