The Committee of European Securities Regulators (CESR) has published a letter where it welcomes the Commission’s proposal to review the Prospectus Directive (PD).

CESR has considered all the issues included in the Commission’s consultation paper and the accompanying background document in detail. However, CESR has decided in its response to restrict itself only to those issues where CESR members are in common agreement.  

CESR’s comments are as follows:

  • Article 2 (1) (e) – Definition of Qualified Investors. CESR welcomes the proposal of the European Commission (EC) to amend article 2(1) to include professional clients and eligible counterparties in the definition of qualified investors.
  • Article 3 – Exempt Offers. CESR is of the view that deleting the last indent in article 3 (2) PD, as proposed by the Commission, would not clarify the responsibilities for publishing and updating the prospectus in a retail cascade scenario. Moreover, CESR considers that the deletion of the last indent of article 3 (2) PD could be considered to create a regulatory gap in so far as, for instance, it would then be possible to circumvent the obligation to publish a prospectus by approaching fewer than 100 persons at each stage of the cascade, even though ultimately a large number of people might subscribe for the securities concerned.
  • Article 10 –Information. CESR supports the deletion of article 10. In addition, all the references included in the PD to article 10 (for example articles 9.4 and 11.1) should be revised.
  • Article 16 –Supplement to the Prospectus. CESR supports harmonisation of the minimum time frame for the exercise of withdrawal rights and most CESR members consider that the 2 day period proposed by the Commission is adequate. However, CESR considers that the wording proposed does not achieve this objective.
  • Disclosure obligations-summary. CESR agrees with the Commission’s proposal to explore the possibility of having under the different directives, a document with similar information requirements (i.e. summary) to give retail investors a fully understandable and useful representation of the product's main features. This would ensure equivalence of protection for retail investors under these directives.