On June 30, 2017, the Prospectus Regulation (Regulation EU 2017/1129) on a prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (repealing Directive 2003/71/EC) was published in the Official Journal. It will enter into force on July 20, 2017. While it is directly applicable, certain provisions, as set out in Article 49(3), need to be transposed by member states by July 20, 2019. However, certain provisions will apply from July 20, 2017 and other provisions will apply from July 20, 2018.
The following provisions apply from July 20, 2017:
- Points (a),(b) and (c) of the first sub-paragraph of Article 1(5) - these provide exemptions from the obligation to publish a prospectus for the admission of securities to trading on a regulated market for the following types of issues:
(a) Securities fungible with securities already admitted to trading on the same regulated market provided that they represent, over a period of 12 months, less than 20 per cent of the number of securities already admitted to trading on the same regulated market;
(b) Shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, where the resulting shares are of the same class as the shares already admitted to trading on the same regulated market, provided that the resulting shares represent, over a period of 12 months, less than 20 per cent of the number of shares of the same class already admitted to trading on the same regulated market;
(c) Securities resulting from the conversion or exchange of other securities, own funds or eligible liabilities by a resolution authority due to the exercise of a power referred to in the Bank Recovery and Resolution Directive (2014/59/EU).
- The second sub-paragraph of Article 1(5), which sets out the circumstances in which the 20 per cent threshold referred to in point (b) above relating to shares resulting from the conversion or exchange of other securities shall not apply.
The Financial Conduct Authority consulted on the necessary minor amendments to the Prospectus Rules sourcebook to accommodate the rule changes arising from these provisions in CP17/6 which it published in March 2017.
The following provisions will apply from July 20, 2018:
- Article 1(3) which exempts offers of securities to the public with a total consideration in the EU of less than €1 million, calculated over a 12 month period, from the requirements of the Regulation. It also states that member states may enact other disclosure requirements at national level, but only to the extent that such requirements do not constitute a disproportionate or unnecessary burden to the issuer.
- Article 3(2) which enables member states to decide to exempt offers of securities to the public from the obligation to publish a prospectus where the total consideration of each such offer in the EU is less than €8 million, calculated over a period of 12 months, provided such offers are not subject to notification under Article 25 of the Regulation (i.e. a “passport” notification from the competent authority in the issuer’s home member state to the competent authority where the offer is going to be made, stating that the prospectus has been drawn up in accordance with the regulations. This will allow the prospectus approved in the home member state to be used for an offer in a host member state or “passported”).
The remainder of the Regulation will apply from July 20, 2019.
(European Parliament and the Council of the European Union, Prospectus Regulation, 30.06.17)