On April 3, 2018, the European Securities and Markets Authority published its final report on its technical advice to the European Commission to supplement the provisions of the Prospectus Regulation with delegated legislation. The Prospectus Regulation entered into force on July 20, 2017 and certain provisions took effect directly across the EU on July 20, 2017. It will further take effect partly on July 21, 2018 with the remainder of its provisions taking effect on July 21, 2019. The Prospectus Regulation is a major part of the European Commission's drive towards EU Capital Markets Union. It will repeal and replace the existing Prospectus Directive as well as its supplemental Regulation on the form and content of a prospectus.
ESMA was mandated by the European Commission to provide technical advice on possible delegated acts on the format and content of the prospectus, the content, format and sequence of the EU Growth Prospectus (a new type of prospectus for small and medium-sized enterprises and in certain cases non-SMEs for small issuances) and scrutiny and approval of the prospectus. ESMA consulted on its draft technical advice in three consultations launched in July 2017. ESMA has made a number of amendments to its technical advice, based on feedback received on the consultations.
ESMA has amended its technical advice on the format of the prospectus, the base prospectus and final terms by removing the requirements for a mandatory cover note and a stand-alone use of proceeds section in the prospectus. It will also not impose a mandatory "How to use this prospectus" section in the base prospectus. It has also made changes to the location of risk factors disclosures and to the positioning or risk factors in the Universal Registration Document. ESMA has also made changes to its proposals in relation to the share registration document, the share securities note, the building block for pro-forma financial information, the schedule on depositary receipts issued over shares and the content of the secondary issuance regime.
Following responses to its consultation on the content and format of the EU Growth Prospectus, ESMA is proceeding with its format proposals largely as consulted on, but has made a number of changes to the content requirements for the EU Growth Prospectus.
Following feedback to its consultation on scrutiny and approval of the prospectus, ESMA has made adjustments to the criteria for completeness, comprehensibility and consistency and may provide further guidance at a later date. It has also made changes to its technical advice on approval of the prospectus and approval and filing of the universal registration document.
ESMA's technical advice will now be considered by the European Commission and, if endorsed, will form the basis of delegated acts to be adopted by July 21, 2019.
The Final Report is available at: https://www.esma.europa.eu/regulation/corporate-disclosure/prospectus and details of the July 2017 consultations are available at: http://finreg.shearman.com/european-securities-and-marke.
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.
