European Commission: Capital Markets Recovery Package including amendments to Prospectus Regulation
On July 24, 2020, the European Commission announced that it has adopted a Capital Markets Recovery Package as part of its overall Coronavirus recovery strategy. As part of this it has adopted a legislative proposal to amend the Prospectus Regulation, aimed at allowing a rapid recapitalisation of EU companies and enabling issuers to tap into the public markets at an early stage in the recovery process.
The proposed amendments include the following:
- Introducing a new simplified, short-form prospectus, the EU Recovery Prospectus, that will be available in relation to secondary issuances of shares by issuers that are already admitted to trading on a regulated market or an SME growth market for a continuous period of at least 18 months (new Article 14a). An EU Recovery Prospectus will be a single document not exceeding 30 pages, that focuses on essential information (including risk factors) investors need to make an informed investment decision, including the minimum information specified in a new Annex Va. Incorporation by reference of information already available in the market will be permitted and will not be counted towards the maximum length of the prospectus. The EU Recovery Prospectus regime is intended to be a temporary measure, and will expire 18 months after the date of application of the amending Regulation (new Article 47a).
- Amending Article 23(2) to increase from two to three days the deadline by which investors must exercise their withdrawal rights when a supplementary prospectus is published.
- In relation to securities that are purchased or subscribed though a financial intermediary, amending Article 23(3) to extend to one working day (rather than the same day) the time period during which financial intermediaries are required to contact investors regarding the publication of a supplementary prospectus, and to clarify that the obligation relates only to those investors that have a right of withdrawal under Article 23(2).
- Temporarily increasing the prospectus exemption threshold in relation to certain non-equity securities issued in a continuous or repeated manner by a credit institution, from €75 million to €150 million, for a period of 18 months from the date of application of the amending Regulation (new Article 4(1)(k)).
Article 2 of the amending Regulation states that it will enter into force on the 20th day following its publication in the Official Journal. The draft amending Regulation will now be sent to the European Parliament and the Council of the EU for discussion and adoption under the ordinary legislative procedure.
(European Commission, Coronavirus response: Making capital markets work for Europe's recovery, 24.07.2020)
(European Commission, Draft legislative proposal, 24.07.2020)
(European Commission, Annex to the draft legislative proposal, 24.07.2020)
European Commission: Roadmap on delegated regulation concerning taxonomy-related disclosures in relation to non-financial reporting
On July 28, 2020, the European Commission published a roadmap for consultation in relation to a proposed delegated regulation which will complement the Taxonomy Regulation, the recently adopted Regulation on the establishment of a framework to facilitate sustainable investment. The Taxonomy Regulation creates a classification system of environmentally sustainable economic activities for investment purposes, the “EU taxonomy”, and the delegated regulation proposes methodologies and indicators to help undertakings determine the extent to which their economic activities can be considered environmentally sustainable according to the EU taxonomy.
The delegated regulation will apply to those entities subject to the Non-Financial Reporting Directive (broadly, large listed entities, large banks and large insurance undertakings with more than 500 employees) who have to publish information on how and to what extent their activities are associated with the EU taxonomy.
Responses to the consultation on the roadmap are requested by September 8, 2020, with adoption of the delegated regulation proposed in the second quarter of 2021.
(European Commission, Roadmap on delegated regulation concerning taxonomy-related disclosures in relation to non-financial reporting, 28.07.2020)