09 March 2018

SMSG Advice - Response to ESMA’s Consultation Paper on draft regulatory technical standards under the new Prospectus Regulation

SMSG strongly believes that a successful review of the Prospectus rules should result in an increased level of investor protection and a true reduction of costs for issuers, without additional burdens imposed.

SMSG believes that issuers should be given flexibility with regard to the number and format of the KFI to be included in the summary, e.g. flexibility to decide to include KFI extracted from the cash flow statement or not. The limit on the number of pages will already prevent unnecessary information being included in the summary.

SMSG also recommends finding a balance between the technological evolution and state of the art solutions that could ease disclosure of information for investors and potential related issues in terms of security and liability for issuers.

The SMSG believes that, in order to be successful, the review of the Prospectus rules should be designed in such a way that it improves investor protection by ensuring information produced is concise and understandable, while truly alleviating requirements and avoiding complexity of rules. Such complex-ity leads to excessive costs which discourages companies (especially smaller ones) from entering public capital markets, and results in disclosure of an excessive number of risk factors and boiler plate lan-guage not helpful to investors.

The SMSG recommends retaining flexibility for companies as this would allow them to better highlight to investors their distinct characteristics and features. Flexibility is also key to avoid duplication of infor-mation and make prospectuses more comprehensible. It takes on even more importance in the case of SMEs since they do not have as many resources to spend on disclosing information as large companies.

Full response

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