New Prospectus Regulation: top five things you need to know

From 21 July 2019 the Prospectus Regulation (Regulation (EU) 2017/1129) will apply in full and directly in all EU Member States (replacing national prospectus legislation). On 12 July 2019, ESMA published updated Q&As relating to the Prospectus Regulation.

What were the top 5 things that you really need to know again? Here they are.

1. What happens to prospectuses that are drawn up or updated after 21 July 2019?

Prospectuses to be approved after 21 July 2019 will need to be structured differently so as to comply with the Prospectus Regulation. The main areas in prospectuses that are subject to substantial revision (in terms of format, order, size limitations etc) are (i) the Risk Factors, and (ii) the Summary (for retail prospectuses).

2. What happens to existing prospectuses?

Prospectuses that have already been approved by 21 July 2019 will benefit from a one-year grandfathering period during which the currently existing Prospectus Directive rules continue to apply to validity, supplements, final terms and passporting. Accordingly, already approved prospectuses can be used for the full one year period of their validity. Supplements and Final Terms to existing prospectuses will also follow the current regime (under the Prospectus Directive), as does the passporting of approved prospectuses to other EU Member States.

3. What about advertisements (marketing materials)?

The grandfathering provisions of the Prospectus Regulation do NOT apply to advertisements and other marketing materials. Therefore, all advertisements and other marketing materials published on or after 21 July 2019 will need to comply with (and refer to) the Prospectus Regulation.

4. What about exempt offerings and listings?

The exemptions available under the Prospectus Directive are largely left intact under the Prospectus Regulation, eg in relation to employee stock offering plans and private placements. However, references to such exemptions will need to be updated to refer to the Prospectus Regulation (rather than the Prospectus Directive) in offering, listing and marketing materials, where applicable.

5. What about Brexit?

For UK parties: Prospectuses and supplements approved by the UK FCA cannot be used in the remaining EU27 Member States after a no-deal Brexit. Issuers of equity securities and non-equity securities below €1,000 who currently have the UK as their PD home Member State must choose a new home member state in the EU27. Issuers admitted to trading on a regulated market within EU27 who currently have the UK as their TD home Member State should choose and disclose their new home Member State without delay.

For EU27 parties: Prospectuses and supplements approved in the EU27 will be able to benefit from a grace period in the UK so that any prospectuses that are valid in the UK before exit day (including those approved by a competent authority in a different EU member state) will remain valid for 12 months after their date of approval. This also applies to prospectus supplements. However, for any supplements approved after exit day that are to be passported to the UK, approval of that supplement from the FCA will also be required. Final Terms for issuances into the UK after exit day will need to be filed with both the EU27 regulator and the UK FCA.

 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.