Update On Implementation Of Amendments To The Prospectus Directive And Prospectus Regulation

Author:Mr Tom Smitham and Mark Howard
Profession:Charles Russell LLP

In our last PLC Update (November 2011), we commented on the UK's early introduction of the 150 persons exemption and the €5 million threshold requirement for producing a prospectus, plus the final technical advice published by the European Securities and Markets Authority (ESMA) on possible delegated acts concerning the Prospectus Directive (Directive 2003/71/EC) which included advice on the format, content and length of the prospectus summary and the proportionate disclosure regime to be introduced for rights issues and offers by SMEs and small caps.

Following the technical advice that it received from ESMA, the European Commission (Commission) published a draft delegated regulation (Amending Regulation) on 30 March 2012 amending the Prospectus Regulation (Regulation 809/2004/EC). The implementation of the Amending Regulation will have the effect of incorporating the proposals provided by ESMA at the EU level. Specifically, the proposals regarding the following are to be adopted:

The format and content (i.e. the mandatory key information) of prospectus summaries; The proportionate disclosure regime regarding rights issues (including certain "near identical rights" in the definition of "rights issue"); and The proportionate disclosure regime for SMEs and issuers with reduced market capitalisation (it should be noted that the Amending Regulation applies the proportionate disclosure regime in this regard to all public offers, including IPOs and initial admissions to regulated markets – which was not the case in the technical advice provided by ESMA). The Commission is required to adopt the Amending Regulation by 1 July 2012.

At the UK level, the Financial Services Authority (FSA) and HM Treasury published (on 13 December 2011) a joint consultation paper relating to the proposed implementation of the remaining amendments to the Prospectus Directive into domestic law (specifically, to the Financial Services and Markets Act 2000 (FSMA) by way of the Prospectus Regulations 2012) and into the FSA Handbook (primarily to the Prospectus Rules). Having sought and received feedback on the consultation paper, the FSA and HM Treasury...

To continue reading