By 1 July 2012, Belgium should have implemented Directive 2010/73/EU of the European Parliament and of the Council of 24 November 2010 (the “Amending Prospectus Directive”), which introduces several amendments to the Prospectus Directive (Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading)1 (unofficial consolidated version), and aims at simplifying and reducing certain obligations under the Prospectus Directive that were considered to be unnecessarily burdensome, without compromising the investors’ protection and the proper functioning of the capital markets in the European Union.
The most significant changes introduced by the Amending Prospectus Directive include the following:
Scope of the prospectus obligation: The Prospectus Directive only applies to an offer of securities provided that the aggregate consideration for such offer exceeds certain thresholds. The Amending Prospectus Directive raises such thresholds from EUR 2,500,000 to EUR 5,000,000 (for offers of equity securities) and from EUR 50,000,000 to EUR 75,000,000 for (offers of non-equity securities issued in a continuous or repeated manner by credit institutions).
Exemptions from the prospectus obligation: The Amending Prospectus Directive amends the scope of the following exemptions from the prospectus obligation:
- minimum consideration – the Prospectus Directive provides for an exemption from the prospectus obligation for offers of securities addressed to investors who acquire securities for a total consideration of at least EUR 50,000 per investor as well as for a offers of securities whose denomination per unit amounts to at least EUR 50,000. The Amending Prospectus Directive increases both thresholds to EUR 100,000;
- private placements – the number of persons (other than qualified investors) per Member State to whom an offer can be made without having to publish a prospectus, is raised from 100 to 150;
- merger – the exemption for securities offered within the framework of a merger is extended to the securities offered within the framework of a demerger;
- employees – the employee offers exemption is extended to all companies which have their head office or registered office in the European Union. In addition, such exemption is extended to companies established outside the European Union whose securities are admitted to trading either on a regulated market or on a third-country market, provided that adequate information is available.
Validity of the prospectus: Even though the European Commission had proposed to extend the validity period of a prospectus up to 24 months, the Amending Prospectus Directive retains the current validity period of 12 months. However, such validity period is now calculated from the date of approval of the prospectus (and thus no longer as from its publication date).
Annual update obligation: The Amending Prospectus Directive repeals the current obligation to file a document on an annual basis containing or referring to all information published or made available to the public during the preceding 12 months.
Qualified Investors: The Amending Prospectus Directive amends the definition of “qualified investors” so as to align it to the notion “professional clients or eligible counterparties” under the MIFID Directive.
Retail cascades: The Amending Prospectus Directive provides that no new prospectus is required for any subsequent resale or final placement of securities through financial intermediaries as long as a valid prospectus is available and the issuer or person responsible for the prospectus consents to its use by means of a written agreement, whereas under the current Prospectus Regime any such subsequent resale or final placement constitutes a separate offer, requiring a separate exemption from the original offer or the publication of a prospectus.
The Amending Prospectus Directive sets out (in more detail) certain requirements with respect to the content and format of the summary.
It requires the summary to include certain “key information”, which consists of the essential characteristics of, and risks associated with, the issuer, any guarantor, and the securities offered, the general terms of the offer, including estimated expenses, and the risk associated with an investment, in a concise manner and in non-technical language.
In addition, the summary will need to be drawn up in a certain format, the details of which will be determined by the European Commission.
The current civil liability regime for the summary is extended to the situation where the summary, when read together with the other parts of the prospectus, does not provide key information in order to aid investors when considering whether to invest in such securities.
Supplements to the prospectus and the right of withdrawal: Article 16 of the Prospectus Directive provides for a right of withdrawal forinvestors, in the event a supplement to the prospectus is published after such investors had already agreed to purchase or subscribe for the securities.
The Amending Prospectus Directive provides that:
- the right of withdrawal can only be applied in the event that (i) the initial prospectus relates to a public offering of shares (and thus not in the event such prospectus relates to an admission to trading) and (ii) the new factor, mistake or inaccuracy to which the supplement relates, has arisen before the final closing of the offer to the public and the delivery of the securities;
- the right of withdrawal must be exercised within two working days after the publication of the supplement. Consequently, the Member States will no longer be allowed to provide for a longer term;
- the period within which the right of withdrawal is to be exercised, can be extended by the issuer or the offeror; and
- the final date of the right of withdrawal must be mentioned in the supplement.
As mentioned above, all Member States should have implemented the changes to the current prospectus regime by 1 July 2012.
To date, a legislative proposal has not yet been submitted to the Belgian Parliament.
Nevertheless, the Belgian Financial Services and Markets Authority (FSMA)has announced that, in its opinion, the provisions of the Amending Prospectus Directive are sufficiently clear, precise and unconditional to have “vertical direct effect”.
Accordingly, the FSMA has decided to apply the provisions of the Amending Prospectus Directive as of 1 July 2012 except to the extent that the Amending Prospectus Directive would impose additional obligations to the issuers (it being understood that the issuers will still be allowed to apply such more stringent provisions of the Amending Prospectus Directive voluntarily, which will enable them to benefit from the Community-wide approval of the prospectus).
For completeness’ sake, it is to be noted that the Commission Delegated Regulation No 486/2012 dated 30 March 2012 (amending Regulation (EC) No 809/2004) will enter into force on 1 July 2012 as well. Such Commission Delegated Regulation introduces certain amendments as regards the format and the content of the prospectus, the base prospectus, the summary and the final terms and as regards the disclosure requirements.
- The Amending Prospectus Directive also introduces certain amendments to the Directive 2004/109/EC on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market. Such amendments are not addressed by this newsletter.
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