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A new EU prospectus regime: impact on the debt and equity capital markets

What you need to know

The new regime established by the Prospectus Regulation (EU 2017/1129) applies in full across the EU from 21 July 2019. The aim of the Regulation is to achieve greater harmonisation of prospectus rules throughout the European Union.

The new rules impact on issuers which offer debt or equity securities to the public or which seek admission to trading on a regulated market in the EU. We will touch on the key implications for the equity and mainstream debt capital markets, share plans, and repackagings and other structured finance transactions.

Select each of the links for details. 

Equity capital markets

Although much of the landscape of the new prospectus regime will be familiar to issuers of equity securities, there are changes that issuers will need to be aware of, both when considering whether a prospectus is required and when drafting prospectuses. We cover the key changes in our briefing paper. 

Our briefing paper covers:

  • The new “necessary information” test
  • Risk factor disclosure under the new regime
  • The new prospectus summary
  • The advertisement regime
  • The simplified disclosure regime for secondary issuances
  • Exemptions from the requirement to produce a prospectus
  • Profit forecast disclosure under the new regime

Employee share plans

The much anticipated new employee share plan exemption came into force on 21 July 2019. This is a significant change for non-EU companies operating broad-based share purchase plans. 

Changes to some of the other key exemptions used for offering equity incentives to EU employees came into effect last year.

The practical implications of the new Regulation can be complicated. All companies should ensure that their share plan offers across the EU (including the UK) comply with the requirements.

Further details are set out in our briefing paper.

Our briefing paper covers: 

  • Key points for employee share plans
  • The new wider employee exemption
  • Brexit implications
  • Actions to ensure compliance
Contacts: Nancy Price, Alex Beidas

Mainstream debt capital markets

The new prospectus regime rules governing debt prospectuses will be broadly recognisable to DCM practitioners as replicating many of the aspects of the current prospectus regime that they are most familiar with.   

However, new rules governing prospectus content, in particular in relation to risk factor disclosure, have been introduced under the new regime which are considerably more prescriptive than those under the previous regime. Practitioners will need to be aware of the changes both to prospectus content and to the requirements to drawing up an approved prospectus.

Our briefing paper covers:

  • The general disclosure test
  • Risk factor disclosure under the new regime
  • The advertisement regime
  • Alleviated treatment for wholesale issuances
  • Exemptions from the requirement to produce a prospectus

Contacts: Ben Dulieu, Neil Dixon, Elaine Keats, Richard Levy, Richard O'Callaghan, Keith Thomson, Carson Welsh, Mairead Duncan-Jones, Catherine Wade, Kym Bavcevich-Ikeda

Repackagings and structured finance

The new Regulation introduces some important changes for repackagings and issuers of structured finance transactions. In particular, disclosure relating to underlying assets and CLN reference entities will become more onerous in certain circumstances. There are also a number of other changes that impact retail structured products in particular. We cover the key changes in our briefing paper.

Our briefing paper covers:

  • The disclosure regimes for underlying assets and derivative securities
  • Risk factor disclosure under the new regime
  • The new prospectus summary
  • The advertisement regime
  • The disclosure regimes for underlying assets and derivative securities

Contacts: Derivatives and Structure Products Group: Mark Brown, Matthew Monahan, David Phillips, Vinay Samani, Ashley Rowlands

Contacts: Structured Finance Group: Andrew Vickery, Julian Davies, Mark Nuttall, Adam Fogarty, Alex Shopov, Reza Taylor, Thomas Quoroll, George Gooderham  

Key Contacts

Select a jurisdiction to find your contact