As a result of the publication in the Official Journal on 30 June 2017 of the new EU Prospectus Regulation, significant improvements will be made to the EU prospectus regime over the next two years. In particular:
- From 20 July this year, Main Market companies will be able to issue up to 19.9% of their ordinary share capital over a 12 month period without needing a prospectus (the limit is currently 9.9%). This will make it cheaper and easier for Main Market companies to raise larger amounts of money through a placing or to use their own shares as consideration in larger acquisitions;
- From 21 July 2018, EU member states will be able to exempt “domestic-only” offers to the public that seek to raise less than €8 million from the prospectus requirement ( the threshold is currently €5 million). If the UK does raise the current threshold, more unquoted companies will be able to use crowdfunding, and more AIM companies will be able to do retail offers, without needing a prospectus; and
- On 21 July 2019, various other changes will help to harmonise and simplify the process of producing a prospectus.
The 2017 Prospectus Regulation will replace the existing 2003 Prospectus Directive and its accompanying 2004 Prospectus Regulation (known as the PD Regulation), and has direct effect in all EU member states. Although the UK will probably have left the EU by 21 July 2019, we expect that, initially at least, the UK will put in place rules that are equivalent to the 2017 Prospectus Regulation in order to ensure that UK prospectuses can continue to be passported into the EU.
The key triggers for a prospectus will remain the same, namely when either: (i) an offer of transferable securities is made to the public in an EU member state; or (ii) transferable securities are admitted to trading on an EU regulated market, such as the UK Main Market.
Click here for more information on how the changes will affect issuers of shares and other equity securities.
This article was written by Alasdair Steele, Head of Equity Capital Markets at CMS, Gary Green, Partner at CMS, and Peter Bateman, Professional Support Lawyer in the corporate team at CMS. For more information, please contact Alasdair Steele.