(1)

This Regulation constitutes an essential step towards the completion of the Capital Markets Union as set out in the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, entitled ‘Action Plan on Building a Capital Markets Union’ of 30 September 2015. The aim of the Capital Markets Union is to help businesses tap into more diverse sources of capital from anywhere within the European Union (hereinafter ‘the Union’), make markets work more efficiently and offer investors and savers additional opportunities to put their money to work, in order to enhance growth and create jobs.

(2)

Directive 2003/71/EC of the European Parliament and of the Council (4) laid down harmonised principles and rules on the prospectus to be drawn up, approved and published when securities are offered to the public or admitted to trading on a regulated market. Given the legislative and market developments since its entry into force, that Directive should be replaced.

(3)

Disclosure of information in case of offers of securities to the public or admission of securities to trading on a regulated market is vital to protect investors by removing asymmetries of information between them and issuers. Harmonising this disclosure allows for the establishment of a cross-border passport mechanism which facilitates the effective functioning of the internal market in a wide variety of securities.

(4)

Divergent approaches would result in fragmentation of the internal market since issuers, offerors and persons asking for admission would be subject to different rules in different Member States and prospectuses approved in one Member State could be prevented from being used in other Member States. In the absence of a harmonised framework to ensure uniformity of disclosure and the functioning of the passport in the Union it is therefore likely that differences in Member States legislation would create obstacles to the smooth functioning of the internal market for securities. Therefore to ensure the proper functioning of the internal market and improve the conditions of its functioning, in particular with regard to capital markets, and to guarantee a high level of consumer and investor protection, it is therefore appropriate to lay down a regulatory framework for prospectuses at Union level.

(5)

It is appropriate and necessary for the rules on disclosure when securities are offered to the public or admitted to trading on a regulated market to take the legislative form of a Regulation in order to ensure that provisions directly imposing obligations on persons involved in offers of securities to the public and in admissions of securities to trading on a regulated market are applied in a uniform manner throughout the Union. Since a legal framework for the provisions on prospectuses necessarily involves measures specifying precise requirements on all different aspects inherent to prospectuses, even small divergences on the approach taken regarding one of these aspects could lead to significant impediments to cross-border offers of securities, to multiple listings on regulated markets and to EU consumer protection rules. Therefore, the use of a Regulation, which is directly applicable without requiring national legislation, should reduce the possibility of divergent measures being taken at national level, and should ensure a consistent approach, greater legal certainty and prevent the appearance of significant impediments to cross-border offers and multiple listings. The use of a Regulation will also strengthen confidence in the transparency of markets across the Union, and reduce regulatory complexity as well as search and compliance costs for companies.

(6)

The assessment of Directive 2010/73/EU of the European Parliament and of the Council  (5) has revealed that certain changes introduced by that Directive have not met their original objectives and that further amendments to the prospectus regime in the Union are necessary to simplify and improve its application, increase its efficiency and enhance the international competitiveness of the Union, thereby contributing to the reduction of administrative burdens.

(7)

The aim of this Regulation is to ensure investor protection and market efficiency, while enhancing the single market for capital. The provision of information which, according to the nature of the issuer and of the securities, is necessary to enable investors to make an informed investment decision ensures, together with rules on the conduct of business, the protection of investors. Moreover, such information provides an effective means of increasing confidence in securities and thus of contributing to the proper functioning and development of securities markets. The appropriate way to make this information available is to publish a prospectus.

(8)

The disclosure requirements of the present Regulation do not prevent a Member State or a competent authority or an exchange through its rule book to impose other particular requirements in the context of admission to trading of securities on a regulated market (notably regarding corporate governance). Such requirements may not directly or indirectly restrict the drawing up, the content and the dissemination of a prospectus approved by a competent authority.

(9)

Non-equity securities issued by a Member State or by one of a Member State's regional or local authorities, by public international bodies of which one or more Member States are members, by the European Central Bank or by the central banks of the Member States should not be covered by this Regulation and thus should remain unaffected by this Regulation.

(10)

The scope of the prospectus requirement should cover both equity and non-equity securities offered to the public or admitted to trading on regulated markets in order to ensure investor protection. Some of the securities covered by this Regulation entitle the holder to acquire transferable securities or to receive a cash amount through a cash settlement determined by reference to other instruments, notably transferable securities, currencies, interest rates or yields, commodities or other indices or measures. This Regulation covers in particular warrants, covered warrants, certificates, depositary receipts and convertible notes, such as securities convertible at the option of the investor.

(11)

To ensure the approval and passporting of the prospectus as well as the supervision of compliance with this Regulation in particular concerning advertising activity, a competent authority needs to be identified for each prospectus. Thus, this Regulation should clearly determine the home Member State best placed to approve the prospectus.

(12)

For offers of securities to the public with a total consideration in the Union below EUR 1 000 000 , the cost of producing a prospectus in accordance with this Regulation is likely to be disproportionate to the envisaged proceeds of the offer. It is therefore appropriate that the requirement to draw up a prospectus under this Regulation should not apply to offers of such small scale. Member States should not extend the requirements to draw up a prospectus in accordance with this Regulation to offers of securities with a total consideration below that threshold. Furthermore, Member States should refrain from imposing at national level other disclosure requirements which could constitute a disproportionate or unnecessary burden in relation to such offers and thus increase fragmentation of the internal market. Where Member States impose such national disclosure requirements, they should notify the Commission and ESMA of the applicable rules.

(12a)

The Commission should analyse such national disclosure requirements and should incorporate the results in its work on crowdfunding, taking into account the need to avoid fragmentation of the internal market. It is important that the regulatory environment at Union level ensures that companies have enough options to raise capital. Therefore, in the spirit of the Capital Markets Union and in order to unlock investment, the Commission should propose a regulatory initiative to regulate and harmonise crowdfunding practices across the Union.

(13)

Furthermore, in view of the varying sizes of financial markets across the Union, it is appropriate to give Member States the option of exempting offers of securities to the public not exceeding EUR 5 000 000 from the prospectus obligation as provided for in this Regulation. In particular, Member States should be free to set out in their national law a threshold between EUR 1 000 000 and EUR 5 000 000, expressed as the total consideration of the offer in the Union over a period of 12 months, from which the exemption should apply taking into account the level of domestic investor protection they deem to be appropriate. Member States should notify the Commission and ESMA of the threshold they have chosen. Offers of securities to the public made under such an exemption should not benefit from the passporting regime under this Regulation. Furthermore, such offers should contain a clear indication that the public offer is not of a cross-border nature and should not actively solicit investors outside that Member State.

