A directive amending the Prospectus Directive (PD) was adopted by the Council of the European Union on 11 October 2010 and will become law on the 20th day following its publication in the Official Journal of the EU. It is expected that this could occur later this month.
Further to our article in Issue 1 of this newsletter, entitled “The effect on Employee Share Plans of the Amending Directive of the Prospectus Directive”, the amending directive will extend those provisions already exempting offers to employees and directors from the prospectus requirement to (i) all companies that are headquartered or registered in the European Union and (ii) companies with securities trading on markets outside of the EU, when that country is considered by the Commission to have the same regulatory and supervisory standards as a regulated market.
Within the UK context, the government decided on 1 November 2010 to allow for early implementation of two of the PD amendments, namely:
- the amendment exempting from the scope of the PD offers of securities for which the consideration is under EUR 5 million (formerly EUR 2.5 million), calculated over a 12 month period; and
- the amendment to the exemption from the requirement to file a prospectus for offers made to less than 150 persons per member state (formerly 100 persons per member state).
It is anticipated that these amendments will be introduced in the UK in early 2011, with a view to assisting small to medium‑sized enterprises.
Although this exemption for companies outside the EU is apparently good news, many of these companies are still able to rely on the other exemptions from requiring a prospectus under the PD, meaning the effect of the amending directive may not be as significant as it seems.