Academic journal article Business Law International

Amendments to the EU Prospectus Directive Regime

Academic journal article Business Law International

Amendments to the EU Prospectus Directive Regime

Article excerpt


Several changes to the Prospectus Directive1 were adopted in an amending directive2 in 2010, with a deadline for implementation into national law by EU Member States of 31 July 2012. The changes have led to a number of practical changes for issuers. The most important areas covered include updates to the offer and admission exemptions, changes to the summary of the prospectus, a new reduced disclosure regime for rights and certain other offerings and changes to the withdrawal rights in connection with prospectus supplements. A number of important areas required implementing legislation and changes to the EU Prospectus Regulation,3 which are set out in three delegated regulations of the EU Commission. The first one covers significant changes to the format and content of prospectuses, the summary and final terms and introduced a proportionate disclosure regime for certain rights issues and offerings of 'small and medium-sized enterprises' (SMEs) and companies with reduced market capitalisation.4 A second delegated regulation covers changes in relation to consents to be given in the context of retail cascades and the requirement for an auditor's report for inclusion of profit forecasts and estimates.5 Another set of changes concerns convertible and exchangeable securities.6 In developing the implementing legislation, the Commission was assisted by the European Securities and Markets Authority (ESMA).

Key changes to the exemptions under the Prospectus Directive

The following summarises certain key changes to the exemptions under the Prospectus Directive contained in the Amending Directive.

Changes to definition of 'qualified investor'

The Prospectus Directive contains an exemption from the obligation to publish a prospectus for offers addressed solely to qualified investors. Under the Amending Directive, the term 'qualified investors' is defined as those persons that are classified as professional clients or eligible counterparties in accordance with Annex II of the Markets in Financial Instruments Directive (Directive 2004/39/EC, 'MiFID')7 (see Article 2(1) (e)). This change was made to reduce the burden on financial intermediaries of checking investor status. In practice, this means that investment firms can rely on their register of qualified investors under MiFID.

The Amending Directive also includes a number of changes to the offer and admission related exemptions from the requirements of the Prospectus Directive:

Thresholds for offers outside the scope of the Prospectus Directive

The Prospectus Directive as amended provides that the following offers of securities below a certain size are outside its scope:

* securities in an offer where the total consideration of the offer in the EU is less than euro5m over a 12-month period (increased from euro2.5m); and

* non-equity securities issued in a continuous or repeated manner where the total consideration of the offer in the EU is less than euro75m (increased from euro50m).

The Amending Directive gave the European Commission powers to adjust the relevant Euro-limits again in the future.

150-person exemption

There is no obligation to publish a prospectus if an offer to the public of securities is addressed to fewer than 150 natural or legal persons per member state (other than qualified investors). The Amending Directive increased the threshold of this exemption from 100 to 150 persons per European Economic Area (EEA) state.8

Increase of wholesale debt minimum denominations to euro100,000

Under the Amending Directive, issuers of debt securities with minimum denominations of euro100,000 (or equivalent) can offer these securities to the public without publishing a prospectus (increased from euro50,000) .9 Issuers who seek to list wholesale debt securities on an EU-regulated exchange have to publish a prospectus, but can do so in accordance with the lighter 'wholesale' disclosure regime under Annexes IX and XIII of the Prospectus Regulation. …

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