The Court of Appeal has recently reviewed when disclaimers in an investor presentation will be effective. The decision provides issuers, banks and financial investors with important practical guidance on what to keep in mind when preparing a presentation – and when reading one. The key points are:
appropriately drafted disclaimers can be effective to preclude a purchaser from relying on representations made in a presentation;
however, steps taken subsequently by the author of the presentation can impair the effectiveness of those disclaimers.
What comes out of the Court of Appeal’s decision – for issuers and those preparing presentations – is the importance of being clear about what your disclaimers are trying to achieve. They should be:
identifying the (limited!) audience for whom the presentation is intended;
setting out the purposes for which the presentation has been prepared (e.g., for “information only”) – in particular making clear which elements of the presentation readers cannot rely upon; and
placing clear limits on the issuer’s responsibility: explaining what parts of the presentation the issuer will accept liability for, and what it won’t.
Importantly for secondary debt market participants, the Court held that it follows from s.2(2) of the Unfair Contract Terms Act that, provided they are reasonable, such limitations can be achieved by way of notice (i.e., there is no need for the audience to agree).
Issuers must remember, however, that what they say can be overridden by what they do: in the case before the Court of Appeal the issuer was unable to rely on the part of its disclaimer limiting the audience for its presentation (roadshow attendees), because it had taken positive steps to direct the (secondary market) purchaser to that presentation.