This is an adoption of a common EU Directive for the drafting, approval, and distribution of the prospectus to be published when securities are offered in public issues.
It is designed to reinforce investor protection. All prospectuses, wherever issued in the EU, provide clear and comprehensive information. The regime makes it easier for companies to raise capital throughout the EU on the basis of approval from one of the national regulators. It specifies:
1. How a prospectus must be submitted for regulatory approval
2. That subsequent changes be highlighted clearly
3. Specific methods for electronic publication of prospectus
4. How advertisement of issues may be done and asks that changes to information previously advertised should be similarly publicised
5. that disclosures be consistent across all media
- Offers below EUR 1 million are exempt from the requirement to issue Prospectuses.
- SMEs have a simplified disclosure requirements.
- Follow on issues have a simplified regime if the Issuer is already listed for 18 months
- Frequent Issuers can get rapid approvals
- Prospectus summaries have strict content and format prescriptions with no more than 15 risk factors permitted.
- Wholesale issues follow existing requirements: and do not have to comply with summary requirements
- The risk factors should be limited to risks specific to the issuer and the securities and which are material to taking an
informed investment decision.
- Risk factors will have to be categorized according to the probability of occurrence and expected negative impact.