EU Commission publishes amendments to Prospectus Delegated Regulations

On 04 June 2020, the European Commission published draft regulations to amend and correct Commission Delegated regulations (EU) 2019/980 and (EU) 2019/979, which both supplement the EU Prospectus Regulation.

Amendments to Delegated Regulation (EU) 2019/980

Commission Delegated Regulation (EU) 2019/980 (the 2019 Delegated Regulation) supplements the Prospectus Regulation in relation to the format, content, scrutiny and approval of prospectuses.

The Commission has published a draft delegated regulation and accompanying Annexes to amend and correct various aspects of the 2019 Delegated Regulation. Draft changes to the 2019 Delegated Regulation include:

• clarifying that the issuers of certain types of convertible, exchangeable and derivative securities should be subject to the lighter disclosure rules applicable to non-equity securities;

• amending Articles 24(4) and 24(5) of the 2019 Delegated Regulation so that when filing a universal registration document, the issuer need only submit the information contained in the annual financial report in XHTML format (as opposed to providing the whole universal registration document in that format);

• setting out placeholders where additional information about underlying shares, derivative securities and consent to use the prospectus, where applicable, should be inserted in the EU Growth prospectus (the 2019 Delegated Regulation sets out the standardised format of the EU Growth prospectus);

• clarifying that where audit reports on historical financial information have been refused by the statutory auditors or where they contain qualifications, modifications of opinion, disclaimers or an emphasis of matter, such qualifications, modifications, disclaimers or emphasis must be reproduced in full and the reasons given, in all cases;

• reflecting the amendment made to the Prospectus Regulation (by Regulation (EU) 2019/2115) under which the requirement to disclose the working capital statement in an EU Growth prospectus applies to all issuers of equity securities, irrespective of their market capitalisation; and

• clarifying that an appendix to a registration document or a universal registration document need only be submitted to the competent authority in searchable electronic format via electronic means where such appendix is required under Article 26(4) of the Prospectus Regulation.

The draft delegated regulation will come into force on the third day following its publication in the EU Official Journal, except that Articles 1(1) to (8) and Article 2 will apply retrospectively from 21 July 2019.

Amendments to Delegated Regulation (EU) 2019/979

Commission Delegated Regulation (EU) 2019/979 (RTS Regulation) supplements the Prospectus Regulation in relation to regulatory technical standards on key financial information in the prospectus summary, the publication and classification of prospectuses, advertisements, supplements to a prospectus and technical arrangements for the notification portal.

The Commission has published a draft delegated regulation and accompanying annexes to amend and correct various minor aspects of the RTS Regulation.

The main amendment is to Article 18(1) of the RTS Regulation, which provides that issuers of securities convertible or exchangeable into third party shares are required to publish a supplement to their prospectus in specified circumstances. Under the previous delegated regulation (which supplemented the Prospectus Directive), issuers of non-equity securities were not required to publish a supplement in these circumstances.

Given that the intention of the RTS Regulation was not to increase the legal requirements for issuers of non-equity securities by asking them to publish a supplement and given that the previous rules have proven to work well and have not affected the level of investor protection, the draft delegated regulation restores the status quo by removing all references to issuers of securities convertible or exchangeable into third party shares from the list in Article 18(1) of the RTS Regulation.

The draft delegated regulation also makes clerical and typographical corrections to the RTS Regulation. It will come into force on the third day following its publication in the EU Official Journal and most of its provisions will apply retrospectively – from 21 July 2019.