The Private Capital Series | Marshall Sterling INVESTMENT MANAGEMENT

Module 10.4 · Financial Promotions

Of all the exemptions available under the Financial Promotion Order, the one-off communication exemptions under Articles 28 and 28A are among the most misunderstood. Founders frequently assume they provide a general permission to approach investors on an individual basis, one at a time, without the need to worry about the financial promotion regime. They do not. Both articles set precise conditions, and relying on them without properly understanding those conditions is one of the more common compliance errors in startup fundraising.

This article explains what Articles 28 and 28A actually provide, what conditions must be met under each, and where the boundaries lie in practice.

The Two Articles and What They Cover

Article 28 of the FPO exempts one-off communications that are either non-real time communications or solicited real time communications. Article 28A exempts one-off unsolicited real time communications, but with an additional and more demanding condition that does not apply under Article 28.

The distinction between solicited and unsolicited real time communications, explained in the overview article at 10.3, is therefore directly relevant here. A live conversation initiated by the investor in response to their own enquiry is solicited and falls within Article 28 if the one-off condition is met. A live conversation initiated by you without any prior expression of interest from the recipient is unsolicited and falls within Article 28A, which requires the additional condition to be satisfied.

The One-Off Condition

Both articles require that the communication be a one-off communication. The FPO sets out what this means by providing conditions to be taken into account when assessing whether a communication qualifies.

1. The communication is made only to one recipient or one group of recipients who are expected to engage in the investment activity jointly.
2. The identity of the product or service has been determined having regard to the particular circumstances of that recipient.
3. The communication is not part of an organised marketing campaign.

The legislation states that if all three conditions are met the communication is to be regarded as a one-off communication. Where one or more but not all conditions are met, that fact is taken into account but the communication may still qualify. A communication can also qualify as one-off even where none of the conditions is met, depending on the overall circumstances. The assessment is therefore holistic rather than mechanical, but the conditions themselves point clearly to what the exemption is designed for: genuinely individual, specifically tailored communications that are not part of any systematic investor outreach programme.

The critical distinction is between a communication that is genuinely specific to the individual recipient and their circumstances, and one that is merely addressed to them individually while being substantively identical to communications sent to others. A pitch deck distributed to fifty investors, even if each covering email uses the recipient’s name, is not a series of one-off communications. The content has not been determined having regard to the particular circumstances of each recipient. It is a campaign, and the one-off exemption does not apply to campaigns.

Article 28: Non-Real Time and Solicited Real Time Communications

For non-real time communications and solicited real time communications, Article 28 requires only that the communication is a genuine one-off as described above. There is no additional condition relating to the characteristics of the recipient. The recipient does not need to be high net worth, sophisticated, or otherwise categorised. This is one respect in which Articles 28 and 28A are broader than the investor-specific exemptions covered in later articles in this module.

However, the practical value of this breadth is constrained by the one-off condition itself. Because the communication must be genuinely tailored and specific to the individual recipient, Article 28 cannot be used to run any kind of systematic investor outreach, regardless of who the targets are. Where Article 28 does have genuine utility is in specific individual circumstances: a bespoke written approach to a particular known contact whose situation you understand well and whose approach you would not replicate for anyone else, or a response to an inbound enquiry from an investor who has sought you out and asked specific questions about your capital raise.

Article 28A: Unsolicited Real Time Communications

Unsolicited real time communications face an additional condition under Article 28A. As well as meeting the one-off condition, the communicator must believe on reasonable grounds that the recipient understands the risks associated with engaging in the investment activity to which the communication relates, and must believe on reasonable grounds that the recipient would expect to be contacted by them in relation to that investment activity.

Both elements of this additional condition are important. The knowledge condition requires a genuine and reasonable basis for believing the recipient understands investment risk. Knowledge of the recipient’s professional background, their track record as an investor, or their stated experience in private investment markets can all contribute to that reasonable belief. A cold approach to someone about whom you know nothing does not provide that basis.

The expectation condition requires a reasonable basis for believing the recipient would expect to hear from you about this investment activity. This is a meaningful threshold. It implies some prior context, relationship, or connection that makes the approach unsurprising from the recipient’s perspective. A cold call to an investor you have never interacted with and with whom you have no shared context is unlikely to meet this condition regardless of how well you know their public profile.

What These Exemptions Are Not

Given how often Articles 28 and 28A are misapplied, it is worth being direct about what they do not provide.

They are not a general permission to approach investors individually provided you do so one at a time. The one-off condition refers to the nature and content of the communication, not simply the fact that you are speaking to one person on each occasion.

They are not a route to systematic investor outreach. If you have a list of target investors and you are working through it with a consistent pitch, Articles 28 and 28A are not the right framework regardless of how individually you frame each approach.

They are not a lower-effort alternative to the investor-specific exemptions. Where your investors qualify as high net worth individuals under Article 48 or self-certified sophisticated investors under Article 50A, those exemptions are likely to provide a more robust and scalable framework for any structured fundraising activity.

They are not a catch-all for communications that do not fit elsewhere. The exemption must genuinely apply to the communication as made, not be selected retrospectively as the most convenient available option.

Where These Exemptions Do Have Practical Value

Despite their limitations, Articles 28 and 28A have genuine utility in specific circumstances.

Where an investor has approached you directly with an expression of interest and has asked specific questions about your raise capital plans, a tailored written response to those specific questions is likely to be a solicited one-off non-real time communication within Article 28.

Where you have a pre-existing relationship with a specific individual, know their background and circumstances well, and are making a genuinely bespoke approach that you would not replicate for anyone else, Article 28 provides a workable framework for that communication.

Where you are making an unsolicited live approach to someone with whom you have a relevant prior connection and a reasonable basis for believing they would expect to hear from you about this kind of investment opportunity, Article 28A may cover that specific conversation provided the one-off condition is also met.

The common thread is genuine specificity and genuine context. The moment the communication becomes a template, a process, or a campaign, Articles 28 and 28A cease to be the right tool. Marshall Sterling Investment Management recommends founders rely on the investor-specific exemptions under Articles 48 and 50A for any structured equity fundraising round involving more than a handful of investors.

Record Keeping

Neither Article 28 nor Article 28A prescribes a formal record-keeping process. However, given that the one-off condition must be met and that under Article 28A the reasonable belief conditions must also be satisfied, maintaining a record of why you considered a specific communication to qualify and what basis you had for the beliefs required is sensible practice. If your approach to compliance were ever reviewed, being able to demonstrate that you applied the exemption thoughtfully rather than as a matter of convenience would be material to how that review proceeded.