Taylor Joynson Garrett partner Tom Mackay is the first UK lawyer to put a share offer on the Internet.
He is advising Oxford-based bookseller The Internet Bookshop on the sale of what it hopes will be £1m worth of shares in its new company, bookshop.co.uk, through a placing and offer on Ofex, the market for smaller unquoted companies, on the Internet.
Mackay, who was formerly in-house at venture capitalist 3i and head of legal at the Stock Exchange, said under Stock Exchange rules the company still had to produce a hard copy prospectus, but there would be “considerable savings” by making the prospectus available on the Net.
Applicants for shares can simply print out the prospectus and application form from their PC, fill it in, sign it and send it back in the post with a cheque.
Mackay said that legally The Internet Bookshop, which already sells books on the Net electronically via credit card, could have asked subscribers to pay online with their credit card but “at the moment brokers just don't have the facilities”.
He said he expected other companies to follow The Internet Bookshop's lead. “About 20,000 people will take a look at their prospectus. With a hard copy prospectus for a similar issue, about 2,000 people would generally look at it.”
The other benefit, he said, was that because of the novelty of the move, it had received 10 times the amount of publicity a company its size would normally expect.
Mackay faced a big legal difficulty: “A prospectus on the web could be seen by anyone anywhere in the world and you have to assume that there are some countries in which it will not conform to the listing rules.”
To get round that problem, the applicant has to state his address before he can access the prospectus. If the address is not in the UK, access is not granted.