Prepared by SwedenBIO’s Business Development and Financing Working Group.
Adopted by the SwedenBIO Board 2020 12 11
Download the industry standard here:
The purpose of this document is to encourage development stage companies to clearly disclose in prospectuses and other documentation prepared in connection with shareholder distributions and capital raisings as a basis for investors’ assessment of the company (“prospectus-like documentation”) information in relation to the information items described in this recommendation. The information items are in addition to the information that the company is required to provide about its business in accordance with the applicable prospectus rules and the information requirements of the relevant marketplace.
Why has SwedenBIO developed these recommendations? Are they really needed?
One of our most important tasks is to promote the best possible conditions for the life science industry in Sweden, and clear and homogeneous rules are a key factor. Our recommendations are designed to promote a healthy climate in which investors can feel confident that they are receiving adequate information to inform their evaluation and how it might affect long-term value growth. For life science companies in the development phase, the recommendations serve as a checklist to tick off the various information items that they are suggested to include in their annual reports, prospectuses and other documentation prepared in the context of shareholder distributions and capital raising – no more and no less. Our ambition is that the recommendations will contribute to the establishment of a new industry standard aimed at increasing transparency and providing a form of “consumer protection” for the investor. The industry is served by a well-functioning capital market and this initiative should be seen as part of a long-term effort to make information provision even more serious and adequate, which should contribute to this (a well-functioning capital market for life science companies in the development phase).
Has there been a lack of information in the past?
Not necessarily bad, but very different between companies. There are already prospectus rules and disclosure requirements set by the various marketplaces, but despite this, there are plenty of examples of companies providing too little or too much information, consciously or unconsciously.
We hope and believe that SwedenBIO’s recommendations will make it easier for companies to do the right thing.
Are you supported by stock exchanges and other parties?
Absolutely. Nasdaq has participated in the preparation of this document and is very supportive. Aktietorget sees the recommendation as an important tool in improving the quality of the information in the prospectus in connection with the distribution of ownership. In addition, representatives of leading investment banks, law firms and audit firms participated in this work.
What happens if the recommendation is breached?
These are recommendations and SwedenBIO has neither the ambition nor the legal mandate to impose penalties or similar. But the extensive consultations we have had with various stakeholders during the development of the recommendations suggest that it is in the companies’ self-interest to follow good practices in the capital market – and that is what we will work towards, that the recommendations set the framework for a new industry standard.
Does this apply to all stock markets?
Absolutely. This is a recommendation from SwedenBIO that all relevant companies can adopt, regardless of the marketplace.
When does it apply?
Now, with immediate effect. We should remember that we are talking about recommendations – this is what we are now recommending to companies in the development phase with regard to disclosure.
Won’t it be expensive for businesses?
Seeking public funding costs time and money. It is important for confidence in the industry that relevant and sufficient information is provided by those seeking capital. This additional information to be disclosed is not only important for raising public capital but should also be part of the business plan of the company.
Can you really know all this?
This is likely to vary between different companies and projects. Some of the information points we mention may not be applicable to a particular company. In such cases, the missing information points should be identified and an explanation given as to why the data is not addressed.
What happens if you are wrong?
SwedenBIO issues this recommendation. The different marketplaces can use it to different extents, possibly directly or indirectly imposing requirements on the companies that want to use them to raise capital.
Will you update the recommendation?
We think we have thought of everything, but experience shows that it is wise to be humble. Over time, we may need to specify or clarify any part of the recommendation and external factors may arise that change the conditions in our industry.
We will monitor compliance and effectiveness on an ongoing basis. And, of course, we will draw impressions and conclusions from feedback from relevant stakeholders.
Helena Strigård, CEO/ Director General
111 24 Stockholm
Phone +46 (0) 73 640 28 05