Section 85 (3) of the Financial Securities and Markets Act 2000, it is mentioned that it is an offence to sell shares of a company to the public in the UK and to put them into trading markets without the involvement of a prospectus (Financial and Markets Act 2000, 2014). The prospectus would contain all the details about the shares in terms of the Act, to enable investors holding the shares to make proper assessment and take a qualified decision about the share sale to the public or to an outsider. Misstatements and removing important information from the prospectus could give rise to criminal investigation. The company as a whole is responsible for the prospectus preparation, after which the directors represent a direct responsibility towards any misinformation presented in the prospectus (Mylawyer.co.uk, 2014). Nick in this case has not provided any prospectus to the share buyers and have not included while mortgaging the property with RBS, which could have informed the other shareholders about the charge being created on the company’s property.
The listing procedures requirements has been replaced by the prospectus requirements since 2005, since listing procedures according to section 79 of the Financial and Markets Act 2000, it is only required in case of offering shares to expert investors (Hudson, 2008). The listing particulars must have the entire prospectus to be put forward for approval to the UK Listing Authority which would then take its own decision.