ESMA Final Report on Changes to the Format and Content of EU Prospectuses – Impact on non-equity securities

On 12 June 2025 ESMA published a final report containing technical advice with regard to changes to the format and content of prospectuses under the EU Prospectus Regulation regime required by the Listing Act package published in November 2024. This report follows feedback received by ESMA on its October 2024 consultation and this briefing explains the principal implications for issues of non-equity securities.

Key points

• The information in a prospectus for “plain vanilla” debt prospectuses will need to follow a prescribed order, but this will not apply to other prospectuses such as base prospectuses or those describing securities which give rise to payment or delivery obligations linked to an underlying asset.
• The separate Annexes to the EU PR Regulation for wholesale and retail non-equity securities are to be merged into one set of Annexes for all "standard" non-equity securities, but as is currently the case certain content requirements will only apply for "retail" securities.
• Detailed additional information will need to be included in a prospectus for non-equity securities that are advertised as considering ESG factors or pursuing ESG objectives.
• The requirement that a prospectus contains audited financial statements in respect of the issuer and any guarantor covering the latest two financial years is to be reduced to a single financial year, although issuers retain the flexibility to include more information where considered necessary.
• The proposed requirement for a prospectus to include a cover note describing its subject matter has been dropped.
• The proposal requiring an issuer to include a description of its KPIs for each financial year for the period covered by the historical financial information included in the prospectus has been dropped.
• Competent authorities are to be granted enhanced powers in relation to the scrutiny and approval of prospectuses.
• The Commission now has three months to take a decision on whether to adopt ESMA's proposals with an option to extend that period by one month.

Background

On 14 November 2024 an amending Regulation (Regulation (EU) 2024/2809) was published in the Official Journal as part of the EU's "Listing Act" package. Amongst other things, this amending Regulation makes a number of changes to the EU Prospectus Regulation regime which essentially apply in two stages: 

• The first set of amendments have applied from 4 December 2024; and  
• The second set will apply from 5 June 2026 (with some provisions relating to EU Growth issuance prospectuses and EU Follow-on prospectuses applying from 5 March 2026).

For more information see this Ashurst briefing giving an overall view and this Ashurst briefing looking in more detail at the first set of amendments. 

The amending Regulation requires the Commission to adopt a number of delegated acts to give effect to various of its provisions. As a result, following a consultation launched in October 2024, on 12 June 2025 ESMA published a final report (ESMA32-117195963-1417) containing technical advice to the Commission on the standardised format and standardised sequence of prospectuses, base prospectuses and the final terms, including a building block of additional information to be included in prospectuses for non-equity securities that are advertised as taking into account ESG factors or pursuing ESG objectives. 

Standardisation of prospectuses

Article 13 of the EU Prospectus Regulation tasks the Commission with adopting delegated acts which supplement the overarching requirement of the "necessary information" test by providing specific requirements for the format of the prospectus and for the information to be included in various different types of prospectus. The amending Regulation inserts in Article 13 a requirement that a prospectus must be a document of a standardised format and the information disclosed in a prospectus must be presented in a standardised sequence. The amending Regulation further inserts new Annexes I, II and III into the EU Prospectus Regulation and stipulates that the delegated acts must comply with those Annexes.

As a result, in its report ESMA proposes amending Commission Delegated Regulation (EU) 2019/980 (widely known as the EU PR regulation) to provide that the information in a "standard" prospectus must be presented in the order set out in those Annexes. This results in the information requirements of many of the Annexes to the EU PR regulation being significantly re-ordered even though in most cases the substance is little altered.

However ESMA has followed the strict sequencing of Annexes I, II and III to the EU Prospectus Regulation only for “plain vanilla” debt prospectuses prepared by a single issuer and has not applied it to other Annexes in the EU PR Regulation or other types of non-equity prospectuses. For other cases, such as base prospectuses or those involving “linked” disclosure Annexes, ESMA says the requirements currently found in Articles 24 and 25 of the EU PR Regulation are preferable.  The only exception to this is where a registration document is prepared as a separate document to constitute a base prospectus for a single issuer.  In that case, the final report says that the order of its information sections should be determined by the new Annex II of the EU Prospectus Regulation.

