The reform of the prospectus regime, one of the first legislative initiatives launched by the Commission as part of the Capital Markets Union (CMU), is close to be finalized. On 20 December 2016, the Permanent Representatives Committee approved, on behalf of the Council of the EU, the agreement reached with the EP on 7 December 2016. The text will now be formally adopted by the EU co-legislators before it can be published in the Official Journal and enter into force. The agreement has already been adopted by the ECON Committee of the European Parliament on 25 January 2017.
Replacing the existing Prospectus Directive, the new regulation aims at facilitating access to financial markets for companies, with a particular focus on small and medium-sized enterprises. In revising the EU framework for prospectuses, the Commission simplified the rules and streamlined administrative procedures. The overall objective is to encourage companies to turn to capital markets by making prospectus requirements cheaper and easier.
The new prospectus framework requires the issuance of a prospectus for securities with a value above EUR 1 milion, whereas the current legislation establishes the threshold at EUR 100,000. Member States will also be able to set further exemptions for small issuers on domestic markets by defining a higher threshold up to EUR 8 million. SMEs, small mid-caps companies with up to 499 employees and unlisted companies launching small issuances will be eligible for a simplified prospectus regime called “EU Growth Prospectus”. Frequent issuers will also benefit from a simplified regime, through the Universal Registration Document (URD).