The Prospectus Regulation came into force on 20 July, introducing a new exemption from the obligation to publish a prospectus up to a 20% increase in securities admitted to trading.

In light of the new threshold, we have confirmed that the Investment Association and the Pensions and Lifetime Savings Association continue to support the current overall limit of 10% in the 2015 Statement of Principles, which allows for two resolutions for disapplication authority - the first 5% for general corporate purposes and, when applied for, the second 5% for use only in connection with an acquisition or specified capital investment.

No change to the flexibility permitted by the guidelines is expected as a consequence of the new Prospectus Regulation.

Companies and investors are encouraged to use the Pre-Emption Group’s Statement of Principles when engaging on pre-emption issues.

In addition, companies are encouraged to use the template resolutions and Appendix of Best Practice in Engagement and Disclosure when applying for authority to disapply pre-emption rights and issuing shares under such an authority.

The new Prospectus Regulation is intended to be of particular benefit to European small and medium enterprises when issuing shares or debt. Companies already listed on public markets will also benefit when they list additional shares or issue corporate bonds.