On 16 May 2017, the final version of the new regulation on prospectuses, issued when securities are offered to investors or admitted to trading, was approved by the Council of the European Union (the Regulation).
The Regulation will enter into force a few days after its publication in the Official Journal of the European Union (expected in Q2 or Q3 2017), but most of the provisions will apply only 24 months after the date of entry into force while only some will apply as from the entry into force.
The Regulation aims to facilitate the access to financial markets for companies, particularly for small and medium-sized enterprises (SMEs).
The main novelties are:
- New exemption for small capital raisings: The Regulation will not apply to securities offers with a total consideration in the EU of less than EUR 1 million.
Member States will also have the possibility to exempt offers of securities of less than EUR 8 million over a period of 12 months.
These exemptions will be applicable 12 months after the entry into force of the Regulation.
- Modified exemption for admission to trading: The 10% exemption threshold for admission to trading will be increased to 20%.
This exemption will be applicable on the date of entry into force of the Regulation.
- Warrants and convertible bonds – admission to trading: The admission to trading of shares resulting from the exercise of the rights conferred by other securities, or from the conversion of other securities (such as warrants and convertible bonds) will now only be exempted from the obligation to publish a prospectus if the shares represent less than 20 % of the total shares of the corresponding class already issued. Up to now, no such threshold applied.
This new rule will be applicable on the date of entry into force of the Regulation.
- Simplified prospectuses: The Regulation aims to make prospectuses shorter and clearer. For instance, prospectus summaries must now be limited to seven A4 pages and the list of documents that may be incorporated by reference will be extended.
- EU growth prospectus: The Regulation provides a less burdensome regime for (i) SMEs, (ii) non-SMEs listed on an SME growth market with a market capitalisation of less than EUR 500,000,000 and (iii) issuers (not listed on a MTF) with an average of up to 499 employees that wish to raise amounts up to EUR 20 million.
- Simplified secondary issuance for listed companies: The Regulation also provides a less burdensome disclosure regime for secondary issuances which will l consist of a summary, a specific registration document, and a specific securities note.
The simplified regime will be applicable to issuers whose securities have been listed on a regulated market or an SME growth market for a continuous period of 18 months.
- Fast-track and simplified frequent issuer regime: Companies that frequently issue securities will be able to obtain the review (or approval) of the prospectus within a shorter time period (five business instead of ten business days currently).
- Universal Registration Document: Issuers will have the possibility to use a "Universal Registration Document" (URD) as a constituent of the base prospectus. If a URD is filed during two consecutive years, subsequent registration documents can be filed without the FSMA’s prior approval.