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The obligation to produce a prospectus and the content and
format requirements of prospectuses across the EU are regulated by
the Prospectus Directive and the Prospectus Regulation. In 2010 the
Prospectus Directive was amended by the Amending Directive. Member
states are required to implement the Amending Directive by 1 July
2012. In the UK, the Amending Directive was implemented by the
Prospectus Regulations 2011 and the Prospectus Regulations 2012
along with accompanying amendments to the FSA Handbook.
The Amending Directive amends some of the exemptions from the
requirement to produce a prospectus and the thresholds determining
if a prospectus is required.
The Prospectus Regulations 2011
The UK implemented two aspects of the Amending Directive in 2011
by amending the Financial Services and Markets Act 2000
(FSMA). These regulations came into force on 31
July 2011. The key change implemented early was to increase the
thresholds in relation to two exemptions from the requirement to
produce a prospectus:
Private placements. The threshold for the
private placement exemption was increased from 100 to 150 persons,
other than qualified investors, per EEA state.
Total consideration. The threshold for the
total consideration of public offers not requiring a prospectus was
increased from €2.5m to €5m calculated on an EU
wide basis.
The Prospectus Regulations 2012
The Prospectus Regulations 2012 (the 2012
Regulations) introduce the following changes, among
others, to FSMA and the Prospectus, Listing and Disclosure
Rules:
The threshold for the minimum consideration per investor was
increased in order to qualify for the prospectus exemption from
€50,000 to €100,000.
The minimum denomination of the offered securities was
increased in order to qualify for the prospectus exemption from
€50,000 to €100,000.
The threshold for the total consideration of debt securities
issued in a continuous or repeated manner by a credit institution
was increased in order to qualify for the prospectus exemption from
€50m to €75m.
The new definition of the term "qualified investor"
adopts the professional investor definition of the MiFID (the
Markets in Financial Instruments Directive).
The employee share scheme exemption was extended to apply to:
all EU companies ;and
non-EU companies whose shares are traded on a regulated market
or an equivalent third country market.
The 2012 Regulations also make amendments to the requirements
for prospectus summaries and the format and validity of a
prospectus.
The 2012 Regulations were published on 15 June 2012 and came into
force on 1 July 2012.
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.
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