Jurisdiction(s):
United Kingdom

Key definition

Securities definition

What does Securities mean? In legal practice, securities are tradable instruments that evidence ownership or debt, typically shares, bonds/debentures, and related instruments (for example, warrants), used in corporate finance and capital markets transactions. The term is used across multiple legal contexts and is often defined by statute. In the UK, under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), “securities” denotes a grouping of specified investments (for example, shares, debentures, government and public securities, warrants and certificates representing certain securities), distinct from “contractually based investments” and “other investments.” Separately, UK regulation and EU-derived frameworks use “transferable securities” (a MiFID/Prospectus...

US SAS 72/AU 634 comfort letters in international offerings: due diligence defence, scope and procedures, 135‑day rule, timing and practice guidance for UK lawyers

Published by a LexisNexis Corporate expert

Practice notes

In cross-border Securities offerings, underwriters or initial purchasers typically insist that the issuer’s accountants deliver one or more comfort letters addressing, in full, the financial information set out in the Prospectus or the offering memorandum for the transaction.

These letters are a key part of underwriters’ Due diligence and underpin their robust defence against possible liability under US securities law.

They are frequently called SAS 72 letters, a nod to the Statement on Auditing Standards 72 (SAS 72) upon which they were originally based and widely well-understood in practice.

That standard has since been replaced by AU Section 634, Letters for Underwriters and Certain Other Requesting Parties (AU 634), which now applies in this area.

Comfort letters and the 'due diligence' defence

The grounds for potential liability under US securities laws vary depending on whether the offer is made publicly in the US, ie registered with the Securities and Exchange Commission (SEC), or made privately to US investors, eg in an institutional placement carried out in accordance with Rule 144A under the US Securities Act of 1933 (Securities Act). Section 11 of the Securities Act provides a private right of action against issuers, controlling persons, selling shareholders and underwriters involved...

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Web page updated on 21/05/2026

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