On 30 November 2015, the European Commission published a legislative proposal for a Level 1 regulation on prospectuses (Prospectus Regulation). The purpose of this regulation was to replace the Prospectus Directive. The text of this new regulation was agreed on 8 December 2016 by the European Commission, the European Parliament and the Council. Since that time, the Prospectus Regulation has been undergoing the formal approval procedure and was finally published in the EU Official Journal on 30 June 2017. Legislation published in the EU Official Journal enters into force on 20 July 2017 and it will apply from 21 July 2019, save for:
- parts (a) (b) and (c) of sub-paragraph 1 of Article 1(5) which will apply from 20 July 2017;
- sub-paragraph 2 of Article 1(5) which will apply from 20 July 2017; and
- Article 1(3) and 3(2) which will apply from 21 July 2018.
Regardless of Brexit, the Prospectus Regulation will be directly applicable in the UK when it enters into force and no further UK legislation is required to give it effect. However, only two sets of measures in the Prospectus Regulation will apply before the second anniversary of it coming into force.
The first of these will apply from 20 July 2017, relating to the 10% rule. The FCA has already consulted on consequential changes to the Prospectus Rules sourcebook to account for these new measures in its quarterly consultation published on 3 March 2017. We have previously written about these changes here. This consultation closed on 3 May 2017 and it is anticipated that the FCA will publish its proposed amendments to the Prospectus Rules, Listing Rules and Glossary of the FCA Handbook prior to the first implementation date of 20 July 2017.
The second change to be brought in on the 21 July 2018 involves:
- the Prospectus Regulation not applying to offers of securities with a total consideration of less than €1 million (calculated over a period of 12 months); and
- allowing Member States to exempt offers of securities from the obligation to publish a prospectus where the total consideration over a period of 12 months is not more than €8 million.
Currently in the UK, an offer of securities does not require the publication of a prospectus if the total consideration over a period of 12 months is below €5 million; it is up to HM Treasury whether it wishes to increase this limit by a further €3 million. Given this change does not come in for some time, it appears unlikely that the HM Treasury is going to prioritise addressing this issue after the election.
If you require any further guidance on the implementation of the Prospectus Regulation, please contact Jonathan Morris or Jack Delaney in Thrings’ London Capital Markets Team.
