The new EU Prospectus Regulation comes fully into force across the EU on 21 July 2019. It replaces the existing rules that regulate companies seeking to raise funds from the general public within the EU or to list their securities on the EU's main public markets. This alert highlights the key changes affecting issues of shares by companies.

  • The Regulation applies directly across the EU and replaces local rulebooks, such as (in the UK) most of the content of the FCA's Prospectus Rules (to be renamed the Prospectus Regulation Rules).
  • Several important changes are already in force:
    • Since July 2018, companies have been able to raise up to €8 million annually from the general public within the UK (or other EU countries that have opted into this concession) without having to publish a prospectus.
    • Since July 2017, companies listed on EU regulated markets, such as the London Stock Exchange's main market, have been able to list up to a further 20 per cent of their share capital annually without publishing a prospectus (double the previous limit).
  •  Long-standing prospectus exemptions remain available, such as those for offers to professional investors and fewer than 150 non-professional investors per EEA state.
  • A company that regularly has to publish a prospectus can publish an annual 'Universal Registration Document’ (URD) instead of its annual report and can then use this to form the basis of a prospectus. Companies must obtain FCA approval for their first two URDs, but not for further URDs.
  • The new rules seek to make prospectuses more focused and concise. For example, they restrict the length of summaries and there is much more emphasis on risk factors being relevant and specific to the company.
  • A wider range of companies can elect to publish a short form prospectus, now called an 'EU Growth prospectus', when offering their shares to the public. However, the general disclosure standard for a prospectus remains very broad, so companies will still need to consider carefully whether a shorter document contains all the information investors need.
  • Companies quoted on EU regulated markets or SME growth markets (such as AIM in the UK) can choose to publish a shorter form prospectus for a secondary issue. Under the new rules, this option is no longer restricted to rights issues, and the general disclosure standard for a secondary issue prospectus allows companies to focus on developments since the last audited accounts. However, companies looking to raise funds outside the EU may find that the EU content concessions are overridden by the broader standards required for an international offering (such as a US Rule 144A fundraising).
  • Companies seeking admission to AIM can still choose to save time and expense by publishing an AIM admission document instead of an FCA-approved prospectus, if they are not raising funds from the general public. The content requirements for an AIM admission document remain very similar to the current standard.
  • A company seeking to publish a prospectus (or an AIM admission document) on or after 21 July 2019 must ensure it complies with the new rules.