On December 20, 2016, the Council of the European Union announced that it had reached an agreement with the European Parliament on prospectuses for the issuing and offering of securities. Finalization of the agreement comes after the provisional agreement reached on December 7, 2016. The draft Prospectus Regulation is part of the EU's Capital Markets Union plan. The proposed Prospectus Regulation will replace the current EU Prospectus Directive, revising the regime for companies to raise money on public markets or by public offer to potential investors. The aim is to simplify the rules and administrative obligations for companies wishing to issue shares or debt on the market and reduce the costs of preparing a prospectus, thus fostering cross-border investments in the single market, while at the same time still enabling investors to make informed investment decisions. Some compromise has been reached in the final agreement, such that no prospectuses will be required for capital raisings and crowdfunding projects up to €1 million. It has also been agreed, among other things, that the threshold beyond which the issuance of a prospectus is mandatory be increased from €5 million to €8 million in capital raised. Below that threshold, issuers can raise capital in accordance with rules set for local growth markets.
The Council expects Parliament to approve the regulation at first reading, with the final text then to be submitted for adoption by the Council.
The Council's press release is available at: http://www.consilium.europa.eu/press-releasespdf/2016/12/47244652884_en.pdf .
You may like to view our client note on the European Commission's proposal for a Prospectus Regulation, available at: http://www.shearman.com/~/media/Files/NewsInsights/Publications/2016/02/Prospectus-Directive-the-Commissions-proposal-for-a-new-Prospectus-Regulation-CM-020416.pdf.
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