On June 29, 2015, the European Securities and Markets Authority ("ESMA") published its position regarding the recognition of EU of prospectuses approved by the Israel Securities Authority ("the ISA").
In accordance with this position, companies that have received a permit from the ISA to publish a prospectus in Israel ("approved prospectus"), shall be entitled to approach the competent authority in each of the EU countries, in order to obtain an approval to publish an approved prospectus (together with the complementary document) in the EU. Where an approved prospectus and a complementary document have been approved as a prospectus by one of the EU countries, then the approved prospectus may be used in other Member States.
- In accordance with Article 20 of the Prospectus Directive ("PD"), a competent authority authorized to approve a prospectus in each one of the European Union countries, may approve a prospectus of a company incorporated in a country which is not an EU member state ("third country"), provided that the prospectus was approved by the competent authority in the third country, and the approved prospectus was accompanied by supplementary information, as specified by ESMA publications on the subject ("supplementary document").
- On 23 March 2011, following an assessment of the requirements of Israeli laws and regulations on prospectuses, and a comprehensive comparison was made as between the Israeli requirements and the EU requirements, ESMA published a statement setting out its view on prospectuses prepared according to Israeli laws and regulations. In ESMA’s view, a prospectus prepared according to Israeli laws and regulations, together with a supplementary document containing the information set out by ESMA, could constitute a valid prospectus under the PD for the purposes of its approval by the home competent authority of a Member State.
- On March 20, 2013, in accordance with changes in the regulatory framework of the PD, ESMA published an opinion which outlines a framework for the recognition of prospectuses approved by a third country, by the competent authority of an EU member ("recognition document of a third country prospectuses").
- As stated above, on June 29, 2015, ESMA published an assessment regarding the regulatory regime in Israel in connection with the publication of a prospectus (this publication should be read together with the recognition document of third country prospectuses).
- ESMA's outline in relation to recognition of EU countries in a prospectus approved by the ISA:
- Issuers seeking to make use of this arrangement should file their application to the competent authority in the home Member State. The application should be accompanied by a written confirmation from the issuer that its third country prospectus has been prepared in accordance with the legislation of the third country and attach the supplementary document to the prospectus. The competent authority can, if satisfied that the requirements have been met, approve the third country prospectus, together with the supplementary document, as a prospectus under the PD. However, nothing under this framework prevents a competent authority from requiring an issuer to include additional or modified disclosure relating to the information in the supplementary document and the third country prospectus on a case by case basis, in accordance with the EU prospectus regime.
- Where a third country prospectus and a supplementary document have been approved as a prospectus under the PD, the PD approved prospectus may be used in other Member States. However, the third country prospectus on its own would not be capable of being 33737 - 2591612/2 used. It should be noted that the arrangement does not address the dual registration procedure.
- The information which Israeli companies will be required to include, as part of the supplementary document, includes the following:
- a summary of the prospectus In accordance with the formula set out in the PD; 2.3.2. balance sheets covering the latest 3 financial years and the audit report in respect of each year;
- legal and arbitration proceedings: including a negative statement, if applicable;
- Details regarding risk factors that are material to the securities in order to assess the market risk associated with these securities;
For the full version of the position - click here