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On 16 May 2017, the Council adopted new rules on prospectuses for the issuing and offering of securities. The new prospectus regulation (“PR3”) will repeal and replace the Prospectus Directive (2003/71/EC) and the existing Prospectus Regulation (809/2004). Unlike directives, regulations do not require further implementation measures by EU member states to be effective. The main aim of PR3 is to facilitate access to financial markets for companies, particularly small and medium-sized enterprises through the simplification of the rules and streamlining of related administrative procedure.

The main changes to the prospectus regime are as follows:

  • Form of Publication. There will no longer be a requirement to publish a physical version of a prospectus, unless requested by a potential investor. 
  • Exempting the smallest capital raisings. The new prospectus 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 now 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.
  • Summary. The summary making up part of the Prospectus will be shorter and modelled on the key information document required to be drawn up under the PRIIPs Regulation ((EU) No 1286/2014).
  • Risk Factors. The Regulation requires lists of risk factors to be shorter, consisting of a limited selection of specific risks which are categorised according to their nature.
  • Single Access Point for all EU Prospectuses. The European Securities and Markets Authority (ESMA) will create an online database with will provide free access to any prospectus approved in the European Economic Area.
  • EU Growth Prospectus. For smaller companies wishing to tap into European markets, the regulation provides a considerably lighter regime and less complex requirements for issuing a prospectus. The EU growth prospectus, a new type of prospectus, will be available for SMEs, companies with up to 499 employees (small mid-caps) admitted to an SME growth market or small issuances by unlisted companies.
  • Fast-track and Simplified Frequent Issuer Regime. Companies that frequently issue securities are also able to use the ‘Universal Registration Document’ (URD). This is a sort of ‘shelf registration’ containing all the 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. This simplifies the procedure for issuers already known to the market.
Entry into force
The regulation enters into force on the 20th day after its publication in the Official Journal of the European Union. The rules are binding and directly applicable in all EU member states.

This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Mikiel Calleja.