QCA welcomes Government’s action on the Prospectus Directive

3rd November 2010

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The Quoted Companies Alliance (QCA), the representative body for the UK’s small and mid-cap quoted company sector, claimed a major victory for publicly quoted businesses following the Government’s decision to introduce two key changes to the Prospectus Directive early which will help companies raise capital more cost effectively.

In earlier discussions and as part of the QCA’s response to HM Treasury’s Green Paper, ‘Financing a Private Sector Recovery’, the QCA urged the Government to take immediate action to stimulate the UK’s small and mid-cap quoted sector, the engine for economic growth and jobs. The QCA specifically highlighted the need for the UK to bring forward these amendments to the Prospectus Directive as soon as possible.

In HM Treasury’s response to the Business Finance Green Paper, Financing a Private Sector Recovery, the Government affirms that it will bring in two key changes to the revised Prospectus Directive early as opposed to waiting the full 18 months it has to transpose the changes into UK law. They are:

  • Raising the threshold for which a prospectus is required from €2.5m to €5m; and
  • Increasing the minimum number of investors for which a prospectus is required from 100 to 150 investors.

The Government announced the measures as part of a package of actions it intends to take in order to develop strong and sustainable economic growth in the UK. The QCA supports the Government’s announcement in its response to engage constructively and input on the European Commission’s Transparency Directive and MiFID reviews in order to improve the information available to all investors, particularly Business Angels, and private investors.

The QCA joins with the Government in welcoming the establishment of a Business Finance Round Table by the BBA Taskforce and, in accepting an invitation to participate, intends to be an active and constructive member of this important forum.

The QCA made its recommendations after close consultation with its members and their advisers, building on a series of roundtable discussions held for the benefit of HM Treasury officials.

Tim Ward, QCA Chief Executive, said: “We are pleased to see that the Government has taken on board our suggestion to implement the changes to the Prospectus Directive quickly. These two key changes will benefit those companies that are considering raising finance by providing them with a cost-effective and efficient means of raising capital from the public. It will benefit the UK economy more widely by giving the UK a competitive advantage.

“We fully support the Government’s work in trying to improve smaller companies’ access to finance. We view this objective as essential in terms of securing economic growth. We look forward to working with HM Treasury and the Department of Business, Innovation and Skills on the consultations that follow from this response.”

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