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14 March 2002

EP adopted Directive on Prospectuses (1st reading)




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Christopher Huhne underlined the importance of this proposal by its approach of sweeping away the need to meet 15 different national rules. He explained that one amendment was designed to ensure the continuation of market practices with regard to eurobonds traded professionally. The decision here was to decide whether an appropriate exemption would be bonds with a value of up to € 50 000 or € 100 000.

Also excluded are securities representing, over 12 months, less than 10% of the number of identical securities already admitted to trading on the same market. Parliament inserted further details on the content of the prospectus.

Similarly with an exemption for small businesses, he was proposing that the new regulatory requirements would not apply to companies with a market capitalisation of less than € 350m and only raising funds on the domestic market. While this could be considered a high figure, Huhne pointed out that small high-tech companies employing less than 200 people could very easily be valued much higher.

Another amendment was being proposed to reduce the regulatory burden on small businesses by making the annual updating of information optional. His other concern was to allow the issuer to choose the competent regulatory authority and eventually he looked forward to the introduction of a single regulatory authority for Europe.

In accordance with the Lamfalussy procedure, the Commission is empowered to adopt implementing measures after consulting the European Securities Committee. In exercising these implementing powers, the Commission is required to respect a list of principles, such as the need to ensure confidence in financial markets by promoting high standards of transparency. Parliament sought to tighten the responsibilities of the competent authority. Any delegation of responsibilities to other entities such as market operators can only take place within the context of a clearly defined framework for the exercise of delegated functions and responsibilities. Final responsibility for supervising compliance with the directive lies with the competent authority.

As to the proposed amendments on Prospectuses, Bolkestein could accept many here, including one exempting Eurobonds traded between professional investors. One the size of the bonds issues to be exempted, he felt a higher figure than the euro 50,000 recommended by Mr Huhne was more appropriate. He could not, however, go along with some amendment, which he felt could perhaps unintentionally weaken existing legislation relating to disclosure and neither could he agree with the exemption for SMEs below the euro 350 million threshold, as this would exclude too many companies.

He was prepared to exempt SMEs from the need to update information annually, although he said this provision was important for larger companies and should be maintained. Neither could he agree to issuers being able to choose the place of issue or regulator. He agreed with Mr Garcia-Margallo y Marfil that this would lead to competition based on the lowest common denominator.

Due to latest changes and agreements on the original agreed report in Committee the finally adopted text is only available on the plenary session document pages 61-88.

(see original Huhne report)

© European Parliament


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