Most Read Contributor in Netherlands, February 2017
As the European Parliament, the Council for the European Union
and the European Commission have now agreed on the proposal for the Prospectus
Regulation, it seems likely that the rules for a new prospectus
regime will enter into force in the next few months. Most
provisions of the regulation will come into effect only 12 and 24
months after entry into force of the regulation. During this
period, implementing measures will be prepared. However, two
provisions that may be very relevant for listed companies will
enter into effect immediately when the regulation enters into
Firstly, the current 10% exemption from the prospectus
requirement for the listing of new securities within a 12-month
rolling period will be extended to permit the listing of 20% of new
securities without a prospectus within a 12-month rolling period.
The widened exemption allows listed companies more flexibility when
making stock-for-stock acquisitions and raising equity capital
generally. This exemption does not cover the prospectus requirement
for new securities offerings. Accordingly, for each transaction, an
analysis needs to be made of whether a separate exemption is
available for the offering of new shares.
Secondly, the current unlimited exemption from the obligation to
prepare a prospectus for the listing of new shares that result from
the conversion of other securities (such as convertible bonds, dual
class of shares and non-employee options) will be restricted to 20%
during a 12-month rolling period. This restriction may be relevant
for listed companies with large or multiple convertible bonds
outstanding. It does not apply to existing convertible securities,
or convertible securities that were offered or listed based on a
See the December 2016 In context for an overview of
the new rules.
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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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.
Determining the limits of the capacity to have rights and
obligations of a joint-stock or limited liability company
("Company") is very crucial since it directly affects the
validity of a transaction that a Company performs
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