Entry into force of the new Prospectus Regulation and Luxembourg implementation

Introduction

Regulation 2017/1129/EU of the European Parliament and of the Council of June 14, 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the New Prospectus Regulation) became fully applicable on July 21, 2019 and has repealed and replaced Directive 2003/71/EC.

Although the New Prospectus Regulation is binding in its entirety and is directly applicable in all Member States of the European Union, certain of its provisions require Member States of the European Union to take specific implementation measures.

In this respect, the Luxembourg law of July 16, 2019 on prospectus for securities (the New Prospectus Law) repeals and replaces the Luxembourg law of July 10, 2005 on prospectuses for securities (the 2005 Law).

It should be noted, however, that prospectuses approved by the Luxembourg financial supervisory authority the Commission de Surveillance du Secteur Financier (the CSSF) in accordance with the 2005 Law before July 21, 2019 will continue to be governed by such law until the earlier of the end of their validity or July 21, 2020.

The CSSF also issued a new Circular 19/724 (the CSSF Circular 19/724) on July 19, 2019, presenting a regulatory framework for prospectuses and detailing the procedures for submitting documents to the CSSF under the New Prospectus Regulation and the New Prospectus Law and repealing former CSSF Circular 12/539.

The main changes introduced by the New Prospectus Law to the existing prospectus regime in Luxembourg include the following:

New exemption from the requirement to publish a prospectus for small scale offerings

The Luxembourg legislature has opted to exempt offers of securities to the public with a total consideration of less than €8,000,000 (or its equivalent in any other currency) in the EU over a period of 12 months from the obligation to publish a prospectus in accordance with the New Prospectus Regulation. The amount of such total consideration corresponds to the maximum amount that could be exempted pursuant to the option provided for by the New Prospectus Regulation.

However, where an offering of securities to the public has a total consideration of at least €5,000,000, an information note is required. Such an information note must contain brief information about the issuer, the securities, the conditions and reasons for the offering. An issuer wishing to make use of this exemption must notify the CSSF prior to making such an offer. No formal approval of the offering and the information note by the CSSF is required.

Simplified prospectus (prospectus allégé) regime

Offers of securities to the public falling outside the scope of the New Prospectus Regulation will be made pursuant to the domestic prospectus regime as mentioned in Part III of the New Prospectus Law. This domestic prospectus regime is mostly comparable to the simplified prospectus regime that existed under the 2005 Law.

The domestic prospectus regime has been aligned with the new exemption under the Prospectus Regulation.

A simplified prospectus will have to be drawn up and approved by the CSSF according to the New Prospectus Law where an offering of securities to the public has a total consideration of at least €8,000,000.

Offers of securities to the public with a total consideration of at least €5,000,000 are exempted from the obligation to publish a simplified prospectus, but an information note drawn up in accordance with Part III of the New Prospectus Law will have to be sent to the CSSF prior to making such offer.