On 29 March 2019, ESMA published its Final Report on Guidelines on risk factors under the Prospectus Regulation.

The Guidelines are addressed to national competent authorities (“NCAs”) to assist them in their review of risk factor disclosure, in particular, with respect to the requirements regarding specificity, materiality and presentation of risks factors across categories contained in Article 16 of the Prospectus Regulation.

The Guidelines encourage NCAs to challenge risk factor disclosure which does not comply with the requirements of Article 16 and note that NCAs may use their powers under Article 20 of the Prospectus Regulation to compel compliance with those requirements. Those powers include not approving the prospectus.

As a result, although the Guidelines are addressed to the NCAs, they will also be of significant interest to persons responsible for preparing prospectus risk factors. Issuers and their advisers will be required to devote time and resources to ensuring that the Guidelines are complied with, in order to minimize the risk of the prospectus approval process being a protracted one.

View our two page summary of the key points for consideration by issuers and their advisers in preparing risk factor disclosure under the Prospectus Regulation and the Guidelines.