On 16 July 2015, TheCityUK, a lobbying group representing UK-based financial and related professional services industry at a national and international level, published a report setting out its views on the European Commissions' proposal to create a Capital Markets Union ("CMU"). This proposal was covered in our April 2015 newsletter.
The report concludes that capital markets could play a much more significant role in financing growth, given that European businesses, particularly small and medium enterprises ("SMEs"), remain too reliant on banks. The objective of the report is to recommend ways to make capital markets more accessible and fundraising for SMEs quicker and cheaper in order to secure diversified sources of capital to support long-term growth.
The report's key recommendations include:
- creating national and central European registers of capital markets to raise awareness of capital markets options available to SMEs;
- minimising the regulatory complexity involved in raising capital and listing on a regulated market in order to help manage costs. In particular, the Prospectus Directive's definition of "offer to the public" should be amended so that its financial and other thresholds could provide greater flexibility;
- publishing the prospectus and other information sooner to investors in the context of an IPO;
- improving the quality of information available to investors by making the prospectus more focused and relevant;
- harmonising the approach of National Competent Authorities to prospectus review and approval in an effort to boost investor confidence in pan-European offerings; and
- reducing the prospectus disclosure requirements for secondary offerings.
Other recommendations focus on how the current regime could be improved to further the goals of the CMU.
The full text of the report is available here:
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