On 3 April 2018, the European Securities and Markets Authority (ESMA) published its final report on its technical advice under the Prospectus Regulation which proposes new rules on the content and format of the prospectus and the scrutiny and approval of prospectuses (Final Report). Click here to read ESMA's final report.

The Final Report sets out the feedback received on ESMA's proposals published for consultation last July 2017, together with its consequential changes to the technical advice.


Click here to read our article on ESMA's original proposals published for consultation in July 2017.

Key points to note

Overall, ESMA proposes in its technical advice to maintain the majority of the content requirements set out in the existing prospectus regime but it has also made some specific changes in order to ease the cost and administrative burden for issuers, whilst ensuring that there is sufficient protection for investors.

We summarise some of the key points in the Final Report:

- ESMA will not proceed with its proposal to require a cover note to the prospectus. If a cover note is voluntarily included, the page length should be limited to 3 sides of A4 sized paper in order not to obscure the content of the prospectus.

- The inclusion of a 'How to use the prospectus' section in a base prospectus will also no longer be mandatory, as was originally proposed in consultation.

- ESMA maintains its position that risk factors should be disclosed in a prominent position and, consequently, should continue to be set out at the beginning of the prospectus after the summary or, in the case of a base prospectus, after the general description of the programme.

- There will not be a requirement for a stand-alone 'use of proceeds' section. Whilst the disclosure items in the various annexes will be retained – they will not have to be set out in a dedicated section of the prospectus.

- The scope of the national competent authority (NCA) approval should be included and placed prominently in the prospectus (that is, "near the beginning") or in the cover note, where one is included.

- ESMA clarifies that, in respect of the 'Information about an Issuer' to be set out in the prospectus, an issuer should only disclose a website address if it has one. If it does not have a website address, an issuer can note this as 'non-applicable' in its prospectus. Additionally, ESMA has decided to modify its technical advice to clarify that information on an issuer's website does not form part of the prospectus unless it is incorporated by reference into the prospectus.

- ESMA has decided that outstanding previously published profit forecasts and profit estimates must be disclosed on the basis of materiality in the context of an equity issuance (but note that ESMA has decided that they do not need to be reproduced in non-equity prospectuses). ESMA notes that this burden is compensated by the removal of the requirement to include an auditors' report on the profit forecast or profit estimate.

- ESMA is proceeding with its proposals in relation to the content of the 'Universal Registration Document' (URD), a new registration document for issuers of securities that are admitted to trading on a regulated market or an MTF. The Prospectus Regulation introduces new provisions that allow an issuer which has filed two consecutive URDs to benefit from a fast track review process for a draft prospectus.

- The technical advice prescribes specific minimum disclosure requirements for the 'EU Growth prospectus', the order in which the content should be presented and the format and content of the specific summary. The new 'EU Growth prospectus' allows certain issuers offering their securities to the public (which are not admitted to trading on a regulated market) to use a prospectus with reduced content requirements.

- ESMA states that its standard criteria for scrutiny of the "completeness, comprehensibility and consistency of the prospectus" should be adopted and, beyond this, national competent authorities should be afforded a certain level of flexibility necessary to ensure investor protection. As for approval and filing procedures, these are largely based on the existing regime, though these are some specific changes to reflect the text of the Prospectus Regulation.

Next steps

Subject to endorsement by the European Commission, the technical advice will form the basis for the delegated acts to be adopted by the European Commission by 21 January 2019. The Prospectus Regulation will be in full force from 21 July 2019, but, at this stage, it remains unclear if (and when) the Prospectus Regulation will apply under UK law following the UK's exit from the EU, which is scheduled for 29 March 2019.