CMU: European Commission seeks technical advice from ESMA on PD3

On 02 March 2017, the Commission requested the European Securities and Markets Authority (ESMA) provide technical advice on a number of aspects of the forthcoming Regulation, commonly known as PD3. The Regulation is scheduled to be published in the Official Journal during the first half of 2017. The mandate to ESMA consists of two parts.

Part 1

ESMA is requested to provide technical advice on the following matters within nine months:

• the disclosure requirements for universal registration documents 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requirements (when the Regulation becomes applicable the existing Prospectus Directive disclosure requirements will be repealed)
• the disclosure requirements applicable to simplified prospectuses (to be used for secondary issuances)
• 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

ESMA is requested 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.

Next steps

The following indicative table has been provided by the Commission:

Comment

The mandate places a strong emphasis on ensuring that there is a balance between investor protection and the cost to the issuer of the disclosure to be included in the prospectus. It remains to be seen how ESMA will apply these instructions in their technical advice. The market is likely to follow with interest ESMA’s technical advice as regards equivalence criteria, particularly in the context of Brexit.