On 30 November 2015, the European Commission adopted a legislative proposal for a new Prospectus Regulation, designed to repeal and replace the existing body of European prospectus law. The proposal was published following extensive consultation conducted in 2015.
The proposal is intended to particularly benefit European small and medium enterprises when issuing shares or debt. Companies already listed on the public markets will also benefit when they list additional shares or issue corporate bonds.
The key proposed changes are:
- A higher threshold to determine when companies must issue a prospectus. No EU prospectus will be required for capital raisings below €500,000 (up from €100,000). Member States may also set higher thresholds for their domestic markets (up to €10 million).
- Prospectuses will require a new, shorter prospectus summary that is modelled on the existing key information document (KID) required under the PRIIPs Regulation.
- Smaller issuers who want to access European capital markets can now avail of a 'lighter prospectus' aimed at companies with a market capitalisation of up to €200 million.
- Companies already listed on a public market seeking to issue additional shares or raise debt may avail of a new, simplified prospectus. In its press release, the Commission noted that 70% of prospectuses approved annually across Europe are secondary issuances for companies already listed on a public market.
- Companies that frequently access the capital markets may use an annual universal registration document (URD), which is similar to a US shelf registration. Irish issuers who regularly maintain an updated URD with the Central Bank of Ireland will benefit from a 5 day fast-track approval when they intend to issue new securities.
- The European Securities and Markets Authority will provide free and searchable online access to all prospectuses approved in the European Economic Area.
It is anticipated that the legislative proposal will be adopted by the European Parliament and Council in late 2016 or 2017.