On 3 March 2017, the FCA published quarterly consultation paper no.16 (CP 17/6) which, amongst other things, proposes changes to the Prospectus Rules to implement certain measures set out in the new Prospectus Regulation, which the FCA anticipates will come into force around May or June this year.

The Prospectus Regulation will be directly applicable in the UK and most of the changes will apply 24 months after it comes into force. Two measures, however, will apply when the Prospectus Regulation comes into force. Consequently, the FCA is consulting on its proposed amendments to the PRs to implement these new measures.

Which measures will have immediate application?

The measures which will apply immediately upon the coming into force of the Prospectus Regulation relate to the exemptions from the obligation to publish a prospectus when securities are admitted to trading on a regulated market. Consequently, it is proposed that PR 1.2.3R which sets out the relevant exemptions is amended:

  • so that the threshold, below which increases of issued shares in a 12 month period are exempt, is increased from 10% to 20% of the number of shares of the same class already admitted to trading. Additionally, the exemption will apply to securities, rather than only to shares, and
  • so that the current exemption for shares resulting from the conversion or exchange of securities is limited to 20% of the number of shares of the same class already admitted to trading on the same regulated market over a period of 12 months, although that 20% limit is disapplied in prescribed circumstances.

Other proposed changes to definitions

Additionally, the FCA proposes some other minor amendments to its Handbook, including proposals to:

  • update the definition of "ESMA Prospectus Questions and Answers" in the Glossary and PR Appendix 1 to refer to ESMA's 26th updated version which was published on 20 December 2016; and
  • update the definition of the "UK Corporate Governance Code" (Code) in the Glossary and LR Appendix 1 to refer to the new edition published in April 2016. Whilst the FCA considers that it does not need to make any changes to the Listing Rules or the Disclosure Guidance and Transparency Rules to reflect the updated provisions of the Code, it proposes transitional provisions in the Listing Rules to provide that the requirements of the 2014 version of the Code will continue to apply in respect of accounting periods ending before 16 June 2017.

What happens next?

Responses are due to be submitted to the FCA by 3 May.