EuropeanIssuers: Prospectus directive revision

18 February 2016

EuropeanIssuers welcome the revision of the EU Prospectus rules which aims at making it easier and less costly to raise funds on capital markets in Europe. Nevertheless, EuropeanIssurers thinks that the Commission could be more ambitious in its proposals.

In order to help inform the debate and help the success of the Prospectus Regulation, this position paper highlights EUropeanIssuers´ main concerns with regard to the proposal:

Home Member State Definition

In line with the Capital Markets Union initiative, companies should have the choice where to approve prospectus (between a MS where they have a registered office and where the securities are offered to the public or were/are admitted to trading). This freedom should apply for issuers of all securities (equity and non-equity securities).  

SME minimum disclosure regime

• The SME minimum disclosure regime should be extended to include all companies on SME Growth Markets and also smaller companies on Regulated Markets.
• Companies transitioning from a SME Growth Market to a regulated market should not face additional unnecessary burdens.
• Minimum disclosure prospectus should be much more succinct, simpler, shorter in length and less costly for SMEs to produce. Therefore, there would be little merit in producing a summary of such a prospectus.
• No pre-approval by NCA should be required, but rather certified advisers should continue to be appointed, as is already the case for many national markets (e.g. AIM in UK or Italy, First North in Scandinavia, NewConnect in Poland).

Secondary Issuances

• For secondary offers only a securities note should be required given that companies admitted to trading on Regulated Markets or SME growth markets already produce a great deal of information, publicly available.
• It would be beneficial to provide more detail or at least some principles in this Regulation that would ensure that the proportional disclosure regime for secondary issuances is truly proportional.

Scrutiny & Approval by NCA

It is important to increase efficiency of the approval of the prospectus by a National Competent Authority. Amendment of the definition of the Home Member State needed to provide more flexibility to issuers of all securities.
Exemption from pre-approval for secondary offerings is needed.

Prospectus Summary

• The Regulation should be clear that the summary should be considered as an introduction to the prospectus and that no liability attaches to the summary alone, but only when the summary is read together with the entire prospectus
• Incorporation by reference and cross-references in the prospectus summary should be allowed to ensure that investors are properly informed 
• To prescribe a maximum number of risks to be included in the Regulation could open issuers up to additional liability and would be both unhelpful and unclear for investors

Full possition

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