Although the report says that it contains technical advice to the Commission on the standardised format and standardised sequence of prospectuses, base prospectuses and final terms, in fact it makes no comment in relation to the format and standardised sequence of final terms.  This is perhaps not surprising as most final terms (at least in the international market) have for many years followed a relatively standardised format and sequence.

Merger of retail and wholesale disclosure

The EU Prospectus Regulation regime refers to non-equity securities which satisfy one of the following conditions as "wholesale securities":

(a)  they are to be traded only on a regulated market, or a specific segment thereof, to which only qualified investors have access;
(b)  they have a denomination of at least EUR 100 000 (or equivalent),

and it refers to any other non-equity securities as "retail securities".

Currently, the specific requirements of the EU PR Regulation for information items which must appear in a prospectus describing non-equity securities differ depending upon whether the securities are wholesale or retail and these are set out in separate Annexes to the EU PR Regulation. In its initial consultation, ESMA recommended doing away with this distinction and specifying one set of information items for all "standard" non-equity securities, using today’s wholesale disclosure as the benchmark with certain additional content requirements specified as applying only to retail securities.  ESMA also changed the order of information sections in the revised Annexes to the EU PR Regulation to align with the sequence in the new Annexes II and III of the EU Prospectus Regulation.

Feedback to the consultation gave much support to this approach but many respondents found the requirements specified as applying only to "retail" securities confusing and duplicative.  As a result, in its final report ESMA has retained the approach of one set of information items for all "standard" non-equity securities but sought to simplify and clarify within each Annex which items relate to retail securities and which to wholesale.

Green bond Annex

The Commission’s request for advice asked ESMA to develop a building block of additional information to be included in the prospectus for non-equity securities that are advertised as considering ESG factors or pursuing ESG objectives. Accordingly the consultation paper proposed inserting new definitions in the EU PR Regulation of "use of proceeds bond" and "sustainability-linked bond" and a new Annex to the EU PR Regulation setting out new requirements for these types of non-equity securities.  

As a result of feedback, and in an attempt to align more closely with market practices these definitions have been amended to read as follows:

"Use of proceeds bond" means non-equity securities whose proceeds or an equivalent amount are allocated to environmental and/or social projects or activities; and.

"Sustainability-linked bond" means non-equity securities for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined ESG objectives.

Compared with the proposals in the consultation for a new Annex to the EU PR Regulation setting out the requirements for this new building block, the final report recommends a number of changes to reduce the complexity of the disclosure requirements and avoid duplication of disclosure.  For example:

• An express requirement to disclose material risks is dropped as this is already covered by the general requirements for risk factor disclosure; and
• instead of requiring the inclusion of a summary of the applicable framework, market standard, label or third country taxonomy issuers will be allowed to include a hyperlink to the applicable framework, market standard, label or third country taxonomy, with a disclaimer that the information on the website does not form part of the prospectus (unless that information is incorporated by reference into the prospectus).

Most of this required information remains "Category A" information, which means in the context of an issuance under a programme that this information must appear in the base prospectus and cannot appear in the final terms. However in the case of use of proceeds bonds, the description of the goals and characteristics of the relevant sustainable projects is "Category B" information, which means that any relevant details not known at the date of the base prospectus may be inserted in the final terms. Also, whether the proceeds of the bond are ringfenced is "Category C" information, which means that this information may be inserted in the final terms. In the case of sustainability-linked bonds, information on financial features which are influenced by the fulfilment or failure to fulfil sustainability or ESG objectives is "Category B" information.

In all cases, if the securities are advertised as complying or aligned with a specific market standard, such as the ICMA’s Green Bond Principles, or the EU Taxonomy, or a third country taxonomy, the prospectus must state how the relevant criteria are met, and where relevant, identify any elements that are not met.

