There
are certain risks involved in securities offered for the investment. The issuer
offering the security should disclose the relevant information and risk
involved which affect or could affect, in the future, the investors.
A full
section in PPM should be dedicated to the various types of risks associated
with investing in the opportunity. The categories, which the risk disclosure,
will contain are assets, environmental tenant, market, legal, tax, and risks
related with the sponsor and SPV (LLC holding the property). Other than these
risks, any other risks, which the issuer thinks of as necessary to be disclosed
to the investors should also be mentioned.
Under
this Section, the PPM shall outstandingly disclose all the risk factors that are
specific to the Issuer or originator or its industry, as well as the equity
securities being offered which had any risk which is or could affect directly
or indirectly issuer’s financials position, business operation and investment
by the holder of securities.
Potential
investors should carefully consider the following risks:
(a) Nature
of the business and the risk involved in it.
(b)
Factors relating to the countries in which it operates;
(c) The
absence of profitable operations in recent periods;
(d) The
financial position of the issuer or originator, or the issuer’s or originator’s
group;
(e) The
probable lack of liquid trading market for the issuer’s or originator's
securities;
(f)
Dependence on the expertise of the management;
(g)
Possible dilution;
(h)
Extraordinary competitive conditions awaiting expiration of material patents,
trademarks or contracts;
(i)
Reliance on a limited number of customers or suppliers; or
(j) Any
other risk factors which are related to the issuer’s or originator’s business,
or its industry.
