Agreement has been reached at EU level on a new Prospectus Regulation (the "Regulation"), which is designed to repeal and replace the existing body of European prospectus law.
The new Regulation is intended to be of particular benefit to European small and medium enterprises when issuing shares or debt. Companies already listed on public markets will also benefit when they list additional shares or issue corporate bonds.
The key changes to the prospectus regime are as follows:
- Thresholds for publication of a prospectus. No prospectus will be required for capital raisings and crowdfunding projects up to €1 million (up from €500,000) and the threshold beyond which a prospectus is mandatory is increased from €5 million to €8 million in capital raised.
- Prospectus summary. Prospectuses will have a new, shorter prospectus summary that is modelled on the existing key information document (KID) required under the PRIIPs Regulation.
- Minimum disclosure regime. The EU growth prospectus, a new type of prospectus, will be available for SMEs, non-SMEs (where the securities are being admitted to an SME growth market) and small issuances by unlisted companies. In addition, companies already listed on a public market seeking to issue additional shares or raise debt may avail of a new, simplified prospectus.
- Fast track approval. Companies that frequently access the capital markets may use an annual universal registration document (URD), which is similar to a US shelf registration. Irish issuers who regularly maintain an updated URD with the Central Bank of Ireland will benefit from a 5 day fast-track approval when they intend to issue new securities.
- Publication of prospectus. Paper prospectuses will no longer be required, unless requested by a potential investor. In addition, the European Securities and Markets Authority (ESMA) will provide free and searchable online access to all prospectuses approved in the European Economic Area.
- Risk factors. The Regulation requires lists of risk factors to be shorter, consisting of a limited selection of specific risks which are categorised according to their nature.
The Regulation was formally approved by the EU Council on 16 May 2017 and will shortly be published in the Official Journal of the EU, with most of its provisions coming into effect 2 years after that publication date (likely to be mid-2019).
The Regulation will have direct effect across the Member States of the EU, meaning that it does not strictly need any national transposing measures to take effect. However, it is to be presumed that revisions to the Irish prospectus framework will be necessary to comply with the new provisions set out in the Regulation.