On 1 October 2019, ESMA published on its website its guidelines on risk factors under the Prospectus Regulation. The guidelines are addressed to each Member State's competent authority to assist their review of risk factors in a prospectus and/or a supplement. However, ESMA encourages those responsible for the preparation of a prospectus to consider the guidelines when preparing documents for submission in relation to the specificity, materiality and presentation of risk factors.

There are 12 areas of guidance set out across six categories in the guidelines: specificity, materiality, corroboration, categorisation, conciseness and the summary. There are also illustrative examples included in Annex I which set out what ESMA considers appropriate risk factors to be, as well as explanations as to how they adhere to the Guidelines.

Within two months of the date of publication of the guidelines, competent authorities are required to notify ESMA whether they comply, do not comply but intend to comply or do not comply and do not intend to comply with the guidelines. The competent authorities must include reasons for their non-compliance.

The guidelines have applied since 1 December 2019.

View ESMA's guidelines here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.