New Prospectus Regulation text agreement announced by EU Commission

On 08 December 2016, the European Commission published a press release confirming that the EU Parliament, Council and the Commission have reached agreement on the text of a new EU Prospectus Regulation. The EU Council has also issued a similar press release. The new Regulation is an integral part of the EU’s Capital Markets Union initiative which aims to create deeper, stronger and better capital markets in the EU to support jobs and growth.

Although the agreed text of the Regulation has yet to be published, the Commission’s press release states that the following changes to the current regime have been agreed:

• No prospectus will be required for the smallest capital raisings and crowdfunding projects up to €1m.
• A prospectus will only be mandatory when the capital being raised amounts to at least €8 million, almost doubling the previous €5m threshold. For offerings below the threshold, issuers can raise capital according to local market rules issued by growth markets.
• A new EU growth prospectus will be available for SMEs, mid-caps admitted to an SME Growth market or small issuances by non-listed companies.
• A frequent issuer regime will be available for frequent participants in the capital markets and this will halve approval times from ten days to five.
• A shorter prospectus for secondary issuances will allow issuers already admitted to stock markets and SME growth markets to benefit from a lighter prospectus for any “follow-up” issuances.
• Prospectus summaries will become shorter and the language used will be easier for investors to understand.
• Paper prospectuses will no longer be required unless a potential investor expressly requests one.
• A new European online prospectus database will be operated free of charge by ESMA.
• An alleviated corporate bond prospectus will be available for admission to wholesale debt markets. Previously the alleviated debt prospectus was only available for debt issued in denominations of at least €100,000. The new corporate debt prospectus aims to introduce more liquidity into secondary markets for corporate bonds.

The agreed text will now go to the European Parliament and Council for a final vote.

For further information on the Capital Markets Union initiative, see the Capital Markets Union knowledge centre.