The Council of the EU has adopted the proposed Regulation that repeals and replaces the Prospectus Directive and the Prospectus Regulation. The new Regulation on prospectuses enters into force on the 20th day after its publication in the Official Journal of the European Union. The majority of its provisions apply from 24 months after the date of entry into force. Given that it is a Regulation, the new rules are binding and directly applicable in all EU Member States.
At a glance the new Regulation has the following key features:
- the new rules do not apply to issues of securities with a value below €1 million (the previous rules set that limit at €100,000). In addition, Member States are able to exempt issuers they consider to be small from the obligation to publish a prospectus by setting a higher threshold – up to €8 million – for their domestic markets;
- a new type of prospectus, the EU growth prospectus, will be available for small and medium sized entities (SMEs), companies with up to 499 employees admitted to an SME growth market or small issuances by unlisted companies;
- companies that are already listed on a public market that wish to issue additional shares (secondary issuance) or raise debt (corporate bonds) are able to benefit from a simplified prospectus;
- companies that frequently issue securities are able to use the ‘Universal Registration Document’ (URD). This is a sort of ‘shelf registration’ containing all necessary information about the company. Issuers that regularly maintain an updated URD with their supervisors can benefit from five day fast-track approval when they need to raise capital on the markets; and
- the European Securities and Markets Authority will, for the first time, provide free of charge and searchable online access to all prospectuses approved in the European Economic Area. Paper prospectuses are no longer required, unless a potential investor requests them.