Belgium fittingly celebrated its national holiday with the entering into force of its new prospectus act (Loi du 11 juillet 2018 relative aux offres au pub lic d'instruments de placement et admissions d'instruments de placement à la négociation sur des marchés réglementés / Wet van 11 juli 2018 op de aanbieding van beleggingsinstrumenten, the "New Prospectus Act"). Parts of the New Prospectus Act with respect to the prospectus requirements, prospectus exemptions and the information document, entered into force on 21 July 2018 and already applied but its full scope will now replace the previous regime (Prospectus Directive 2003/71/EC as implemented in the Belgian prospectus law of 16 June 2006) and bring the national framework in line with EU Prospectus Regulation 2017/1129.
Like its predecessor, which contained a harmonised prospectus regime and a Belgian prospectus regime that applied to offerings of investment instruments outside the scope of the Prospectus Directive, the New Prospectus Act has a wider material scope of application than the EU Regulation it derives from as the Prospectus Regulation only applies to the offer of "securities", while the New Prospectus Act is applicable to the public offer and admission to trading of a broader category of instruments, i.e. "investment instruments" that include all types of instruments permitting to carry out a financial investment, regardless of the underlying assets. Following its entry into force no investment instruments may be offered to the public, nor may any other document relating thereto be distributed in Belgium, nor admitted to trading on a regulated market, except under the main conditions set out below.
The alteration of the prospectus obligation thresholds and the accompanying introduction of the information note concept to disclose smaller offerings have been long anticipated. Your key takeaways should be the following.
1. Revised thresholds
An offer of investment instruments to the public in Belgium can only be made provided that a prospectus in relation thereto is either approved by the FSMA or, where appropriate, approved by the competent authority in another relevant EU member state and notified to the FSMA.
An offer to the public of investment instruments in Belgium does not require the publication of a prospectus in the following circumstances:
- the total consideration of the offer in the EU over a twelve-month period does not exceed EUR5 million; or
- the total consideration of the offer in the EU over a twelve-month period does not exceed EUR8 million, provided that the instruments are admitted to trading on an MTF designated by Royal Decree (MTF).
The foregoing exemptions do not apply to the admission of investment instruments to a Belgian regulated exchange which always remains subject to a prospectus obligation. Additionally, an offer concerning securities (as defined in the EU Prospectus Regulation) which is subject of notification to a competent authority in a different EU member state (in line with Article 25 of the EU Prospectus Regulation) will also be exempt from Belgian prospectus duty.
Going forward the size of the offering becomes determinative for the applicable regulatory treatment. This results in a landscape of small versus larger offerings. To facilitate the first, a lighter version of the disclosure documentation was introduced: the information note.
2. Information note
In situations where, as per the above exemptions, it is not mandatory to publish a prospectus in the context of an offer of investment instruments to the public in Belgium, the following offers will require the publication of an information note in accordance with Chapter II of the New Prospectus Act:
- offers of investment instruments to the public in Belgium of which the total value in the European Union is less than or equal to EUR5 million, calculated over a twelve month period;
- offers of investment instruments admitted to trade on MTFs, to the public in Belgium of which the total value in the European Union is less than or equal to EUR8 million calculated over a twelve month period; and
- to the admission of investment instruments to trading on MTFs.
Certain exceptions to the aforementioned information note publication obligation apply pursuant to Article 10, §2-§7 of the New Prospectus Law. Those include, among others:
- the usual exemptions for:
- sovereign and central bank bonds; and
- fund raising by certified non-profit organisations; as well as,
- more noteworthy, a new de minimis exemption to the disclosure obligation for offers with a total value below EUR500,000 (calculated over a twelve month period) in which subscriptions are limited to a maximum amount of EUR5,000 per investor. That allows practically all of today's crowdfunding initiatives to market under a far less cumbersome administrative burden.
In practice the content requirements for an information note are substantially less elaborate than for a full-fledged prospectus. Pre-contractual information disclosure should be contained to the bare minimum and presented in understandable form. The note describing the issuer and highlighting the main risks related to its offering must be limited to 15 pages in total.
Information notes referred to under this heading must be made available to the public and filed with the FSMA prior to the start of the offer. However, they also bear a disclaimer stating that they are not verified or approved by the FSMA, thus leaving investors in a grey zone in terms of comfort.
Under the previous regime, any advertisements had to be submitted to the FSMA for prior approval in the following circumstances: (i) an offer to the public in Belgium of securities or investment instruments or (ii) an admission to trading on a Belgian regulated market of securities or investment instruments, provided that a prospectus had to be drawn up. The rules on advertisements were specified in the Royal Decree of 25 April 2014 on the marketing of financial products with non-professional clients.
The Prospectus Regulation's rules on advertisements apply to offers to the public of securities and to an admission to trading of securities on a regulated market, provided that a prospectus must be published (if this is not the case, some rules will not apply). The New Prospectus Law extends these rules to advertisements (and other documents) relating to:
- offers to the public of investment instruments in Belgium;
- an admission to trading of investment instruments on a Belgian regulated market; or
- an admission to trading of investment instruments on a Designated MTF.
The advertisements regime (article 22 of the Prospectus Regulation) does not apply for the following transactions:
- an offer or admission to trading of securities that does not require the publication of a prospectus under the Prospectus Regulation;
- an offer or admission to trading of investment instruments (other than securities) that do not require the publication of a prospectus (the prospectus regime under the Prospectus Regulation applies "indirectly" to investment instruments, pursuant to Article 8 of the New Prospectus Law);
- an offer or admission to trading for which no information note must be published.
However, note that the regime can be fully or partially applied to offers to the public of investment instruments that do not require the publication of a prospectus or an information note, by Royal Decree.
It must be noted however that the regime applies even if an offer to the public of investment instruments is for an amount lower than the EUR5 million or the EUR8 million threshold, for which no prospectus must be drawn up but only an information note, as set out above. In that case however, the advertisement must not be submitted to the FSMA for approval.
The preparatory works of the New Prospectus Law clarify that as of 21 July 2019, the rules on the content of advertisements in the Royal Decree of 25 April 2014 (articles 11 to 25) will no longer apply to securities and investment instruments.
For the upcoming quarters capital markets demand is expected to stay strong in sight of prolonged high liquidity across the international financial environment. DLA Piper Belgium continues to assist both national and international clients in this domain.
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.