On April 5th the European Parliament approved the new Prospectus Regulation. It is intended to protect investors while at the same time helping companies, and in particular SMEs, access the capital markets in a more cost efficient manner. The Regulation contains new rules on when a prospectus must be published and on its contents.
Some important elements of this new prospectus regime are:
- Prospectus requirement: No prospectus is required for securities fungible with securities already admitted to trading on the same regulated market, provided that they represent, over a period of 12 months, less than 20% of the number of securities already admitted to trading.
- Secondary issuances: A simplified prospectus regime will become available for secondary issuances.
- Risk factor presentation: Risk factors should be presented in order of probability of their occurrence and the expected magnitude of their impact.
- Fast track prospectus approval: 5 working day prospectus approval track will become available for frequent issuers.
The Council of the European Union must still approve the new Regulation, which is expected to happen in the coming weeks. The final text will then be published in the Official Journal of the European Union. It is anticipated that publication will take place in the second half of Q2 2017. The new Regulation will enter into force shortly after publication.