In this newsletter, we provide a snapshot of the principal European, US and selected international governance and securities law developments of interest to European corporates.

EU DEVELOPMENTS

Resolution of Proposal for New Prospectus Regulation

On 15 September 2016, the European Parliament resolved to adopt amendments to the European Commission's proposal for a new Prospectus Regulation to replace the current Prospectus Directive. The principal amendments relate to the following areas:

  • Scope: the Regulation shall not apply to offers of securities to fewer than 350 persons per Member State and to a total of no more than 4,000 persons across all Member States. The Regulation shall also not apply to offers of securities where the total consideration in the EU is less than €1,000,000, calculated over a 12 month time period.
  • Exemptions: where the total consideration of an offer of securities in the EU does not exceed €5,000,000, calculated over a 12 month time period, a Member State can decide to exempt such an offer from the prospectus requirement.
  • Prospectus Summary: a competent authority, in exceptional circumstances, may allow an issuer to produce a longer summary of up to ten (instead of sx) sides of A4 paper where the complexity of the issuer's activities so requires. Further, there will be no requirement for a summary for a prospectus relating to the admission of non-equity securities on a regulated market to qualified investors only.
  • EU Growth Prospectus: the new Regulation introduces a new concept of an 'EU growth prospectus' for the proportionate disclosure regime set out in Article 15. An EU growth prospectus will be in a standardised format and have fewer content requirements.

The European Parliament's full proposal can be accessed here:

Prospectuses: ESMA Updates Q&A

On 15 July 2016, the European Securities and Markets Authority ("ESMA") published an updated version of its Q&A to include two new questions.

The first new question concerns the applicability of the requirements under Article 11(3) of Commission Delegated Regulation (EU) 2016/301. ESMA clarified that a new roadshow would not have to be organised in order to deliver an amended version of the information provided in the original, but the general requirement to amend the roadshow advertisement still applies. ESMA added it is the responsibility of the issuer, offeror or person asking for admission to trading to disseminate the amended version of the information by the most suitable means.

The second new question concerns how an issuer, offeror or person asking for admission to trading should proceed when a participant at a live presentation requests information about an alternative performance measure that is not included in the prospectus. ESMA clarified that such an issuer, offeror or person asking for admission to trading should decline to provide an answer, as otherwise there would be a breach of Article 12 of Commission Delegated Regulation (EU) 2016/301. Version 25 of ESMA's Q&A on prospectuses can be accessed here:

ESMA: Overview of Prospectus Activity in the EEA

On 28 July 2016, ESMA published statistical data on prospectuses falling with the EU prospectus regime approved and passported by national competent authorities in the European Economic Area ("EEA"). The report covered areas such as general approval activity, structures of approved prospectuses, the number of equity vs. non-equity prospectuses and the type of securities offered and passporting activity.

The full report can be accessed here:

IPOs: AFME Guidance

On 4 July 2016, the Association for Financial Markets in Europe ("AFME") published guidance on research meetings and material prior to the award of a capital markets mandate. AFME provided commentary on how meetings should be conducted and structured so as to avoid the view that research analysts were not objective. AFME also described certain topics as inappropriate for such research meetings, such as asking research analysts' specific views on a potential IPO.

AFME's guidance can be accessed here:

Market Abuse Regulation

On 3 July 2016, the key operative provisions of the Market Abuse Regulation ("MAR") took effect. MAR addresses areas such as insider dealing, unlawful disclosure of inside information and market manipulation (all of which constitute market abuse for MAR purposes), disclosure requirements in relation to inside information and arrangements between ESMA and national competent authorities. The Regulatory Technical Standards ("RTS") and Implemented Technical Standards ("ITS") also came into force. The RTS and ITS cover areas such as:

  • the conditions, restrictions, disclosure and reporting obligations for buyback programmes and stabilisation measures;
  • the arrangements procedures and record-keeping requirements for persons conducting market soundings;
  • the systems and notification templates to be used in market soundings and the means for appropriate communications;
  • the establishment, maintenance and termination of accepted market practices;
  • the arrangements, systems, procedures and notification templates to report suspicious orders and transactions;
  • the technical means for public disclosure of inside information and circumstances where delay is legitimate;
  • the precise format of insider lists;
  • the format and template for the notification of managers' transactions; and
  • the technical arrangements for the objective presentation of investment recommendations.

Our briefing on MAR can be accessed here:

MAR: Market Soundings and Delays to Disclosure of Inside Information

On 13 July 2016, ESMA published final guidelines on persons receiving market soundings and delay of disclosure of inside information. The guidelines on market soundings detail internal procedures and staff training of persons receiving a market sounding, written minutes or notes of unrecorded meetings or telephone conversations, assessment of possession of inside information and record keeping requirements.

The guidelines on legitimate interests of issuers to delay disclosure of inside information and on situations in which the delay of disclosure is likely to mislead the public provide a non-exhaustive list of situations where the delay of disclosure is likely to mislead the public and examples of cases where the immediate disclosure of inside information may prejudice the legitimate interests of issuers (e.g. where disclosure might prejudice the outcome of negotiations being conducted by the issuer).

ESMA's final guidelines can be accessed here:

MAR: ESMA Updates Q&A on Closed Periods

On 13 July 2016, ESMA published an updated version of its Q&A on MAR on closed periods, i.e. where persons discharging managerial responsibilities are prohibited from dealing in shares and debt instruments of the issuers, unless certain specified circumstances are met. ESMA provides that the announcement of preliminary financial results agreed by the management of the issuer constitutes the announcement marking the end date of a closed period under the MAR regime. ESMA clarifies that where the information announced changes after the publication, a closed period will not be triggered but the event should be addressed in accordance with Article 17 of MAR.

The updated Q&A can be accessed here:

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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.