(13a)

Where a Member State chooses to exempt offers of securities to the public with a total consideration not exceeding EUR 5 000 000, nothing in this Regulation should prevent that Member State from introducing rules at national level which allow multilateral trading facilities (MTFs) to determine the content of the admission document which an issuer is required to produce upon initial admission to trading of its securities. In such a case, it could be appropriate for the operator of the MTF to define how the admission document is reviewed, which would not necessarily involve a formal approval by the competent authority or the MTF.

(14)

Where an offer of securities is addressed exclusively to a restricted circle of investors who are not qualified investors or other investors that fulfil the conditions set out in points (a) and (b) of Article 6(1) of Regulation (EU) No 345/2013 , drawing up a prospectus represents a disproportionate burden in view of the small number of persons targeted by the offer, thus no prospectus should be required. This should apply for example to an offer addressed to relatives or personal acquaintances of the managers of a company.

(15)

Incentivising directors and employees to hold securities of their own company can have a positive impact on companies' governance and help create long-term value by fostering employees' dedication and sense of ownership, aligning the respective interests of shareholders and employees, and providing the latter with investment opportunities. Participation of employees in the ownership of their company is particularly important for small and medium-sized enterprises (SMEs), in which individual employees are likely to play a significant role in the success of the company. Therefore, there should be no requirement to produce a prospectus for offers made in the context of an employee-share scheme within the Union, provided a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer, to safeguard investor protection. To ensure equal access to employee-share schemes for all directors and employees, independently of whether their employer is established in or outside the Union, no equivalence decision of third country markets should be required any longer, as long as the aforementioned document is made available. Thus, all participants in employee-share schemes will benefit from equal treatment and information.

(16)

Dilutive issuances of shares or securities giving access to shares often indicate transactions with a significant impact of the issuer's capital structure, prospects and financial situation, for which the information contained in a prospectus is needed. By contrast, where an issuer has shares already admitted to trading on a regulated market, a prospectus should not be required for any subsequent admission of the same shares on the same regulated market, including where such shares result from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, providing the newly admitted shares represent a limited proportion in relation to shares of the same class already issued on the same regulated market, unless such admission is combined with an offer to the public falling in the scope of this Regulation. The same principle should apply more generally to securities fungible with securities already admitted to trading on a regulated market.

(17)

When applying the definition of ‘offer of securities to the public’, the ability of an investor to take an individual decision to purchase or subscribe to securities should be a decisive criterion. Therefore, where securities are offered without an element of individual choice on the part of the recipient, including in allocations of securities where there is no right to repudiate the allocation, such transaction should not fall within the definition of ‘offer of securities to the public’ prescribed by this Regulation.

(18)

Issuers, offerors or persons asking for the admission to trading on a regulated market of securities which are not subject to the obligation to publish a prospectus should be entitled to draw up voluntarily a full prospectus or an EU Growth prospectus, as applicable, in accordance with this Regulation. Therefore, they should benefit from the single passport where they choose to comply with this Regulation on a voluntary basis.

(19)

Disclosure provided by the prospectus should not be required for offers limited to qualified investors. In contrast, any resale to the public or public trading through admission to trading on a regulated market requires the publication of a prospectus.

(20)

A valid prospectus, drawn up by the issuer or the person responsible for drawing up the prospectus and available to the public at the time of the final placement of securities through financial intermediaries or in any subsequent resale of securities, provides sufficient information for investors to make informed investment decisions. Therefore, financial intermediaries placing or subsequently reselling the securities should be entitled to rely upon the initial prospectus published by the issuer or the person responsible for drawing up the prospectus as long as it is valid and duly supplemented and the issuer or the person responsible for drawing up the prospectus consents to its use. The issuer or the person responsible for drawing up the prospectus should be allowed to attach conditions to his or her consent. The consent to use the prospectus, including any conditions attached thereto, should be given in a written agreement enabling assessment by relevant parties of whether the resale or final placement of securities complies with the agreement. In the event that consent to use the prospectus has been given, the issuer or person responsible for drawing up the initial prospectus should be liable for the information stated therein and in the case of a base prospectus, for providing and filing final terms and no other prospectus should be required. However, in the event that the issuer or the person responsible for drawing up such initial prospectus does not consent to its use, the financial intermediary should be required to publish a new prospectus. In that case, the financial intermediary should be liable for the information in the prospectus, including all information incorporated by reference and, in the case of a base prospectus, final terms.

(21)

Harmonisation of the information contained in the prospectus should provide equivalent investor protection at Union level. In order to enable investors to make an informed investment decision, a prospectus drawn up under this Regulation should contain the relevant and necessary information in relation to an investment in securities which an investor would reasonably require in order to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer and of any guarantor, and the rights attaching to the securities . Such information should be drafted and presented in an easily analysable, succinct and comprehensible form and should be adapted to the type of prospectus drawn up in accordance with this Regulation, including those following the simplified disclosure regime for secondary issuances and the EU Growth prospectus regime . A prospectus should not contain information which is not material or specific to the issuer and the securities concerned, as this could obscure the information relevant to investors and thus undermine investor protection. Therefore, the information which is included in a prospectus should be adapted to reflect the nature and circumstances of the issuer, the type of securities, the type of investor targeted by the offer or admission to trading on a regulated market and the likely knowledge of such investors, and the information that is available to such investors because it has been made public under other legal or regulatory requirements.

(22)

The summary of the prospectus should be a useful source of information for investors, in particular retail investors. It should be a self-contained part of the prospectus and should focus on key information that investors need in order to be able to decide which offers and admissions to trading of securities they want to study further by reviewing the prospectus as a whole with the purpose of making an informed investment decision. The foregoing implies that information produced in the summary is not replicated within the main body of the prospectus unless absolutely necessary . Such key information should convey the essential characteristics of, and risks associated with, the issuer, any guarantor, and the securities offered or admitted to trading on a regulated market , including unique identifiers such as the legal entity identifier (LEI) of the actors involved in the offer and the international securities identification number (ISIN) of the securities . It should also provide the general terms and conditions of the offer. In particular, the presentation of risk factors in the summary should consist of a limited selection of specific risks which the issuer considers to be of most relevance to the investor when the investor is making an investment decision. The description of the risk factors in the summary should be of relevance to the specific offering and should be prepared solely for the benefit of investors and not give general statements on investment risk, or limit the liability of the issuer, offeror or any persons acting on their behalf .

