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On 11 December 2009, the EU Swedish Presidency Working Party released its final compromise text for the amending Directive for the Prospectus Directive.

In the final presidency text, the proportionate disclosure regime for rights issues and companies with small market capitalization would only be available to companies on a regulated market.  During the Legal Committee’s annual visit to the European Commission, the QCA heard that this is because the Market Abuse and Transparency Directives do not apply to all EU non-regulated markets (in the UK, aspects of both the Market Abuse and Transparency Directives already apply to companies quoted on both AIM and PLUS).  As such, the reviews of these Directives in 2010 will be very important in order to determine whether or not companies on growth markets will be able to have access to these concessions.

In good news, the final presidency text does extend the exemption for employee share schemes from producing a prospectus to both companies on regulated and multilateral trading facilities (MTFs – which include AIM and PLUS), provided that ‘the MTF is subject to appropriate on-going disclosure requirements and that trade in securities on MTF is subject to rules on market abuse’

The Rapporteur, Wolf Klinz MEP, has submitted a first draft of his report to the Committee on Economic and Monetary Affairs of the European Parliament, which recommends that rights issues should be fully exempt from the obligation to publish a prospectus.  This is a positive development; however, it would still only apply to companies listed on an EU regulated market.  The Rapporteur’s draft report is available here.

The final draft of the Rapporteur is due to be out soon.  The QCA has met with him and other key representatives from HM Treasury and pushed the need for the exemptions to extend to growth markets and also the need to raise the exemption threshold to €10 million.

The timetable is moving quickly.  Meetings and debates are currently taking place within the Committee of Economic and Monetary Affairs, with a vote scheduled for mid-March.  It will then go for a vote in the European Parliament, and should be adopted into law by July 2010.  Watch this space for any further updates.

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