A new Prospectus Regulation was published in the Official Journal of the European Union on 30 June 2017 and will come into force on 20 July 2017. It will repeal the current Prospectus Directive regime and replace it with a new European prospectus regime on 21 July 2019, although some aspects of the regime will come into effect earlier (see below).
Certain aspects of the new Prospectus Regulation will come into effect on 20 July 2017. From an ECM perspective, the most important change relates to the admission to trading exemptions. Currently, an issuer whose shares are admitted to trading on a regulated market such as the Main Market of the London Stock Exchange is not required to publish a prospectus if the issue of new shares represents over a period of 12 months less than ten per cent of the number of shares of the same class already admitted to trading on the same market. From 20 July 2017, the percentage will increase to 20 per cent and the exemption will relate to all securities fungible with securities already admitted to trading, for example debt. Although the changes appear to benefit issuers, it should be noted that any issuance of new shares by an issuer (wherever incorporated) whose shares are listed on the premium segment of the Official List will be subject to the pre-emption guidelines issued by the Pre-Emption Group.
Other key points (which will come into effect on 21 July 2019) are as follows:
- new simplified content requirements for secondary issuances
- new universal registration document
- shorter summaries and different format but prescriptive content remains
- risk factors to be presented in a limited number of categories and in order of materiality
- changes to the "necessary information" test including a requirement for the information in a prospectus to be concise
We have published an article in Practical Law Magazine covering the details of the key points. Please read our full article here.
This article first appeared in the July 2017 issue of PLC Magazine.
Of course, the elephant in the room is Brexit. The new Prospectus Regulation will have become effective before the United Kingdom leaves the European Union but it remains to be seen to what extent the Great Repeal Bill will transpose the Prospectus Regulation into English law after the United Kingdom ceases to be a member state.
Please see here to access PLC Magazine
