Prospectus Rules to be updated to reflect revised exemptions
The Financial Conduct Authority has published its latest quarterly consultation, which includes proposed changes to the Prospectus Rules to mirror the new EU Prospectus Regulation and some transitional provisions relating to the UK Corporate Governance Code.
The FCA is proposing amendments to PR 1.2.3R to reflect amendments being introduced by the new EU Prospectus Regulation. In particular:
- amending the existing exemption from the requirement to publish a prospectus where the annual increase of shares is less than 10%, to a higher threshold of 20%. The amended exemption will also apply to securities, not just shares.
- amending the existing exemption from the requirement to publish a prospectus for shares resulting from the conversion or exchange of securities. Under the Prospectus Regulation, the conversion exemption is limited to 20% of the number of shares of the same class already admitted to trading on the same regulated market over a period of 12 months, although that 20% limit is disapplied in certain circumstances.
The Prospectus Regulation will come into force 20 days after it is published in the Official Journal of the EU (expected to be in May/June this year). Although most of the Regulation will not actually apply until two years after it comes into force, these exemption changes will take effect immediately. The FCA proposes to make the corresponding changes to the Prospectus Rules on the same date and so asks for responses to its proposals on PR 1.2.3R before 3 April 2017.
UK Corporate Governance Code
The FCA also intends to update the definition of the "UK Corporate Governance Code" in the Glossary and Listing Rules Appendix 1 to refer to the new edition published in April 2016. It also proposes transitional provisions to clarify that the requirements of the 2014 version of the Code will continue to apply in respect of accounting periods ending before 16 June 2017.
The FCA invites views on these definitional changes and the transitional provisions before 3 May 2017.
Click here for the FCA Quarterly consultation paper No. 16 (CP17/6).