Prospectus to be published when securities are issued

SUMMARY OF:

Directive 2003/71/EC – prospectus to be published when securities are on sale to the public or admitted to trading

SUMMARY

WHAT DOES THE DIRECTIVE DO?

It seeks to improve the quality of information provided to investors by companies wanting to attract external investors in order to raise capital in the EU to finance their growth.

It aims to ensure that adequate and equivalent disclosure standards are in place in all EU countries in the event that the securities are offered to all EU investors.

It lays down rules on the prospectus* - a document that EU companies are required to publish when they issue securities to attract investments. By virtue of these rules, once a prospectus has been approved in one EU country, it is valid throughout the EU (single passport for the issuers).

KEY ELEMENTS

Obligation to publish a prospectus

Issuers are obliged to publish a prospectus on offers of securities, unless the offer:

• is addressed solely to qualified (professional) investors; and/or
• is addressed to fewer than 150 persons, other than qualified investors (e.g. individuals), per EU country; and/or
• is addressed to investors who acquire these securities for a total consideration of at least €100 000 per investor; and/or
• covers securities (shares or bonds) with a denomination per unit of at least €100 000;
• has a total value in the Union of less than €100 000.

Information

The prospectus must contain a summary document, produced in a standard format, providing key information on:

• the essential characteristics of the issuer of the securities (e.g. the issuing company), of any guarantors (e.g. the bank) and of the securities offered or admitted to trading on a regulated market, as well as the main risks associated with them;
• the general terms of the offer, notably an estimate of the expenses invoiced by the issuer to the investor.

The issuer is civilly liable vis-à-vis the information provided in the prospectus. This information must be in accordance with the facts and contain no omissions.

Approval and publication

Once the prospectus has been approved by the competent authority of the EU country of origin, it must be published (in a widely-circulated national newspaper or on the website of the issuer, for example) and a copy must be sent to the European Securities and Markets Authority.

A prospectus remains valid for up to 12 months following its approval, provided it is updated and supplemented with the required items.

WHEN DOES THE DIRECTIVE APPLY?

The directive had to be transposed into national law on 1 July 2005. The amending Directive 2010/73/EC has been applicable since 1 July 2012.

In a green paper on the capital markets union, published in February 2015, the Commission announced that it is going to re-examine the Prospectus Directive so that businesses, notably SMEs, can more easily raise capital and find investors abroad.

For further information, visit the European Commission site covering the Prospectus Directive.

KEY TERM

* Prospectus: a disclosure document that contains information enabling investors to make investment decisions in full knowledge of the facts.

ACT

Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ L 345, 31.12.2003, pp. 64–89)

Successive amendments to Directive 2003/71/EC have been incorporated into the basic text. This consolidated version is for reference only.

last update 13.12.2015