Earlier this year, the European Commission published a consultation document for the review of the Prospectus Directive. The consultation document asks a number of specific questions about when a prospectus is needed, what information it should contain, and how prospectuses are approved. De Brauw contributed to the consultation on a number of questions that may be of interest to its clients. One of the elements of our feedback was that the sub-10% threshold (for listing additional shares without a prospectus if they are of the same class as those already admitted to trading) should be raised to 25%. The Commission is expected to publish more detailed proposals for a review of the Prospectus Directive later in 2015 based on the consultation input.

We suggested that the exception should apply to listings and secondary offerings of shares, in addition to rights in a rights issue. This would mean that smaller rights issues, such as for financing smaller M&A transactions, could take place without a prospectus. We also indicated that we support the introduction of an exception to allow an offering of securities by the selling shareholder to the issuer’s employees. This is relevant if securities are offered by a selling shareholder to employees in an EEA-country that the offering prospectus is not passported to. Furthermore, we advocated for a European conflict of law rule providing that the laws of the country of the issuer’s corporate seat should apply to liability claims relating to the offering and prospectus. The current rule – that the laws of the country apply where the damages occur – may lead to various liability regimes applying at the same time.

The review of the Prospectus Directive forms part of the proposals to establish a Capital Markets Union among the 28 EU member states by 2019. By reforming and reshaping the current prospectus regime, the Commission wants to make it easier for issuers to raise capital throughout the EU and lower the associated costs. At the same time, effective levels of consumer and investor protection should be maintained. The Commission is expected to publish more detailed proposals for a review of the Prospectus Directive later in 2015 based on the consultation input.