Finally, the report notes that the relevant optional disclosures from the voluntary templates set out in the European Green Bond Regulation can be used to satisfy the disclosure requirements in this new Annex (although ESG-related risk factors would need to be disclosed in the risk factors section of the prospectus).  ESMA had also considered disapplying Annex 21 in its entirety to prospectuses relating to green bonds which comply with the standards set out in the European Green Bond Regulation (EuGBs) but instead decided to require these prospectuses to comply with the new Annex, even if they are exempted from most of its disclosure requirements. The logic behind this approach is that the new Annex should apply to all non-equity securities that are advertised as taking into account ESG factors or pursuing ESG objectives, which includes EuGBs.  In due course, ESMA plans to publish a new regulatory technical standard (RTS) to add the optional pre-issuance disclosure to the list of documents that can be incorporated by reference into prospectuses in accordance with Article 19(1) of the EU Prospectus Regulation.

Historical financial information

Currently a prospectus for non-equity securities must contain audited financial statements in respect of the issuer and any guarantor covering the latest two financial years (at least 24 months) or such shorter period as the issuer or guarantor has been in operation. In the consultation paper, ESMA proposed reducing this requirement to one financial year (at least 12 months) or such shorter period as the issuer or guarantor has been in operation and this proposal has been carried through to the final report.  While ESMA acknowledges that this reduced time period may in some cases be too short it notes that issuers have discretion to include additional information, where they consider it necessary.

Cover notes

Currently when stipulating the format of a prospectus, the first item which the EU PR Regulation mentions is a table of contents, followed by a summary if required. In the consultation paper, ESMA proposed to amend this by requiring a prospectus to include a short cover note before the table of contents. However, in view of concerns about the disclosure which the proposed cover note should contain, and the fact that issuers already produce cover pages, this cover note proposal has been dropped.

Key performance indicators (KPIs)

In the consultation paper ESMA proposed an additional disclosure item for retail non-equity securities requiring a description of the issuer’s KPIs for each financial year for the period covered by the historical financial information to be included in the prospectus. In light of negative feedback, this proposal has been dropped.

New powers for competent authorities

Currently there appears to be considerable variation between national competent authorities (NCAs) in their approaches to setting timeframes for the scrutiny and approval of prospectuses.  In its consultation, ESMA proposed two amendments to the EU PR Regulation to harmonise timeframes for the scrutiny and approval process.  Based on positive feedback, ESMA has carried these proposals into the final report:

(a)  If an NCA informs an issuer that a draft prospectus does not meet the relevant standards it may impose a deadline for the submission of an updated draft prospectus of at least 10 working days and, if the deadline passes without a fresh submission, the NCA may refuse approval of the prospectus; and
(b)  An NCA must take a decision to approve or refuse approval of a prospectus within 120 working days of the receipt of the initial application for approval of a draft prospectus. If the scrutiny of the prospectus exceeds this time period, the NCA must refuse approval of the prospectus. This deadline can be extended once upon application by the issuer for a period of 90 working days.

Also carried over into the final report is the proposal to amend the EU PR Regulation to provide that, in the case of new types of securities, such as cryptoassets, or structured securities that display features that are comparable to but not the same as securities covered in the Annexes to the EU PR Regulation, the NCA will have the express power to require that the prospectus includes such additional information as is necessary to comply with the "necessary information test" in Article 6(1).

Comprehensibility and use of plain language

The amending Regulation requires ESMA to develop guidelines on comprehensibility and on the use of plain language in prospectuses.  However ESMA has not yet said anything about when or how it plans to develop these guidelines.  Nevertheless, in response to a number of comments on its October 2024 consultation to the effect that comprehensibility may be better addressed by plain language rather than mandatory format and content, the final report says that ESMA may explore work relating to the use of plain language at a future date but notes there are inherent challenges such as the fact that what constitutes “plain language” may have a different meaning depending on the relevant EU language and this may significantly impact work in this area.

Next steps

The European Commission now has three months to take a decision on whether to adopt ESMA's proposals with an option to extend that period by one month.