Capital Markets Union: Commission welcomes agreement to give companies easier access to capital markets

08 December 2016

The European Parliament, the Council and the Commission have agreed on revamped prospectus regulation. The reform was proposed by the Commission as part of its Capital Markets Union Action Plan in order to improve access to finance for companies and simplify information for investors.

The new EU prospectus rules will exempt the smallest capital raisings from the burden of producing a lengthy and expensive prospectus. Start-ups and SMEs can now raise up to €1 million on local growth markets without a prospectus. Member States are able to set higher thresholds to support growth in their domestic markets. These thresholds will be increased from €5m to €8m. For small companies who want to raise money across the EU, a new EU growth prospectus will be created for use by small and medium-sized companies (SMEs) and mid-caps. The EU growth prospectus will also help investors to make informed investment decisions based on the clearer information provided.

Secondary markets in corporate bonds will receive a boost from the new alleviated corporate bond prospectus that will now become available irrespective of denomination sizes when admitted to professional markets.

The new prospectus rules will also help to strip away burdens, deliver shorter prospectuses, better and more concise information for investors and a fast track regime for companies that frequently tap capital markets. [...]

The agreement provides for the following changes:

• The smallest capital raisings and crowdfunding projects up to €1 million will not need to issue a prospectus at all.
• The EU prospectus will only be mandatory from € 8 million in capital raised, almost doubling the previous €5 million threshold.  For offerings below that threshold, issuers can raise capital according to local market rules issued by growth markets.  This will support the growth of local or regional stock small company exchanges (including the future SME growth markets introduced by MiFID II).
• There will be a new EU growth prospectus that will be available for SMEs, mid-caps admitted to an SME Growth market or small issuances by non-listed companies. This will boost the ability of small and growing companies to raise money across the single market.
• An alleviated corporate bond prospectus will be available for admission to wholesale debt markets.  Previously, the alleviated debt prospectus was only available for debt issued in denominations of at least € 100 000, a denomination size which made it difficult for many investors to invest in corporate debt.  The new corporate debt prospectus aims to introduce more liquidity into secondary markets for corporate bonds. 
• Frequent participants in the capital markets will now have a frequent issuer regime that they can activate once an opportunity to raise funds arises, which will halve approval times from 10 days to 5. 
• A shorter prospectus for secondary issuances will allow issuers already admitted to stock markets and SME growth markets to benefit from a lighter prospectus for any "follow-up" issuances.
• Prospectus summaries will become shorter and the language used will be easier to understand for investors.
• No more paper prospectuses will be required, except if a potential investor explicitly requests one. This should result in considerable cost savings and move prospectuses to the digital age.
• A new European online prospectus database will be operated free of charge by European Securities and Markets Authority (ESMA).

Full press release

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