In June 2013, the European Securities and Markets Authority (“ESMA”) published a report entitled “Comparison of liability regimes in Member States in relation to the Prospectus Directive” (the “Report”). This Report provides a useful comparison of the national liability regimes across the European Economic Area states (the “EEA States”) in relation to the Prospectus Directive.
The Report provides a high level overview of the various EEA States’ civil, administrative, criminal and governmental liability regimes. Liability for prospectuses is not harmonised at the EEA level apart from a few elements of administrative and civil liability, and therefore many differences exist between various jurisdictions.
ESMA’s key conclusions were:
- There is no uniform approach as to the persons who are subject to the different liability regimes.
There are areas of common ground between EEA States, particularly on the following issues:
- In all EEA States, the inclusion of false or incomplete information in a prospectus gives rise to both civil and criminal liability.
- The majority of EEA States display a similar approach regarding the degree of fault that must exist to trigger liability, as at least some form of negligence is required.
- On the issue of sanctions, the vast majority of EEA States apply both fines and/or imprisonment in the criminal liability regime, whereas fines and/or other supervisory measures such as public reprimand or trading suspension are applied in the administrative regime.
- In one-third of EEA States, class action suits are permitted both in the civil and governmental liability regimes.
- Although there are wide differences in approaches to liability regimes in EEA States, none of the approaches are more or less correct than others.
- The diversity of approaches between different jurisdictions may make it difficult for market participants to assess their risks and rights in accordance with the applicable prospectus liability regimes.
Whilst there is no suggestion yet that the EU will seek to harmonise the rules, the Report does point out the inconsistencies in the current system, and the need to be aware of the risks when offering securities across the EU. For those contemplating an offer of securities into a given jurisdiction, the annexes to the Report provide a useful source of information on the rules presently in place.
For additional information, please click here for the Report: Comparison of liability regimes in Member States in relation to the Prospectus Directive.
Please click here for Annex II of the Report, entitled Comparative table of responses from EEA States.
Please click here for Annex III for the Report, entitled Individual responses from EEA States.