By Xavier Kong
Tiger is annoyed at the medical-textbook-size of the prospectus, the document dished out to investors ahead of the listing of a company. Can’t things be made much simpler and the essence of a company distilled in 10-15 pages? Tiger thinks it can.
Tiger is once again, confused, stumped, rendered speechless. The reason? Well, Tiger would like to first point out that, in a world of mobile technology like tablets, smartphones, and laptops, it really is not so difficult to carry a lot of documents around, that would have traditionally required a forklift and/or a cargo container.
However, in our high-tech world, it seems that some things are doomed to stay the same. Tiger is referring (the clue is in the title above!) to the prospectus documents given at a prospectus launch event.
As Tiger takes a quick jaunt down memory lane, Tiger recalls that, throughout Tiger’s time in the corporate jungle, prospectus documents have always been a thick stack of papers. Recently, an 800-page prospectus found its way to tiger as well.
Yes, 800 pages! Let that sink in for a moment. Do you feel the weight of 800 pages on your investing shoulders yet? Yes? Moving on.
And to think about it, there are plenty of these oversized doorstops, as the company would have to print out enough copies to give away at the launch of the prospectus.
Tiger would like to borrow an acronym from the two-legged here, “tl;dr”. For those not in the know, tl;dr is the abbreviation of “too long; didn’t read”. This particular acronym came into being from the reluctance of many to wade through a big block of text when a short, thoughtful sentence or two can often tell the reader a similar amount of useful information.
(Did you wonder why many publications these days go with shorter paragraphs compared to the great big word blocks of yonder? Yes, same reason.)
With that being said, how do the country’s regulators expect the younger generation to take up a larger interest in the stock market, when one of the steps of readiness is to wade through an 800-page document?
And honestly, spare a thought for the trees. While Malaysia’s trees might not be well-suited for being turned into paper, these are still trees that contribute to the breathable air in our atmosphere. To think that so many trees were cut down for the paper used in these documents that will only ever see the layman skimming through it (if at all), brings sadness to Tiger.
Taking into account the layman’s understanding and also the profligate use of lumber, Tiger would like to propose a solution. In the spirit that the prospectus is similar to a scientific report, Tiger proposes a form of abstract, something short that covers everything the prospectus would cover, but without going into too much detail.
Maybe the prospectus could include an executive summary, maybe about 10 pages, 15 at most? Why not add forecasts in the executive summary, like the old times? With forecasts alongside the plan the company has in place for the proceeds raised from the listing, prospective investors can get a clearer view of what the company is offering, and in turn may be a better sell for the company.
Transparency, a plan, and recommendations from a few trusted local banks? That sounds like a recipe for a successful fund-raising to Tiger.
At the same time, the shorter (and lighter!) document would definitely be more palatable and more easily digested than 800 pages. By simplifying the document, companies are given the opportunity to present themselves to a barely tapped market of investors, due to the ease of reading of the summary.
Bursa Malaysia has, in its own way, been trying to get the younger generation to take an interest in the stock market as well, what with its launch of Bursa Marketplace and its fantasy football arrangement during the recent World Cup.
While Tiger applauds those moves, Tiger also believes that the system itself has to move forward as well. It really would not do if the interest of the new generation is piqued by all these initiatives only to have the underlying system turn them away.
Oh, what’s that? You don’t think you can fit everything important there? And investors, are you worried about fact-checking the summary? Tiger refers to the beginning of the article and points toward technology for the solution.
Would it really be that difficult for a company to have a QR code or a URL on the last page or cover of the executive summary of its prospectus, along with the disclaimer that the entire prospectus can be found online through those links? Tiger thinks not.
Tiger may be biased, but Tiger really does not see any detriments towards the distribution of an executive summary instead of an entire prospectus, while keeping the prospectus in a paperless format accessible anytime online.
Not only would it likely play a part in attracting more of the younger crowd, it would also make it a clearer sales pitch for anyone, regardless of age group, looking to invest in a company, but still in the midst of deciding which.
On an unrelated note, trees would also be saved, through the use of digital documents, rather than too many printed copies of an 800-page paperweight (which pose issues for corporate types dealing with carpal tunnel syndrome, mind you).
So, Tiger asks, why not embrace technology for what it can do for the environment? Executive summaries will definitely help more than one cause here — Bursa Malaysia gains; the companies raising funds through public offerings gain; and the investors themselves, regardless of age group, also gain.
And not to mention the cause of environmental protection too…
GRRRRR!!!
You must be logged in to post a comment.