The European Parliament recently adopted major amendments to the
draft Prospectus Regulation (the Regulation) proposed by the
European Commission to replace the Prospectus Directive 2003/71/EC
as amended (the Directive). The Regulation constitutes an essential
step towards the completion of the Capital Markets Union.
One of the aims of the Directive had
been to introduce a lighter, less burdensome prospectus regime. As
the regime under the Directive was not substantially lighter than
the full prospectus itself, the Commission proposed a new
prospectus regulation with a wider range of exemptions. Some of the
amendments now adopted by the European Parliament go further and
increase the scope of some of those exemptions.
The key amendments are as follows:
Scope of obligation to publish a prospectus.
The amended Regulation provides that a prospectus shall not be
required in relation to offers of securities to the public, among
addressed to fewer than 350 persons per Member State
(previously 150) and in a total of no more than 4000 persons in the
EU other than certain qualified investors; or
with a total consideration in the EU of less than €1m
(previously €500,000) calculated over a period of 12
EU Growth prospectus for SMEs. The Regulation
introduces an EU Growth prospectus regime with standardised content
and form requirements to be developed by the Commission that are
supposed to be "significantly and genuinely lighter than the
full prospectus". The EU Growth prospectus will be available
SMEs whose securities are to be admitted to trading on a market
other than a regulated market;
issuers whose securities are to be admitted to trading on an
SME growth market; and
offers for a total consideration in the EU not exceeding
€20m over a period of 12 months.
An approved EU Growth prospectus will
benefit from the passporting regime within the EU.
Obligation to publish a prospectus. The
Commission draft provided that Member States may exempt public
offers from the obligation to publish a prospectus if the total
consideration did not exceed €10m over a period of 12 months.
This threshold has now been lowered by the European Parliament to a
total consideration of €5m and the Regulation further
specifies, among others, that such exempt offers shall not benefit
from the passporting regime.
Universal registration document. The period
before which an issuer can under certain circumstances file
subsequent universal registration documents without prior approval
by the competent authority has been reduced to two consecutive
years (previously three).
The Regulation is a significant
improvement on the existing Directive. However, it does remain
rather too prescriptive in many areas with a high level of
illogicality – which is perhaps a fairly inevitable result of
national governments negotiating between themselves through the
text of the instrument. The focus on the promotion of EU
growth is welcome, but the limitation of a lighter EU Growth
prospectus, among others, to raising up to €20m on
non-regulated markets demonstrates a lack of ambition by the
rule-makers of Europe. Why not dream bigger?
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
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