(22a)

The summary should contain a clear warning highlighting the risks, in particular for retail investors, in the case of securities issued by banks that are subject to bail-in under Directive 2014/59/EU of the European Parliament and of the Council (BRRD)  (6).

(23)

The summary of the prospectus should be short, simple, clear and easy for investors to understand. It should be drafted in plain, non-technical language, presenting the information in an easily accessible way. It should not be a mere compilation of excerpts from the prospectus. It is appropriate to set a maximum length for the summary in order to ensure that investors are not deterred from reading it and to encourage issuers to select the information which is essential for investors. In exceptional cases, the competent authority should, however, be able to allow the issuer to draw up a longer summary of up to 10 sides of A4-sized paper when printed, where the complexity of the issuer's activities, the nature of the issue, or the nature of the securities issued so requires, and where the investor would be misled without the additional information being set out in the summary as a result.

(24)

To ensure the uniform structure of the prospectus summary, general sections and sub-headings should be provided, with indicative contents which the issuer should fill in with brief, narrative descriptions including figures where appropriate. As long as they present it in a fair and balanced way, issuers should be given discretion to select the information that they deem to be material and meaningful.

(25)

The prospectus summary should be modelled as much as possible after the key information document required under Regulation (EU) No 1286/2014 of the European Parliament and of the Council (7). Where securities fall under the scope of both this Regulation and Regulation (EU) No 1286/2014, full reuse of the contents of the key information document should be permitted in the summary in order to minimise compliance costs and administrative burden for issuers. The requirement to produce a summary should however not be waived when a key information document is required, as the latter does not contain key information on the issuer and the offer to the public or admission to trading of the securities concerned.

(26)

No civil liability should be attached to any person solely on the basis of the summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent with the relevant parts of the prospectus. The summary should contain a clear warning to this effect.

(27)

Issuers which repeatedly raise financing on capital markets should be offered specific formats of registration documents and prospectuses as well as specific procedures for their filing and approval, in order to provide them with more flexibility and enable them to seize market windows. In any case, those formats and procedures should be optional at the choice of issuers.

(28)

For all non-equity securities, including where these are issued in a continuous or repeated manner or as part of an offering programme, issuers should be allowed to draw up a prospectus in the form of a base prospectus. A base prospectus and its final terms should contain the same information as a prospectus.

(29)

It is appropriate to clarify that final terms to a base prospectus should contain only information relating to the securities note which is specific to the individual issue and which can be determined only at the time of the individual issue. Such information may, for example, include the international securities identification number, the issue price, the date of maturity, any coupon, the exercise date, the exercise price, the redemption price and other terms not known at the time of drawing up the base prospectus. Where the final terms are not included in the base prospectus they should not have to be approved by the competent authority, but should only be filed with it. Other new information which is capable of affecting the assessment of the issuer and the securities should be included in a supplement to the base prospectus. Neither the final terms nor a supplement should be used to include a type of securities not already described in the base prospectus.

(30)

Under a base prospectus, a summary should only be drawn up by the issuer in relation to each individual issue offered, in order to reduce administrative burdens and to enhance the readability for investors. That issue-specific summary should be annexed to the final terms and should only be approved by the competent authority where the final terms are included in the base prospectus or in a supplement thereto.

(31)

In order to enhance the flexibility and cost-effectiveness of the base prospectus, an issuer should be allowed to draw up a base prospectus as separate documents and to use a universal registration document as a constituent part of that base prospectus, where it is a frequent issuer.

(32)

Frequent issuers should be encouraged to draw up their prospectus as separate documents as this can reduce their cost of compliance with this Regulation and enable them to swiftly react to market windows. Thus, issuers whose securities are admitted to trading on regulated markets or multilateral trading facilities should have the option, but not the obligation, to draw up and publish every financial year a universal registration document containing legal, business, financial, accounting and shareholding information and providing a description of the issuer for that financial year. That should enable the issuer to keep the information up-to-date and draw up a prospectus when market conditions become favourable for an offer or an admission by adding a securities note and a summary. The universal registration document should be multi-purpose in so far as its content should be the same irrespective of whether the issuer subsequently uses it for an offer or admission to trading of equity, debt securities or derivatives. It should act as a source of reference on the issuer, supplying investors and analysts with the minimum information needed to make an informed judgement on the company’s business, financial position, earnings and prospects, governance and shareholding.

(33)

An issuer which has filed and received approval for a universal registration document for two consecutive years can be considered well-known to the competent authority. All subsequent universal registration documents and any amendments thereto should therefore be allowed to be filed without prior approval and reviewed on an ex-post basis by the competent authority where that competent authority deems it necessary , unless those amendments concern an omission, or a material mistake or inaccuracy, which is likely to mislead the public with regard to facts and circumstances essential for an informed assessment of the issuer . Each competent authority should decide the frequency of such review taking into account for example its assessment of the risks of the issuer, the quality of its past disclosures, or the length of time elapsed since a filed universal registration document has been last reviewed.

(34)

It should be possible for the universal registration document, as long as it has not become a constituent part of an approved prospectus, to be amended, either voluntarily by the issuer — for example in case of a material change in its organisation or financial situation — or upon request by the competent authority in the context of a post filing review where the standards of completeness, comprehensibility and consistency are not met. Such amendments should be published according to the same arrangements that apply to the universal registration document. In particular, when the competent authority identifies an omission or a material mistake or inaccuracy, the issuer should amend its universal registration document and make this amendment publicly available without undue delay. As neither an offer to the public, nor an admission to trading of securities is taking place, the procedure for amending a universal registration document should be distinct from the procedure for supplementing a prospectus, which should apply only after the approval of the prospectus.

(35)

Where an issuer draws up a prospectus consisting of separate documents, all constituting parts of the prospectus should be subject to approval, including, where applicable, the universal registration document and amendments thereto, where they have been previously filed with the competent authority but not approved. In the case of a frequent issuer, any amendments to the universal registration document should not need to be approved prior to publication, but instead should be able to be reviewed by the competent authority on an ex post basis.

