EU Prospectus Directive

Profession:Smith & Williamson

Article by Gary Thorpe of Clyde & Co

Gary Thorpe of Clyde & Co outlines the potential changes to the EU Prospectus Directive.

The EU Prospectus Directive (2003/71/ EC) requires companies seeking admission to an EU-regulated market or making a public offer in an EU member state to publish a prospectus approved by the competent authority in the relevant member state. In the UK, this is the UK Listing Authority (UKLA), although it is set to become the Financial Conduct Authority. A prospectus must contain information as set out by the Prospectus Rules and enable investors to make an informed assessment of the company and its securities.

Admission document

AIM is not an EU-regulated market, so companies seeking admission need to publish an admission document not a prospectus – unless they are making a public offer, which most tend not to do. The contents of an admission document are governed by the AIM Rules (in reality, an abbreviation of the Prospectus Rules) and are not UKLA approved. In general, issuing a prospectus to raise capital is more costly than issuing an admission document and UKLA approval lengthens the timetable.


For companies seeking admission to AIM, there are exemptions from the prospectus regime. These include:

offers to qualified investors private placings to less than 150 people (not qualified investors) offers raising less than €5m. Exemptions are not available for subsequent pre-emptive offers to shareholders, for example, rights issues and open offers, raising more than €5m.

Prospective changes

The EU Prospectus Directive has had little practical effect on companies on the Official List, but on AIM almost all admissions and subsequent fundraisings have been private placings and retail investors rarely participate. However, change is coming. The EU has amended directive (2010/73/ EC) as part of its review of the EU Prospectus Directive. The amended directive will be implemented in the UK by July 2012. It outlines a framework for a...

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