The European Securities and Markets Authority (ESMA) has published the first part of its technical advice for a revised approach to prospectus regulation, as part of a long-running project to make simplifications to the format and content of prospectus
This release covers the areas of format and content of prospectus, the EU growth prospectus and the scrutiny and approval of prospectus.
Steven Maijoor, ESMA chair, said: ‘The prospectus regulation, supporting the capital markets union (CMU), aims to make it easier and cheaper for companies, and in particular smaller companies, to access capital and improve their prospectuses accessibility for investors.
‘ESMA proposes a large number of simplifications and adaptations of the prospectus regime, aimed at maintaining a strong level of investor protection while also opening up new possibilities for companies to diversify their financing.’
The technical advice largely proposes maintaining the existing regime, but adding a number of changes aimed at easing requirements for issuers, with a view to reducing the cost and administrative burden in using a prospectus, as well as a number of additional disclosure requirements that are deemed necessary for investor protection.
In addition, ESMA has developed the content of the new universal registration document (URD), for issuers of securities that are listed on a regulated market or a multilateral trading facility (MTF). This URD is intended to function as a useful shelf registration document, allowing issuers to quickly offer securities to the market.
In terms of secondary issuance, the technical advice proposes alleviated disclosure requirements by better taking into account already publicly available information.
The technical advice identifies the minimum disclosure requirements for the EU growth prospectus, the order in which they should be presented, and the format and content of the specific summary. In order to ensure a proportionate regime for SMEs, ESMA has adapted the disclosure requirements to the issuer’s size and the complexity of its operations.
The final set of technical advice sets out criteria for scrutiny and procedures for approval and filing of the prospectus. ESMA proposes that standard criteria for scrutiny of the completeness, comprehensibility and consistency of the prospectus should be adopted, and that, beyond these standard criteria, NCAs should be afforded a certain level of flexibility, which in ESMA’s view is necessary to ensure investor protection.
As regards approval and filing, ESMA proposes procedures that are largely based on the existing provisions. Subject to endorsement by the European Commission, the technical advice will be adopted by 21 January 2019.
ESMA technical advice under the prospectus regulation is here.
Report by Pat Sweet
