Prospectus Regulation – text agreed

The European Parliament, the Council of the European Union and the Commission have agreed on the text of a new Prospectus Regulation. The Regulation will replace the existing Prospectus Directive and introduce new rules on prospectus contents as well as providing broader exemptions for small offerings, where no prospectus is required.

The text of the Regulation is yet to be released but a press release from the European Commission sets out the main changes from the current prospectus regime. These include:

  • capital raisings up to EUR 1 million will not need a prospectus at all;
  • offerings below EUR 8 million will not require an EU Prospectus and will be subject to local rules;
  • a new frequent issuer regime which will halve approval times from 10 days to 5;
  • a shorter prospectus for secondary issuances;
  • shorter prospectus summaries using language which is easier for investors to understand; and
  • a paper prospectus will only be required if a potential investor explicitly requests one.

Next steps

The final text will need to be endorsed by the European Parliament and then by the Council of the EU. It will then be published in the Official Journal of the EU, probably in 2017. We do not yet know to what extent the UK will continue to apply this and other European legislation going forwards.