(36)

To speed up the process of preparing a prospectus and to facilitate access to capital markets in a cost-effective way, frequent issuers who produce a universal registration document should be granted the benefit of a faster approval process, since the main constituent part of the prospectus has either already been approved or is already available for the review by the competent authority. The time needed to obtain approval of the prospectus should therefore be shortened when the registration document takes the form of a universal registration document.

(37)

Provided that the issuer complies with the procedures for the filing, dissemination and storage of regulated information and with the deadlines set out in Articles 4 and 5 of Directive 2004/109/EC of the European Parliament and of the Council (8), it should be allowed to publish the annual and half-yearly financial reports required by Directive 2004/109/EC as parts of the universal registration document, unless the home Member States of the issuer are different for the purposes of this Regulation and Directive 2004/109/EC and unless the language of the universal registration document does not fulfil the conditions of Article 20 of Directive 2004/109/EC. This should alleviate administrative burden linked to multiple filings, without affecting the information available to the public or the supervision of these reports under Directive 2004/109/EC.

(38)

A clear time limit should be set for the validity of a prospectus in order to avoid investment decisions based on outdated information. In order to improve legal certainty, the validity of a prospectus should commence at its approval, a point in time which is easily verified by the competent authority. An offer of securities to the public under a base prospectus should only extend beyond the validity of the base prospectus where a succeeding base prospectus is approved before such validity expires and covers the continuing offer.

(39)

By nature, information on taxes on the income from the securities in a prospectus can only be generic, adding little informational value for the individual investor. Since such information must cover not only the country of registered office of the issuer but also the countries where the offer is being made or admission to trading is being sought, where a prospectus is passported, it is costly to produce and might hamper cross-border offers. Therefore a prospectus should only contain a warning that the tax legislation of the investor's Member State and of the issuer's Member State of incorporation may have an impact on the income received from the securities. However, the prospectus should still contain appropriate information on taxation where the proposed investment entails a specific tax regime, for instance in the case of investments in securities granting investors a favourable tax treatment.

(40)

Once a class of securities is admitted to trading on a regulated market, investors are provided with ongoing disclosures by the issuer under Regulation (EU) No 596/2014 of the European Parliament and of the Council (9) and Directive 2004/109/EC. The need for a full prospectus is therefore less acute in case of subsequent offers to the public or admissions to trading by such an issuer. A distinct simplified prospectus should therefore be available for use in case of secondary issuances and its content should be alleviated compared to the normal regime, taking into account the information already disclosed. Still, investors need to be provided with consolidated and well-structured information on such elements as the terms of the offer and its context▌. Therefore, the simplified prospectus for a secondary issuance should include the relevant reduced information which investors would reasonably require to understand the prospects of the issuer and of any guarantor, the rights attaching to the securities, and the reasons for the issuance and its impact on the issuer, in particular the working capital statement, the disclosure of capitalisation and indebtedness, the impact on the overall capital structure and a concise summary of relevant information disclosed under Regulation (EU) No 596/2014 since the date of the last issue.

(41)

The simplified disclosure regime for secondary issuances should be extended to securities that are traded on SME growth markets as their operators are required under Directive 2014/65/EU to establish and apply rules ensuring appropriate on-going disclosure by issuers whose securities are traded on such venues. The regime should also be applicable to MTFs, other than an SME growth market, where those MTFs have disclosure requirements equivalent to the ones required for SME growth markets under Directive 2014/65/EU.

(42)

The simplified disclosure regime for secondary issuances should only be available for use after a minimum period of time has elapsed since the initial admission to trading of a class of securities of an issuer. A delay of 18 months should ensure that the issuer has complied at least once with its obligation to publish an annual financial report under Directive 2004/109/EC or under the rules of the market operator of an SME growth market or an MTF with equivalent disclosure requirements .

(43)

One of the core objectives of the Capital Markets Union is to facilitate access to financing on capital markets for SMEs in the Union. As such companies usually need to raise relatively lower amounts than other issuers, the cost of drawing up a  full prospectus can be disproportionately high and may deter them from offering their securities to the public. At the same time, because of their size and shorter track record, SMEs might carry a  specific investment risk compared to larger issuers and should disclose sufficient information for investors to take their investment decision. Furthermore, in order to encourage the use of capital market financing by SMEs, this Regulation should ensure that special consideration is given to SME growth markets. SME growth markets are a promising tool to allow smaller, growing companies to raise capital. The success of such venues depends, however, on their attractiveness to companies of certain size. Similarly, issuers offering securities to the public with a total consideration in the Union not exceeding EUR 20 000 000 would benefit from easier access to capital markets funding in order to be able to grow and reach their full potential and should be able to raise funds at costs that are not disproportionately high. Therefore, it is appropriate that this Regulation establishes a specific proportionate EU Growth prospectus regime which is available to SMEs, to issuers making an offer of securities to the public that are to be admitted to trading on an SME growth market and to issuers offering securities to the public with a total consideration in the Union not exceeding EUR 20 000 000.  A proper balance should therefore be struck between the cost-efficient access to financial markets and investor protection when calibrating the content of an EU Growth prospectus applying to SMEs and a specific disclosure regime should therefore be developed for SMEs to achieve that objective. Once approved, EU Growth prospectuses should benefit from the passporting regime under this Regulation and should therefore be valid for any offer of securities to the public across the Union.

(44)

The reduced information required to be disclosed in the EU Growth prospectuses should be calibrated in a way that focuses on information that is material and relevant when making an investment in the securities issued, and would need to ensure proportionality between the size of the company and its fundraising needs, on the one hand, and the cost of producing a prospectus, on the other hand. In order to ensure that such companies can draw up prospectuses without incurring costs that are not proportionate to their size, and thus the size of their fundraising, the EU Growth prospectus regime ▌should be more flexible than the regime which applies to companies on regulated markets to the extent compatible with ensuring that the key information necessary to the investors is disclosed.

(45)

The proportionate disclosure regime for EU Growth prospectuses should not be ▌available where securities are to be admitted to trading on a regulated market because investors on regulated markets should feel confident that the issuers whose securities they invest in are subject to one single set of disclosure rules. Therefore there should not be a two-tier disclosure standard for admission of securities on regulated markets depending on the size of the issuer.

