By John Browning
It seemed like a good idea at the time. Unipalm, though still a smallish company, is Britain's largest purveyor of Internet connections. To expand its networks, the company wanted to raise about 5.5 million pounds on the stock market. Naturally, it also wanted to use the Net to help. Instead, it learned how financial regulations may have to change to adapt to a networked world.
To raise interest in the offer, Unipalm's executives toured London's finance houses with a SparcBook loaded with Mosaic and other Internet-savvy software. The enthusiastic response prompted Peter Dawe, joint managing director, to propose putting Unipalm's prospectus and other financial documents on the Internet. While the financiers thought this was a great idea, the lawyers were nonplused.
The problem is that financial regulations assume the existence of boundaries absent from networks. The first are national. By publishing its prospectus on the Internet, Unipalm's lawyers pointed out, it might be argued that the company had published it – or at least distributed it – in the United States. But Unipalm had not gone through the procedures to get approval to raise money in America. So a disgruntled American investor might in theory have sued Unipalm for violating American securities laws.
National boundaries were not the only problem. British law is quite specific about the sorts of information a company can distribute to promote a share offering. All claims have to be carefully documented, according to strict legal standards. Bill Thompson, who was given the task of creating Unipalm's online prospectus, had originally planned to put the prospectus on to the World Wide Web and cross-link it to all sort of other corporate information. But, the lawyers wondered, might this be construed as "publishing" all of that other, unverified information?
In the end, caution beat out innovation. Apart from posting to a few newsgroups distributed only in Britain, Unipalm decided to stick to paper for the share offering. Take a look at Unipalm's finances online – the prospectus that might have been.
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