Prospectus to be published when securities are offered to the public or admitted to trading on a regulated market

KEY POINTS

The Prospectus Regulation:

• requires a prospectus for an offer of securities to the public or for the admission to trading of securities on a regulated market in the EU;
• recognises the status of a listed company by providing exemptions from the obligation to publish a prospectus for offers to the public or admission to trading on a regulated market of securities fungible with those already admitted to trading (introduced by Regulation (EU) 2024/2809); these exemptions are subject to different investor protection safeguards that vary based on the exemption type and whether the securities exceed the 30 % threshold of those already admitted to trading;
• removes the need for a prospectus for any offer of securities to the public that does not benefit from a passport³, below the new EU-wide threshold of €12 million (replacing both the previous €1 million exemption and the optional exemption that Member States could establish up to an €8 million ceiling, as amended by Regulation (EU) 2024/2809); Member States may, however, apply a lower threshold of €5 million, but not below that level;
• sets out rules to curb the tendency to overload prospectuses with generic risk factors; the amended rules now require that risk factors be specific and material, restrict the use of generic disclaimers and permit issuers to rank risks as low, medium or high;
• strengthens supervisory convergence by harmonising the scrutiny and approval of prospectuses (including the applicable timelines) throughout the EU; competent authorities are bound by stricter deadlines and must notify issuers and the European Securities and Markets Authority (ESMA) in the event of delays, while ESMA gains a stronger coordinating role;
• enables companies that frequently issue securities to use the universal registration document to secure fast-track approval from supervisors; following the amendment introduced by Regulation (EU) 2024/2809, an issuer now qualifies as a ‘frequent issuer’ after only one year of approved universal registration documents (previously two years);
• introduces a European online database, operated free of charge by ESMA, containing all prospectuses approved in the European Economic Area;
• requires prospectuses and certain related documents, along with some exemption documents, to be accessible on the European single access point (ESAP).

The Prospectus Regulation requires a prospectus to enable an investor to make an informed decision. It must include:

• assets, liabilities, profits, losses, financial position and prospects for the issuer and any guarantor;
• rights attached to the securities;
• reasons for issuing the securities and their impact on the issuer;
• a clear and accurate seven-page summary (except for the admission to trading of non-equity securities only targeting qualified investors) that provides:
  • an introduction with warnings that the investor could lose all or part of the invested capital,
  • key information on the issuer,
  • key information on the securities, including the type and class of securities and the rights attached to the securities,
  • key information on the offer of securities to the public and/or the admission to trading on a regulated market,
  • where relevant, a brief description of the nature and scope of a guarantee.

The Prospectus Regulation, as amended by Regulation (EU) 2024/2809, establishes a standardised, simplified and significantly alleviated EU growth issuance prospectus, replacing the earlier and more comprehensive EU growth prospectus rules. It is a single, lighter prospectus capped at 75 pages (for shares) available to SMEs, certain issuers on SME growth markets and unlisted companies raising up to €50 million.

In addition, the Prospectus Regulation, as amended by Regulation (EU) 2024/2809, establishes the EU follow-on prospectus for secondary issuances by companies already listed on a regulated market or SME growth market. This is a significantly shorter prospectus (limited to 50 pages for shares), subject to a reduced approval period, and replaces the earlier more comprehensive simplified secondary issuance prospectus.

The Prospectus Regulation, as amended by Regulation (EU) 2024/2809, also significantly streamlines and standardises the main prospectus for all offers of securities to the public or admissions to trading on a regulated market and introduces a page limit of 300 pages for share prospectuses.

The Prospectus Regulation harmonises the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division.

The Prospectus Regulation introduces a prospectus exemption for offers of securities to the public made by crowdfunding service providers (raising money from a large group of people, often via the internet) that do not exceed the threshold of €5 million in accordance with the conditions specified in amending Regulation (EU) 2020/1503.

The Prospectus Regulation, as amended by Regulation (EU) 2024/2809, also makes further changes to improve efficiency and investor protection:

• prospectuses are now provided only in electronic form, with simplified language rules;
• future financial information may be more efficiently incorporated by reference into base prospectuses, within their validity, instead of being included via a supplement (still possible on voluntary basis);
• the equivalence rules for recognising non-EU-country prospectuses are simplified;
• investor withdrawal rights are extended from two to three working days.

Delegated acts

The European Commission has adopted the following acts:

• Delegated Regulation (EU) 2019/979 laying down details of the key financial information in the summary of the prospectus, the publication and classification of the prospectus, the advertisement for the securities, supplements to a prospectus and the notification portal;
• Delegated Regulation (EU) 2019/980 laying down details of the precise content and format of the prospectus, and concerning the scrutiny and approval of the prospectus;
• Delegated Regulation (EU) 2021/528 setting out the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division;
• Delegated Regulation (EU) 2020/1272 amending and correcting Delegated Regulation (EU) 2019/979;
• Delegated Regulation (EU) 2020/1273 amending and correcting Delegated Regulation (EU) 2019/980.