The EU Prospectus Regulation¹ entered into force on 20 July 2017. With few exceptions, the regulation will only apply from 21 July 2019. The regulation is aimed at ensuring that securities prospectuses are made simpler and more user-friendly to enable investors to make informed investment decisions, while at the same time making it easier for companies to access the capital market.

The new provisions will allow more exemptions from the prospectus requirement for admitting shares of the same class to a regulated market by increasing the threshold from 10 to 20 percent. A universal registration document is intended to contain information on the organisation, business activities, financial condition, income and future prospects of issuers; a description of the securities and a summary may be added to turn the document into a prospectus. Through the universal registration documents, issuers can attain the status of frequent issuer and thus benefit from a reduction in the time it takes to approve the prospectus from 10 to 5 working days.

The Prospectus Regulation specifies rules for simplified disclosures for secondary issuances. For certain companies, whose securities have been admitted continuously to a regulated market or a special market segment for small and medium-sized enterprises (SMEs) – an SME growth market – for at least the last 18 months are subject to simplified requirements. A new type of prospectus is the EU Growth prospectus, which gives certain companies, such as SMEs, the opportunity to take advantage of reduced disclosure requirements. Improved presentation of the information in the prospectus is above all intended to strengthen investor protection. For example, issuers will in future not be allowed to overload prospectuses with risk factors that hide the risk factors relevant to the investor.

At the European level, a number of measures have been and are being taken to implement the Prospectus Regulation. ESMA has published three consultation papers containing draft technical advice on the format and content of the prospectus, on the EU Growth prospectus and on scrutiny and approval.

Implementation of national regulatory scope

Article 1(3) of the Prospectus Regulation specifies that offers of securities to the public with a total consideration in the EU of less than €1 million (calculated over a period of 12 months) are not subject to a prospectus requirement, although the member states may impose other disclosure requirements. In addition, Article 3(2) of the Prospectus Regulation allows member states from 21 July 2018 onwards to increase the threshold for the obligation to publish a prospectus at the national level to up to €8 million (also calculated over a 12-month period).

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