The European Parliament, the European Council and the European Commission have reached agreement on a new regime for securities prospectuses. Based on the European Commission's proposal of 30 November 2015, a Prospectus Regulation¹ will replace the Prospectus Directive within the framework of the planned capital markets union.

Legislators have put together a new regulatory framework to reduce the effort and cost of preparing a prospectus, but also to facilitate access to the capital market, especially for small and medium-sized enterprises (SMEs). To this end, the threshold for public offers will be raised to €1 million over a 12-month period. No prospectus will be required below this total. In addition, the member states will in future be able to exempt offers totalling up to €8 million over the same period from the prospectus requirement at the national level. At the same time, however, investor protection is to be improved by requiring information such as the risk factors to be presented better.

Outside of the organised market, SMEs and unlisted companies with fewer than 500 employees will be given the possibility to prepare an EU growth prospectus. This will also apply to companies with a market capitalisation of less than €500 million seeking access to an SME growth market. In terms of contents, the requirements for the EU growth prospectus will be significantly less complex in future, and its format will be standardised in order to facilitate its preparation. Secondary issuances by issuers that are already subject to subsequent transparency requirements because of their participation in the organised market or SME growth market will also benefit from simplified prospectus requirements.

As a departure from the Commission's original proposal, the existing simplifications for securities with a minimum denomination of €100,000 will be retained. Legislators have, however, added bonds to this regime, if irrespective of their minimum denomination they are to be admitted to an organised market or a segment of the organised market to which only qualified investors will have access.

To present the information in a way that is easier for investors to understand, the Regulation will limit the size of the prospectus summary to a maximum of seven sides of A4-sized pages in future. The securities-related information in the summary can also be replaced with the corresponding elements from a key information document prepared in accordance with the PRIIPs Regulation.²

Securities prospectuses are also to become more easily accessible for investors by implementing a new Europe-wide online database operated by the European Securities and Markets Authority (ESMA). ESMA will grant free-of-charge access to all prospectuses approved by the national competent authorities.

Finally, under the amended regulation, shorter review periods will apply to frequent issuers that prepare the prospectus as a multi-part document using a universal registration document. This new document contains both the information on the issuer required under the Prospectus Regulation and the annual reports required under the Transparency Directive. It is filed in advance with the competent supervisory authority.

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