This Practice Note provides an overview of the purpose, content and Scope of a comfort letter prepared by the auditors of a company preparing to offer its Shares to the public in the context of a US Initial public offering (IPO). Produced in partnership with Thomas France, a partner in the Corporate Transactional group of Venable LLP.
What is a comfort letter and why is it required?
In connection with the due diligence process, the underwriters will obtain a 'comfort letter' from the company’s auditors regarding the financial information contained in the prospectus and registration statement. The underwriting agreement will require the company to procure the auditors to deliver the comfort letter to the underwriters as a condition to closing and the company will engage the auditors to prepare the comfort letter. Underwriters’ counsel typically will negotiate the content of the comfort letter directly with the auditors, but will keep the company and its counsel informed about the negotiation of the comfort letter and any issues that may arise.
What financial information is covered in the comfort
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Jurisdiction(s):
United Kingdom
Key definition:
Scope definition
What does Scope mean?
The scope of works is a term which may be used generally in construction projects to describe the works that the contractor is expected to carry out. More specifically, ‘Scope’ is a defined term used in the NEC4 suite of contracts to specify and describe the work which the contractor is to undertake, together with any constraints on how it is to carry out such work. In the NEC3 suite of contracts, the term ‘works information’ wass used instead of Scope.
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