(46)

An EU Growth prospectus should be a standardised document, which is easy for issuers to complete and should cover key information on the issuer, on the securities and on the offer. The Commission should develop delegated acts to specify the reduced content and format of the standardised EU Growth prospectus. When setting out the details of the proportionate disclosure regime for EU Growth prospectuses, the Commission should take into account the need to ensure that the EU growth prospectus is significantly and genuinely lighter than the full prospectus, in terms of administrative burden and issue costs, the need to facilitate access to capital markets for SMEs while ensuring investor confidence in investing in such companies, the need to minimise costs and burden for SMEs, the need to elicit specific types of information of special relevance to SMEs, the size of the issuer and how long it has been operating, the various types and characteristics of offers, and the various types of information needed by investors relating to the different types of securities.

▌

(48)

The primary purpose of including risk factors in a prospectus is to ensure that investors make an informed assessment of such risks and thus take investment decisions in full knowledge of the facts. Risk factors should therefore be limited to those risks which are material and specific to the issuer and its securities and which are corroborated by the content of the prospectus. A prospectus should not contain risk factors which are generic and only serve as disclaimers, as these could obscure more specific risk factors that investors should be aware of, thereby preventing the prospectus from presenting information in an easily analysable, succinct and comprehensible form. ESMA should develop guidelines on the assessment of the specificity and significance of risk factors to assist competent authorities in their review of risk factors in a manner which encourages appropriate and focused risk factor disclosure by issuers.

(49)

Omission of sensitive information in a prospectus should be allowed in certain circumstances by means of a derogation granted by the competent authority in order to avoid detrimental situations for an issuer.

(50)

Member States publish abundant information on their financial situation which is in general available in the public domain. Thus, where a Member State guarantees an offer of securities, such information should not need to be provided in the prospectus.

(51)

Allowing issuers to incorporate by reference documents containing the information to be disclosed in a prospectus or a base prospectus  — provided that the documents incorporated by reference have been previously published electronically— should facilitate the procedure of drawing up a prospectus and lower the costs for the issuers without endangering investor protection. However, this aim of simplifying and reducing the costs of drafting a prospectus should not be achieved to the detriment of other interests the prospectus is meant to protect, including the accessibility of the information. The language used for information incorporated by reference should follow the language regime applying to prospectuses. Information incorporated by reference may refer to historical data, however where this information is no longer relevant due to material change, this should be clearly stated in the prospectus and the updated information should also be provided. Furthermore, frequent issuers should be free to choose to incorporate any changes to the universal registration document by way of a dynamic reference in the prospectus. Such dynamic reference would ensure that the reader is always referred to the latest version of the universal registration document, without the need for a supplement. The use of a dynamic reference in place of a supplement should not affect the investor's right of withdrawal.

(52)

Any regulated information ▌should be eligible for incorporation by reference in a prospectus. Issuers whose securities are traded on a multilateral trading facility, and issuers which are exempted from publishing annual and half-yearly financial reports pursuant to Article 8(1)(b) of Directive 2004/109/EC, should also be allowed to incorporate by reference in a prospectus all or part of their annual and interim financial information, audit reports, financial statements, management reports or corporate governance statements, subject to their electronic publication.

(53)

Not all issuers have access to adequate information and guidance about the scrutiny and approval process and the necessary steps to follow to get a prospectus approved, as different approaches by competent authorities exist in Member States. This Regulation should eliminate those differences by harmonising the rules applying to the scrutiny and approval process and streamlining the approval process by the national competent authorities in order to ensure that all competent authorities take a convergent approach when scrutinising the completeness, consistency and comprehensibility of the information contained in a prospectus. Guidance on how to seek approval of a prospectus should be publicly available of the websites of the competent authorities. ESMA should play a key role in fostering supervisory convergence in this field by using its powers under Regulation (EU) No 1095/2010 of the European Parliament and of the Council (10). In particular, ESMA should conduct peer reviews covering activities of the competent authorities under this Regulation within an appropriate time-frame before the review of this Regulation and in accordance with Regulation (EU) No 1095/2010. ESMA should develop a central workflow system, capturing the prospectus approval process from initiation through to approval, allowing competent authorities, ESMA and issuers to manage and monitor approval requests online. That system would provide key information and function as a tool for ESMA and competent authorities to drive convergence of prospectus approval processes and procedures across the Union and to ensure that, in future, prospectuses are approved in the same manner Union-wide.

(53a)

ESMA should make an assessment of the design, financing and operation of a central workflow system in the context of the Capital Markets Union together with the national competent authorities.

(54)

To facilitate the access to the markets of Member States, it is important that fees charged by competent authorities for the approval and filing of prospectuses and their related documents are reasonable and are disclosed. Fees imposed on issuers established in a third country should reflect the burden that such an issuance represents.

(55)

Since the internet ensures easy access to information, and in order to ensure better accessibility for investors, the approved prospectus should always be published in an electronic form. The prospectus should be published on a dedicated section of the website of the issuer, the offeror or the person asking for admission, or, where applicable, on the website of the financial intermediaries placing or selling the securities, including paying agents, or on the website of the regulated market where the admission to trading is sought, or of the operator of the multilateral trading facility, and be transmitted by the competent authority to ESMA along with the relevant data enabling its classification. ESMA should provide a centralised storage mechanism of prospectuses allowing access free of charge and appropriate search facilities for the public. To ensure that investors have access to reliable data that can be used and analysed in a timely and efficient matter, key information contained in the prospectuses, such as the ISIN identifying the securities and the LEI identifying the issuers, offerors and guarantors, should be machine readable including when meta data is used. Prospectuses should remain publicly available for at least 10 years after their publication, to ensure that their period of public availability is aligned with that of annual and half-yearly financial reports under Directive 2004/109/EC. The prospectus should however always be available to investors on a durable medium , free of charge ▌on request.

(56)

It is also necessary to harmonise advertisements in order to avoid undermining public confidence and prejudicing the proper functioning of financial markets. The fairness and accuracy of advertisements, as well as their consistency with the content of the prospectus are of utmost importance for the protection of investors, including retail investors . Without prejudice to the passporting regime under this Regulation , the supervision of such advertisements is an integral part of the role of competent authorities. The competent authority of the Member State where the advertisements are disseminated should have the power to exercise control over the compliance of advertising activity, relating to an offer to the public of securities or an admission to trading on a regulated market, with the principles referred to in this Regulation. Where necessary, the home Member State should assist the competent authority of the Member State where the advertisements are disseminated with assessing the consistency of the advertisements with the information in the prospectus. Without prejudice to the powers laid down in Article 30(1), scrutiny of the advertisements by a competent authority should not constitute a precondition for the offer to the public or the admission to trading to take place in any host Member State.

