The proposed Regulation on the prospectus to be published when securities are offered to the public or admitted to trading (which will replace the existing Prospectus Directive), was made public by the European Commission on 30th November, 2015. The draft Regulation, which is now with the Commission for review, is expected to come into force within 12 months of the date of publication in the Official Journal.
The Regulation is a full overhaul of the Prospectus Directive regime, and includes some material changes in approach, with a view to unlocking funding for businesses and providing more opportunities for investors in the EU.
The principal changes which will affect issuers are summarised below.
- Exempting the smallest capital raisings with no EU Prospectus for issues of less than €500,000. Member States will have discretion to exempt domestic offers of up to €10 million.
- Creating a lighter prospectus for smaller companies with a market capitalisation of less than €200 million, which can avail of a proportionate smaller Prospectus.
- Shorter prospectuses which limit and clearly prescribe the content of risk factors, and shorten the maximum length of the summary to 6 pages, similar to content to a KIID,
- Simplifying secondary issuances for companies which have already been listed on a regulated market for at least 18 months.
- Increasing the exemption threshold for further issuances of already offered/listed securities from 10% to 20% and widening the scope of this exemption from "shares" to "securities".
- Optional fast track Universal Registration Document for frequent issuers – similar to a "shelf registration".
- Single access point for all EU approved Prospectuses to simplify access to information.
- Removing the distinction between retail and wholesale debt, and introducing a common Prospectus regime for all debt listing on a regulated market, including the requirement for a summary for all debt issuances/admission to trading under a regime equivalent to that required previously for retail issuances. This is aimed at increasing participation in the corporate debt market for investors.
- Simplified requirements for SMEs which are not admitted to trading on a regulated market, but wishing to make public offers, may do so using new disclosure rules, including a Q&A format.
- Simplified regime for retail cascades.
- Opt-in "voluntary" prospectus regime for excluded issuers.
- Widening the scope for Incorporation by Reference.
The Regulation and associated press release and Q&A can be found at the following links:
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.