4.5.5 The offer period and timetable
All time-bound offers should have an opening date, when the offer is launched, and a closing date after which no further investments can be accepted. There are a number of factors to consider when determining the timing of an offer period.
Primary consideration should be given to the requirements of the investment project itself. When will the capital be used for the stated purpose? How certain is it that the investment project will be able to proceed according to plan? If the society is planning to purchase an existing business, property or asset, there may be external deadlines to be met. Alternatively, the society may be planning a development that requires permissions, approvals or contractual agreements, and it cannot proceed until these are in place. The offer document should include details of the investment project timetable, highlighting any uncertainties that may affect it. If the investment project is unlikely to proceed within twelve months of the share offer being completed, then members should be given the option of withdrawing some or all of their capital.
The timing and length of the offer period should also take into account the impact on potential investors. The length of the offer period has to be sufficiently long for the publicity and marketing campaign to be successful, but not so long that early applicants have their money held in suspense for extended periods. Offer periods vary in length from six weeks to six months, with a norm of three months. People often wait until near the end of the offer period before investing, partly to ensure that their money is not held in suspense for too long, and partly to see how successful the offer is before committing their money. So there is a danger with long offer periods that potential investors do not respond to the initial publicity, delay their decision to invest, and then forget to make a decision before the deadline.
It is important to get the timing right by, for example, avoiding major holiday periods, when people may not be thinking about investment, or may have other calls on their money. During the months preceding and following the HMRC financial year-end in April, many people make decisions about the most tax-efficient use of their savings and investments.
Offer periods can be preceded by promotions, including invitations to register an interest in the offer, make a non-binding investment pledge, or even to pay a deposit towards the investment. Any deposits should be held in an escrow account and be fully-refundable on demand during the offer period.
Most time-bound offers experience a surge of investment at the beginning of the offer period, followed by a lull, and then a final surge in the last few weeks or days of the offer. At the end of the offer period the society should stop actively promoting the offer, although it can continue to accept late applications if the stated maximum amount has not been exceeded. Active promotion would include making the offer document and application form available to enquirers, or continuing to allow online applications.
An extension to the closing date can only be made if the terms of this contingency are outlined in the offer document. Alternatively, an extension can be made if the society contacts all applicants informing them of the extension, and allowing them the option of withdrawing their application.
Offer periods, including extensions, should not exceed twelve months.
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