03 June 2005

CESR call for evidence on financial information in a prospectus

The Commission issued its formal mandate to CESR on the Prospectus Directive. The mandate requests CESR’s advice on a possible amendment in order to ensure that a prospectus is required in every case to include the historical financial information which is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer, as is required by Article 5(1) of the Prospectus Directive.

The Regulation contains a number of requirements relating to historical financial information in the Annexes. A possible deficiency in relation to some or all of these provisions became apparent shortly after the adoption of the Regulation. Some CESR members wished to use the Level 3 guidance relating to the Prospectus Directive to require the disclosure of financial information relating to entities other than the issuer in cases where the issuer has a complex financial history.

However, views were divided as to whether the requirement under the relevant provisions of the Regulation is restricted to financial information relating to the issuer, or whether it extends to historical financial information in respect of entities which are legally separate from, but which are closely linked to the issuer, in cases where that information is necessary for a proper assessment of the issuer and the securities in question.

The Commission considers it desirable to amend the relevant provisions of the Prospectus Regulation so as to eliminate uncertainty as to the scope of those provisions and to ensure that the requirements in relation to historical financial information extend to the entire range of information which may be necessary to enable investors to make an informed assessment of the issuer and the securities, in any case where financial information relating to legal entities other than the issuer may be relevant to the financial condition and prospects of the issuer itself.

CESR invites all interested parties to submit views by 20 June 2005.

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