(57)

Any significant new factor, material mistake or inaccuracy which could influence the assessment of the investment, arising after the publication of the prospectus but before the closing of the offer or the start of trading on a regulated market, should be properly evaluated by investors and therefore requires the approval and dissemination of a supplement to the prospectus without undue delay.

(58)

In order to improve legal certainty, the respective time-limits within which an issuer must publish a supplement to the prospectus and within which investors have a right to withdraw their acceptance of the offer following the publication of a supplement should be clarified. On the one hand, the obligation to supplement a prospectus should apply until the final closing of the offer period or the time when trading of such securities on a regulated market begins, whichever occurs later. On the other hand, the right to withdraw an acceptance should apply only where the prospectus relates to an offer of securities to the public and the new factor, mistake or inaccuracy arose before the final closing of the offer and the delivery of the securities. Hence, the right of withdrawal should be linked to the timing of the new factor, mistake or inaccuracy that gives rise to a supplement, and should assume that such triggering event has occurred while the offer is open and before the securities are delivered. To improve legal certainty, the supplement to the prospectus should specify when the right of withdrawal ends. Financial intermediaries should facilitate proceedings when investors exert their right to withdraw acceptances.

(59)

The obligation for an issuer to translate the full prospectus into all the relevant official languages discourages cross-border offers or multiple trading. To facilitate cross-border offers, where the prospectus is drawn up in a language that is customary in the sphere of international finance, only the summary should be translated in the official language(s) of the host or home Member State(s) or in one of the official languages used in the part of the Member State where the investment product is distributed .

(60)

ESMA and the competent authority of the host Member State should be entitled to receive a certificate from the competent authority of the home Member State which states that the prospectus , or the individual universal registration document in cases where only such a document has been approved, has been drawn up in accordance with this Regulation. The competent authority of the home Member State should also notify the issuer or the person responsible for drawing up the prospectus or the universal registration document, as applicable, of the certificate of approval of the prospectus that is addressed to the authority of the host Member State in order to provide the issuer or the person responsible for drawing up the prospectus or the universal registration document, as applicable, with certainty as to whether and when a notification has actually been made.

(61)

In order to ensure that the purposes of this Regulation will be fully achieved, it is also necessary to include within its scope securities issued by issuers governed by the laws of third countries. ▌In order to ensure exchanges of information and cooperation with third-country authorities in relation to the effective enforcement of this Regulation, competent authorities should conclude cooperation arrangements with their counterparts in third countries. Any transfer of personal data carried out on the basis of those agreements should comply with Directive 95/46/EC and with Regulation (EC) No 45/2001 of the European Parliament and of the Council.

(62)

A variety of competent authorities in Member States, with different responsibilities, may create unnecessary costs and overlapping of responsibilities without providing any additional benefit. In each Member State, a single competent authority should be designated to approve prospectuses and to assume responsibility for supervising compliance with this Regulation. That competent authority should be established as an administrative authority and in such a form that their independence from economic actors is guaranteed and conflicts of interest are avoided. The designation of a competent authority for prospectus approval should not exclude cooperation between that competent authority and other entities, such as banking and insurance regulators or listing authorities, with a view to guaranteeing efficient scrutiny and approval of prospectuses in the interest of issuers, investors, markets participants and markets alike. Delegation of tasks by a competent authority to another entity should only be permitted where it relates to the publication of approved prospectuses.

(63)

A set of effective tools and powers and resources for the competent authorities of Member States guarantees supervisory effectiveness. This Regulation therefore should in particular provide for a minimum set of supervisory and investigative powers with which competent authorities of Member States should be entrusted in accordance with national law. Those powers should be exercised, where the national law so requires, by application to the competent judicial authorities. When exercising their powers under this Regulation competent authorities and ESMA should act objectively and impartially and remain autonomous in their decision making.

(64)

For the purpose of detecting infringements of this Regulation, it is necessary for competent authorities to be able to access sites other than the private residences of natural persons in order to seize documents. The access to such premises is necessary when there is reasonable suspicion that documents and other data related to the subject matter of an inspection or investigation exist and may be relevant to prove an infringement of this Regulation. Additionally the access to such premises is necessary where: the person to whom a demand for information has already been made fails to comply with it; or where there are reasonable grounds for believing that if a demand were to be made, it would not be complied with, or that the documents or information to which the information requirement relates, would be removed, tampered with or destroyed.

(65)

In line with the Commission Communication of 8 December 2010 entitled ‘Reinforcing sanctioning regimes in the financial services sector’ and in order to ensure that the requirements of this Regulation are fulfilled, it is important that Member States take necessary steps to ensure that infringements of this Regulation are subject to appropriate administrative penalties and measures. Those penalties and administrative measures should be effective, proportionate and dissuasive and ensure a common approach in Member States and a deterrent effect. This Regulation should not limit Member States in their ability to provide for higher levels of administrative sanctions.

(66)

In order to ensure that decisions made by competent authorities have a deterrent effect on the public at large, they should normally be published unless the competent authority in accordance with this Regulation deems it necessary to opt for a publication on an anonymous basis, to delay the publication or not to publish sanctions.

(67)

Although Member States may lay down rules for administrative and criminal penalties for the same infringements, Member States should not be required to lay down rules for administrative penalties for the infringements of this Regulation which are subject to national criminal law by [date of application of this Regulation]. In accordance with national law, Member States are not obliged to impose both administrative and criminal penalties for the same offence, but they should be able to do so if their national law so permits. However, the maintenance of criminal penalties instead of administrative penalties for infringements of this Regulation should not reduce or otherwise affect the ability of competent authorities to cooperate, access and exchange information in a timely way with competent authorities in other Member States for the purposes of this Regulation, including after any referral of the relevant infringements to the competent judicial authorities for criminal prosecution.

(68)

Whistleblowers may bring new information to the attention of competent authorities which assists them in detecting and imposing sanctions in cases of infringements of this Regulation. This Regulation should therefore ensure that adequate arrangements are in place to enable whistleblowers to alert competent authorities to actual or potential infringements of this Regulation and to protect them from retaliation.

