Changes have been made to the Prospectus and Transparency regimes in Ireland by the implementation into law of Directive 2010/73/EU which amends both the Prospectus Directive (Directive 2003/71/EC) and the Transparency Directive (Directive 2004/109/EC).

Changes to the Prospectus Regime

The Prospectus (Directive 2003/71/EC) (Amendment) Regulations 2012 (the 2012 Regulations), which were published last week, amend the Prospectus (Directive 2003/71/EC) Regulations 2005 (the 2005 Regulations). The changes came into effect on 1 July 2012.

The European Commission brought about these changes in order to provide greater legal clarity around the Prospectus regime, to reduce administrative burdens for issuers and intermediaries, to give issuers' employees access to a full range of investment opportunities and to assist retail investors to analyse the prospects and risks posed by a security more efficiently before investing.

Some of the key changes include:  

  • In the case of Public Offers which are exempt from the need to issue a Prospectus, the maximum number of investors (other than qualified investors) has been raised to less than 150 per member state from the current less than 100-person limit (in other words, 149 persons); the minimum total consideration threshold has been raised to €100,000 from the previous €50,000 per investor and the minimum denomination threshold has been raised to €100,000 from the previous €50,000 per unit;
  • In the case of exempt Public Offers which are outside the scope of the Prospectus regime, the threshold of total consideration of an offer has been raised to €5 million over a 12-month period. In addition, the threshold which applies in the case of non-equity securities that are issued in a repeated manner by credit institutions has been raised to €75 million;
  • the format and content requirements of the prospectus summary have been altered to require a more tailored summary focusing on "key" information for the benefit of investors;
  • there are clearer exemptions from the obligation to publish a prospectus in the case of retail cascades and for employee share schemes; and
  • the definition of 'qualified investors' has been aligned with that of 'professional clients' as defined in the Markets in Financial Instruments Directive (MiFID).

Amendments to Commission Regulation 809/2004

Regulation 809/2004, dealing with format and the content of the prospectus, the base prospectus, the summary and the final terms and as regards the disclosure requirements, has also been amended, and these amendments came into force also on 1 July. The amendments relate to:  

  • the format and detailed content of the key information to be included in a prospectus summary;
  • the proportionate disclosure regime which will apply to pre-emptive offers by companies with shares admitted to trading on a regulated market or a multilateral trading facility; and
  • the proportionate disclosure regime which will apply to small and medium-sized enterprises and issuers with reduced market capitalisation.

Changes to the Transparency Regime

The changes in Directive 2010/73/EU related in the main to the Prospectus regime. However, some corresponding changes were introduced to the Transparency regime. The Transparency (Directive 2004/109/EC) (Amendment) Regulations 2012 (the 2012 Transparency Regulations), which were published last week, amend the Transparency (Directive 2004/109/EC) Regulations 2007 (the 2007 Regulations). The changes came into effect on 1 July 2012.  

The key changes include:  

  • In the case of issuers of debt securities, the minimum denomination threshold for the exemption from the requirement to produce annual and half-yearly financial reports and interim management statements has been increased to €100,000 from the previous €50,000. The availability of this exemption is also dependent on whether the issuer’s financial year begins prior to or after 1 July 2012;
  • In the case of issuers of debt securities, the minimum denomination threshold which applies to enable the issuer to chose any Member State as a venue for meetings has been increased to €100,000 from the previous €50,000;
  • The minimum denomination threshold governing the right of debt issuers to elect the language of regulated information has been raised to €100,000 from the previous €50,000;and
  • Appropriate provisions have also been made for debt securities for at least €50,000 already admitted to trading on an EU Regulated Market prior to 31 December 2010 in each case.