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09 June 2011

ESMA publishes an update to its FAQ - common positions on prospectuses

The purpose of this document is to promote common supervisory approaches and practices in the application of the PD and its implementing measures, by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the PD.

The Prospectus Directive 2003/71/EC (PD) and the Commission's Regulation on Prospectuses (EC 809/2004) became effective on 1 July 2005. The Prospectus Directive and accompanying Regulation establish a harmonised format for prospectuses in Europe, and allow companies to use the same prospectus prepared for admitting securities to trading on their home market to admit securities to any number of further European markets without having to re-apply for approval from the local regulator. In so doing, the intention is to help companies avoid the inherent delays and cost that any reapplication process would involve. The new legislation also sought to ensure investors had access to more consistent and standardised information that would enable them to compare more effectively the various securities offers available from a wide number of European companies.

ESMA is required to play an active role in building a common supervisory culture by promoting common supervisory approaches and practices. The content of this document is aimed at competent authorities under the PD to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by CESR, and now ESMA. However, these responses are also meant to give market participants an indication of what constitutes proper implementation of the PD rules. The answers are intended to help issuers of securities by providing clarity as to the content of the PD requirements without necessarily imposing an extra layer of requirements.

Full paper


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