EU Regulation 2017/1129 (the Prospectus Regulation) came into force in July 2017. It relates to the publication of prospectuses when either an offer of securities is made to the public or securities are admitted to trading on a regulated market. The Prospectus Regulation repeals and replaces Prospectus Directive 2003/71/EC and the old Prospectus Regulation 809/2004. The majority of the provisions of the new Prospectus Regulation will apply with direct effect from 21 July 2019. This means that it does not necessarily need any national transposing measures to be effective.
The old prospectus regime attracted criticism from various commentators, particularly from small and medium enterprises (SMEs) seeking to raise capital. It was said to impose significant administrative burdens for companies. Prospectuses are usually costly and onerous to produce. Prospectuses can also prove too complex for investors who have to process and consider excessively detailed information.
The main objectives of the Prospectus Regulation are:
the reduction of the administrative burden for issuers when drawing up a prospectus, in particular for SMEs, frequent issuers of all types of securities and secondary issuances making the prospectus a more relevant disclosure tool for potential investors, especially when investing in SMEs avoiding overlaps between the EU prospectus and disclosure rules Key provisions of the Prospectus Regulation
Minimum monetary thresholds where a prospectus is required
The obligation to publish a prospectus will not apply to capital raisings and crowdfunding projects, from an offer of securities to the public, where the total consideration in the EU is less than €1 million, calculated over a 12 month period. Additionally, each member state will have the discretion to exempt offers of securities to the public where the total consideration in the EU is less than €8 million, calculated over a 12 month period. This is provided it is not subject to notification under Article 25 of the Prospectus Regulation.
These exemptions will apply from 21 July 2018.
Issuers with securities already admitted to trading
The obligation to publish a prospectus will not apply to an admission to trading on a regulated market where:
a regulated market issuer wants to admit further securities, or shares are issued on conversion or exchange of exchangeable securities. This is provided that in both cases the new securities/shares, as the case may be, represent...