(69)

In order to specify the requirements set out in this Regulation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of ▌the minimum information content of the documents referred to in points (f) and (g) of Article 1(3) and points (d) and (e) of Article 1(4), the adjustment of the definitions of Article 2, ▌the format of the prospectus, the base prospectus and the final terms, and the specific information which must be included in a prospectus, the minimum information contained in the universal registration document, the reduced information contained in the simplified prospectus in case of secondary issuances and by SMEs, the specific reduced content and format of the EU Growth prospectus provided for in this Regulation, the advertisements for securities falling under the scope of this Regulation, and the general equivalence criteria for prospectuses drawn up by third country issuers. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council should receive all documents at the same time as Member States' experts, and their experts should systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts .

(70)

In order to ensure uniform conditions for the implementation of this Regulation in respect of equivalence of third country prospectus legislations, implementing powers should be conferred on the Commission to take a decision on such equivalence. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (11).

(71)

Technical standards in financial services should ensure adequate protection of investors and consumers across the Union. As a body with highly specialised expertise, it would be efficient and appropriate to entrust ESMA, with the elaboration of draft regulatory technical standards which do not involve policy choices, for submission to the Commission.

(72)

The Commission should adopt draft regulatory technical standards developed by ESMA, with regard to the content and format of presentation of the historical key financial information to be included in the summary, the scrutiny, approval, filing and review of the universal registration document, as well as the conditions for its amendment or updating and the conditions where the status of frequent issuer may be lost, the information to be incorporated by reference and further types of documents required under Union law, the procedures for the scrutiny and approval of the prospectus, the publication of the prospectus, the data necessary for the classification of prospectuses in the storage mechanism operated by ESMA, the provisions concerning advertisements, the situations where a significant new factor, material mistake or inaccuracy relating to the information included in the prospectus requires a supplement to the prospectus to be published, the information exchanged between competent authorities and ESMA in the context of the obligation to cooperate, and the minimum content of the cooperation arrangements with supervisory authorities in third countries. The Commission should adopt those draft regulatory technical standards by means of delegated acts pursuant to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

(73)

The Commission should also be empowered to adopt implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1093/2010. ESMA should be entrusted with drafting implementing technical standards for submission to the Commission with regard to the standard forms, templates and procedures for the notification of the certificate of approval, the prospectus, the supplement of the prospectus and the translation of the prospectus and/or summary, the standard forms, templates and procedures for the cooperation and exchange of information between competent authorities, and the procedures and forms for exchange of information between competent authorities and ESMA.

(74)

In exercising its delegated and implementing powers in accordance with this Regulation, the Commission should respect the following principles:

(75)

Any processing of personal data carried out within the framework of this Regulation, such as the exchange or transmission of personal data by the competent authorities, should be undertaken in accordance with Directive 95/46/EC of the European Parliament and of the Council (12) and any exchange or transmission of information by ESMA should be undertaken in accordance with Regulation (EC) No 45/2001 of the European Parliament and of the Council (13).

(76)

No later than five years after the entry into force of this Regulation, the Commission should review the application of this Regulation and assess in particular whether the disclosure regimes for secondary issuances and for SMEs, the universal registration document and the prospectus summary remain appropriate to meet the objectives pursued by this Regulation.

(77)

The application of the requirements in this Regulation should be deferred in order to allow for the adoption of delegated and implementing acts and to allow market participants to assimilate and plan for the application of the new measures.

(78)

Since the objectives of this Regulation, namely to enhance investor protection and market efficiency while establishing the Capital Markets Union, cannot be sufficiently achieved by the Member States but can rather, by reason of its effects, be better achieved at Union level, the Union may adopt measures in accordance with principle of subsidiarity as set out in Article 5 of the Treaty of the European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(79)

This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. Therefore, this Regulation should be interpreted and applied in accordance with those rights and principles.

(80)

The European Data Protection Supervisor was consulted in accordance with Article 28(2) of Regulation (EC) No 45/2001 ▌.

(a)

units issued by collective investment undertakings▌;

(b)

non-equity securities issued by a Member State or by one of a Member State's regional or local authorities, by public international bodies of which one or more Member States are members, by the European Central Bank or by the central banks of the Member States;

(c)

shares in the capital of central banks of the Member States;

(d)

securities wholly, unconditionally and irrevocably guaranteed by a Member State or by one of a Member State's regional or local authorities;

(e)

securities issued by associations with legal status or non-profit-making bodies, recognised by a Member State, for the purposes of obtaining the funding necessary to achieve their non-profit-making objectives;

▌

(g)

non-fungible shares of capital whose main purpose is to provide the holder with a right to occupy an apartment, or other form of immovable property or a part thereof and where the shares cannot be sold on without this right being given up;

▌

(i)

non-equity securities issued in a continuous or repeated manner by a credit institution, where the total aggregated consideration in the Union for the securities offered is less than EUR 75 000 000 per credit institution over a period of 12 months, provided that those securities:

(a)

▌addressed solely to qualified investors;

(b)

▌ addressed to fewer than 350 natural or legal persons per Member State and in a total of no more than 4 000 natural or legal persons in the Union , other than qualified investors or other investors that fulfil the conditions set out in points (a) and (b) of Article 6(1) of Regulation (EU) No 345/2013 ;

(c)

▌ addressed to investors who acquire securities for a total consideration of at least EUR 100 000 per investor, for each separate offer;

(d)

▌ with a total consideration in the Union of less than EUR 1 000 000 , which shall be calculated over a period of 12 months;

(e)

shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital;

(f)

securities offered in connection with a takeover by means of an exchange offer, provided that a document is available containing information describing the transaction and its impact on the issuer;

(g)

securities offered, allotted or to be allotted in connection with a merger or division, provided that a document is available containing information describing the transaction and its impact on the issuer;

(h)

dividends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;

(i)

securities offered, allotted or to be allotted to existing or former directors or employees by their employer or by an affiliated undertaking, whether or not located in the Union, provided that a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer or allotment.

