The Prospectus Directive regime in the European Union has been amended by virtue of Directive 2010/73/EU (the "Amending Directive"), which gave member states until 1 July 2012 to implement the necessary measures by domestic legislation. At the same time, Commission Regulation (EC) No 809/2004 (the "Prospectus Directive Regulation"), which stipulates the detailed contents of prospectuses under this regime and which does not require implementing legislation but has direct effect in member states, has also been amended.
The European Commission has adopted two amending regulations to amend the Prospectus Directive Regulation, which also came into effect on 1 July 2012 (the "Amending Regulations"). The Amending Regulations address (i) the format and content of the prospectus, the base prospectus, the summary and final terms; (ii) the proportionate disclosure regime; (iii) retail cascades; and (iv) certain technical amendments and clarifications.
The Amending Regulations reflect technical advice received from the newly created European Securities and Markets Authority ("ESMA"). Unlike the Amending Directive (which needs to be implemented by individual member states), the Amending Regulations have direct effect in member states and do not require implementing legislation. In the UK, the changes will be reflected in amendments to the Prospectus Rules, the Listing Rules, and the Disclosure and Transparency Rules.
Among other effects, the amended EU prospectus regime will have a significant impact on the content of base prospectuses and final terms, as well as the general operation of debt programmes that are approved on or after 1 July 2012 and are not subject to grandfathering. This client alert summarises the most important changes to the EU prospectus regime and the likely impact such changes will have on the capital markets.
Exemptions to the obligation to produce a prospectus
The Financial Services and Markets Act 2000 ("FSMA") sets out various offers which are exempt from the requirement to produce a prospectus. The exemptions from the obligation to produce a prospectus in respect of public offers have been amended as follows:
Offers to qualified investors – the definition of "qualified investors" in the Prospectus Directive has been amended to conform to the professional client or eligible counterparty definition in the Markets in Financial Instruments Directive (2004/39/EC) ("MiFID"). Offers to less than 100 persons per Member State – the exemption for offers to no more than 100 persons per member state has been increased to 150 persons. The UK implemented this change in 2011 in advance of the required timeframe on the...