The EU Council has agreed a negotiating stance on proposed new rules on prospectuses for the issuing and offering of securities in the EU.

The proposed Regulation is an important step towards the creation of the capital markets union which is due to be fully functioning by the end of 2019. The draft regulation seeks to provide all types of issuers with disclosure rules that are tailored to their specific needs, whilst making the prospectus a more relevant tool for informing potential investors. It will also reduce divergences that have emerged in implementation by member states.

The proposal establishes specific rules for companies already listed on a regulated market that wish to raise additional capital by means of a secondary issuance, as well as for SMEs. With reduced paperwork and associated costs, it is likely SMEs may be encouraged to raise capital in the market.

The draft Regulation also sets out to achieve greater convergence between the prospectus rules and other disclosure rules.