The Prospectus Regulation
The Prospectus Regulation (the PR) will become fully applicable from 21 July 2019 and will replace the previous regime based on the Prospectus Directive (the PD). In Ireland, this change is effected by the Prospectus (Directive 2003/73/EC) (Amendment) Regulations 2018, which amend the Prospectus (Directive 2003/71/EC) Regulations 2005.
Background
The EU prospectus regime requires a prospectus to be drawn up where securities are either offered to the public within the EU or admitted to trading on a regulated market operating within a Member State. This regime was originally based on the PD, which was implemented locally in each of the Member States and will now be based on the PR which will be directly applicable.
The PR is supplemented by the following detailed delegated acts:
- a delegated regulation supplementing the PR as regards the format, content, scrutiny and approval of the prospectus, and
- a delegated regulation supplementing the PR with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal.
Continuing Exemptions
The PR retains many of the exemptions which existed under the PD regime, for example units issued by open-ended collective investment undertakings, shares in EU central banks and securities which are guaranteed by a Member State remain out of scope.
Exempt offers
The PR allows Member States to exempt offers of securities to the public where total consideration of each offer does not exceed €8m over a 12-month period and where offers are not subject to passporting notifications under Article 25. Member States must notify the Commission and ESMA whether and at what monetary threshold they intend to exercise this discretion. Ireland has since 21 July 2018 applied a threshold of €5m.
What's new?
The new features being introduced by the PR include:
Summaries
The requirements which apply to summaries have changed and are now quite similar to those which apply to KIDs prepared under the PRIIPs Regulation. Among other things, the summary can be no longer than seven pages and can include no more than 15 risk factors.
Universal Registration Document
Regular issuers of securities trading on a regulated market or a multi-lateral trading facility, will have the option of preparing a Universal Registration Document (URD) which outlines issuer-level disclosure including; business & legal information, financial and accounting position, earnings and prospects, and governance and shareholding structure. Once a URD has been approved for two consecutive financial years by a competent authority, subsequent URDs may be filed without prior approval (provided that at least one URD is filed every year). This should speed up the process of issuing securities and result in cost-effective access to capital markets.
Simplified disclosure regime
SMEs and companies that have debt or equity securities admitted to trading on regulated markets for at least 18 months, can avail of a simplified disclosure regime for secondary issuances. This means reduced disclosure for the issuer and its business and an exemption from including operating and financial review information. This exemption is due to other regulatory disclosures having been made, such as those required under the Market Abuse Regulation and the Transparency Directive.
