New Prospectus Regulation introduced to enhance protection for investors and make SME funding more accessibleThursday, 24 August 2017
What is the Prospectus Regulation, when does it apply from and how?
The Prospectus Regulation 2017/1129/EU (the “Prospectus Regulation”) is a new set of European Union (”EU”) rules relating to prospectuses. A prospectus is a document required to be published by a company in certain circumstances where it is offering transferable securities to the public in the EU or where it is admitting transferable securities to trading on an EU regulated market.
The Prospectus Regulation was published in the Official Journal of the European Union on 30 June 2017. It is hoped the new regime will give more protection to investors whilst, at the same time, making funding more accessible for small and medium sized enterprises (“SMEs”). The EU has introduced these changes in response to concerns raised by market participants that it was too difficult under the previous prospectus regime for SMEs in the EU to access the capital markets, placing them at a competitive disadvantage and making them too reliant on bank finance. Reforming the EU regime on prospectuses is also one of the building blocks of the European Commission’s plan to establish a capital markets union.
The Prospectus Regulation came into force on 20 July 2017. A few of its provisions apply from 20 July 2017 and a further few provisions will apply from 21 July 2018. The full scope of the Prospectus Regulation is due to apply from 21 July 2019, at which point the entirety of the existing EU Prospectus Directive 2003/71/EC will be repealed.
The Prospectus Regulation has direct effect across the EU, i.e. Ireland does not have to enact any implementing legislation, and the same rules will apply to all EU countries in the hope of having a consistent approach across the EU.
What are the key changes under the Prospectus Regulation?
FROM 20 JULY 2017:
Secondary Issuances on Regulated Markets
Conversion/Exchange of Securities on Regulated Markets
FROM 21 JULY 2018:
Smaller Capital Raisings Exempt
FROM 21 JULY 2019:
“EU Growth” Regime
Universal Registration Document
For more information or general advice on what the new Prospectus Regulation might mean for you and your business, please contact Gerry Beausang, Head of ByrneWallace Capital Markets or any member of the ByrneWallace Capital Markets team.