Spring 2013 has seen a number of developments in the regulation of equity capital markets. In last month's corporate newsletter, we reported on the announcement of the proposed new High Growth Segment of the Main Market which was launched on 27 March 2013 and in this month's edition, we report on the European and Securities Markets Authority (ESMA) consultation on its proposed list of events which require the automatic publication of a supplementary prospectuses.
Here is a brief round-up of the other recent key developments.
New High Growth Segment – now live
The High Growth Segment of the Main Market was launched by the London Stock Exchange on 27 March 2013. Click here for our article on the new segment.
Revised ESMA framework for third country prospectuses
In March 2011, ESMA published a framework for third country prospectuses. The framework enables prospectuses from non-EU countries, which are drawn up in compliance with those countries’ legislation, to be supplemented by a “wrap” of the prospectus containing additional disclosure, so that the resulting document meets the requirements of the Prospectus Directive and may be used in the EU.
The framework provides that, either on application from a third country competent authority or on its own initiative, ESMA will publish an opinion on the application of the framework to identify a list of the items which will need to be included in a "wrap" to a prospectus from that specific third country. Once an opinion is published, third country issuers can request the competent authority in the home Member State to make use of the arrangement. The relevant competent authority will scrutinise the prospectus and the "wrap" before issuing its approval if it is satisfied that all requirements have been met. However, the framework does not prevent a competent authority from requiring an issuer to include additional or modified disclosure relating to the information in the wrap and the prospectus on a case by case basis in accordance with the EU prospectus regime. To date, Israel is the only third country for which ESMA has published an opinion on the application of the framework to a prospectus regime outside the scope of the Prospectus Directive.
On 20 March 2013, ESMA published an opinion which sets out an updated framework for the assessment of third country prospectuses. The framework reflects the substance of the previous version, but has been updated to reflect the entry into force of the legislation amending the Prospectus Directive in 2012.
The key changes include:
the categorisation of additional information required to be disclosed in the EU prospectus regime (for example, information required to be disclosed in prospectus summaries and for registrations of share rights issues) so that it falls into Category A or Category B. Information, which is required to be disclosed in the prospectus pursuant to the Prospectus Regulation (809/2004), is classed as either Category A or Category B information. If an item listed in Category A is not required to be disclosed in the third country prospectus regime, ESMA states that this information will have to be provided in the "wrap" in the same form specified under the Prospectus Regulation. If an item listed in Category B is not required to be disclosed in the third country prospectus regime, ESMA considers that the information will have to be provided in the "wrap", unless the third country can demonstrate to ESMA that investors would nevertheless be able to make the same informed assessment from the information, despite being disclosed in a different form, and
a requirement that the summary of the prospectus must be in the form required for prospectus summaries pursuant to the Prospectus Regulation, including the mandatory order of information within the summary. Where the third country regime does not require a prospectus summary to follow a similar form, the summary will have to be provided in the required form in the "wrap" added to the prospectus.
Click here to see the revised framework and list of categorised information.
Updated CESR recommendations regarding mineral companies
On 22 March 2013, ESMA published an update of the CESR recommendations for the consistent implementation of the Prospectus Regulation implementing the Prospectus Directive. The update amends the recommendations relating to disclosures by mineral companies (paragraphs 131-133 and the related appendices) of the CESR recommendations, which were the subject of consultation last Autumn 2012.
Some of the key changes include changing the scope and structure of the exemption from the need for a prospectus to include a Competent Person's Report; including the Russian NAEN Code within the list of Acceptable Internationally Recognised Mineral Standards as regards mining reporting and clarifying the materiality concept when evaluating mineral projects.
Click here to review the ESMA update (including the new recommendations relating to disclosures by mineral companies).