Prospectus Regulation: recent developments

The Prospectus Regulation (which repeals and replaces the Prospectus Directive) was published in the Official Journal on 30 June 2017. The Prospectus Regulation came into force on 20 July 2017 and will apply to all prospectuses approved on or after 21 July 2019. Certain of its provisions apply from an earlier date, however, including the following two revised admission to trading exemptions, which apply from 20 July 2017:

• a new prospectus will not be required for the admission to trading of fungible shares representing, over a 12 month period, less than 20% (up from 10%) of the same class of shares already admitted to trading on the same regulated market, and
• the current conversion/exchange exemption has been modified by the introduction of a cap, so that no prospectus will be required on admission of shares resulting from the conversion or exchange of other securities or from the exercise of rights conferred by other securities, provided that those shares represent less than 20% of the shares of the same class already admitted to trading on the same regulated market (over a 12 month period).

See The new Prospectus Regulation: Key features for equity issuers and CMU: The New Prospectus Regulation (PD3) - Impact on Issuers of Debt Securities for more information.

ESMA advice on Prospectus Regulation

On 28 February 2017, the European Commission asked the European Securities and Markets Authority (ESMA) to provide technical advice on a number of aspects of the Prospectus Regulation. An updated version of the mandate was published on 01 June 2017. The mandate to ESMA consisted of two parts:

• Part 1 - to provide technical advice on the following matters within 13 months:
  • the criteria for the scrutiny and review of the universal registration document and other procedural matters relating to universal registration documents
  • the format of the prospectus, the base prospectus and the final terms and the applicable disclosure requirements (when the Regulation applies the existing Prospectus Directive disclosure requirements will be repealed)
  • the minimum information that has to be included in the universal registration document
  • the disclosure requirements applicable to simplified prospectuses (to be used for secondary issues)
  • the format and disclosure requirements applicable to EU Growth Prospectuses, and
  • the criteria for the scrutiny of prospectuses and the procedures for approval of prospectuses.
• Part 2 - to provide technical advice on measures specifying the following matters within 18 months:
  • the minimum information to be included in documents describing a merger or a takeover by way of an exchange offer, and
  • general equivalence criteria for prospectuses drawn up under the laws of non-EU states.

ESMA had to provide the technical advice in Part 1 by 31 March 2018 and has to provide Part 2 by 31 August 2018. See CMU: European Commission seeks technical advice from ESMA on PD3.

On 03 April 2018, ESMA published its final report with its technical advice on:

• the format and content of the prospectus
• scrutiny and approval of the prospectus, and
• content and format of the EU Growth prospectus.

This follows a consultation on its draft technical advice published in July 2017.  Subject to endorsement by the EU Commission this technical advice will form the basis for the delegated acts to be adopted by the Commission by 21 January 2019.

On 15 December 2017, ESMA published a consultation paper with its proposed draft regulatory technical standards on:

• key financial information for the prospectus summary
• provisions concerning advertisements
• obligation to publish a supplement to the prospectus
• publication of prospectuses, and
• data for classification of prospectuses and practical arrangements to ensure machine readability of such data.

The consultation on these RTSs closed on 09 March 2018.

More information

See our PD3 feature.