(a)

securities fungible with securities already admitted to trading on the same regulated market, provided that they represent, over a period of 12 months, less than 20 per cent of the number of securities already admitted to trading on the same regulated market;

(b)

shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, where the resulting shares are of the same class as the shares already admitted to trading on the same regulated market, provided that the resulting shares represent, over a period of 12 months, less than 20 per cent of the number of shares of the same class already admitted to trading on the same regulated market. Where a prospectus was drawn up in accordance with either this Regulation or Directive 2003/71/EC upon the offer to the public or admission to trading of the securities giving access to the shares, or where the securities giving access to the shares were issued before the entry into force of this Regulation, this Regulation shall not apply to the admission to trading on a regulated market of the resulting shares irrespective of their proportion in relation to the number of shares of the same class already admitted to trading on the same regulated market.

(c)

shares issued in substitution for shares of the same class already admitted to trading on the same regulated market, where the issuing of such shares does not involve any increase in the issued capital;

(d)

securities offered in connection with a takeover by means of an exchange offer, provided that a document is available containing information describing the transaction and its impact on the issuer;

(e)

securities offered, allotted or to be allotted in connection with a merger or a division, provided that a document is available containing information describing the transaction and its impact on the issuer;

(f)

shares offered, allotted or to be allotted free of charge to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market and that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer or allotment;

(g)

securities offered, allotted or to be allotted to existing or former directors or employees by their employer or an affiliated undertaking, whether or not located in the Union, provided that the said securities are of the same class as the securities already admitted to trading on the same regulated market and that a document is made available containing information on the number and nature of the securities and the reasons for and detail of the offer or allotment;

(h)

securities already admitted to trading on another regulated market, on the following conditions:

(a)

‘securities’ means transferable securities as defined by Article 4(1)(44) of Directive 2014/65/EU with the exception of money market instruments as defined by Article 4(1)(17) of Directive 2014/65/EU, having a maturity of less than 12 months;

(b)

‘equity securities’ means shares and other transferable securities equivalent to shares in companies, as well as any other type of transferable securities giving the right to acquire any of the aforementioned securities as a consequence of their being converted or the rights conferred by them being exercised, provided that securities of the latter type are issued by the issuer of the underlying shares or by an entity belonging to the group of the said issuer;

(c)

‘non-equity securities’ means all securities that are not equity securities;

(d)

‘offer of securities to the public’ means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for these securities. This definition also applies to the placing of securities through financial intermediaries;

(e)

‘qualified investors’ means persons or entities that are listed in points (1) to (4) of Section I of Annex II to Directive 2014/65/EU, and persons or entities who are, on request, treated as professional clients in accordance with Section II of Annex II to Directive 2014/65/EU, or recognised as eligible counterparties in accordance with Article 30 of Directive 2014/65/EU unless they have requested that they be treated as non-professional clients. Investment firms and credit institutions shall communicate their classification on request to the issuer without prejudice to the relevant legislation on data protection;

(f)

‘small and medium-sized enterprises’ (‘SMEs’) means either

(g)

‘credit institution’ means an undertaking as defined as defined in point (1) of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (16);

(h)

‘issuer’ means a legal entity which issues or proposes to issue securities;

(i)

‘offeror’ means a legal entity or individual which offers securities to the public;

(j)

‘regulated market’ means a  regulated market as defined by Article 4(1)(21) of Directive 2014/65/EU;

(k)

‘advertisement’ means announcements:

(l)

‘regulated information’ means all information which the issuer, or any other person that has applied for admission to trading of securities on a regulated market without the issuer's consent, is required to disclose under Directive 2004/109/EC or under the laws, regulations or administrative provisions of a Member State adopted under Article 2(1)(k) of that Directive and under Articles 17 and 19 of Regulation (EU) No 596/2014 ;

(m)

‘home Member State’ means:

(n)

‘host Member State’ means the Member State where an offer of securities to the public is made or admission to trading on a regulated market is sought, when different from the home Member State;

(na)

‘competent authority’ means the authority designated by each Member State in accordance with Article 29, unless otherwise specified in this Regulation.

(o)

‘collective investment undertaking▌’ means undertakings for collective investment in transferable securities (UCITS) authorised in accordance with Article 5 of Directive 2009/65/EC of the European Parliament and of the Council  (17) and alternative investment funds (AIFs) within the meaning of Article 4(1)(a) of Directive 2011/61/EU of the European Parliament and of the Council  (18);

(p)

‘units of a collective investment undertaking’ means securities issued by a collective investment undertaking as representing the rights of the participants in such an undertaking over its assets;

(q)

‘approval’ means the positive act at the outcome of the scrutiny by the home Member State's competent authority of the completeness, the consistency and the comprehensibility of the information given in the prospectus;

(r)

‘base prospectus’ means a prospectus that complies with Article 8 of this Regulation, and, at the choice of the issuer, the final terms of the offer;

(s)

‘working days’, for the purposes of this Regulation, mean working days of the relevant competent authority excluding Saturdays, Sundays and public holidays, as defined by the national law applicable to that national competent authority;

(t)

‘multilateral trading facility’ means a multilateral system as defined in Article 4(1)(22) of Directive 2014/65/EU;

(u)

‘SME growth market’ means an SME growth market as defined in Article 4(1)(12) of Directive 2014/65/EU;

(v)

‘third country issuer’ means an issuer established in a third country

(va)

‘durable medium’ means any instrument which:

(a)

shall not benefit from the passporting regime under this Regulation and therefore Articles 23 and 24 of the Regulation shall not apply;

(b)

shall contain a clear indication that the public offer is not of a cross-border nature; and

(c)

shall not actively solicit investors outside the Member State referred to in the first subparagraph.

(a)

the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor; and

(b)

the rights attaching to such securities.

(a)

the nature of the issuer;

(b)

the type of securities;

(c)

the circumstances of the issuer;

(d)

where relevant, the type of investor targeted in the offer to the public or admission to trading, the likely knowledge of such type of investor, and the market on which the securities are to be admitted to trading;

(e)

any information made available to investors further to requirements imposed on the issuer of the securities under Union or national law or the rules of any competent authority or trading venue by or on which the issuer's securities are listed or admitted to trading, which can be accessed through an officially appointed mechanism as referred to in Article 21 of Directive 2004/109/EC;

(f)

the applicability of any simplified or proportionate disclosure regime as set out in Article 14 and Article 15.

(a)

be presented and laid out in a way that is easy to read, using characters of readable size;

(b)

be written in a language and a style that facilitate the understanding of the information, in particular, in language that is clear, non-technical, succinct and comprehensible for the type of investors concerned .

(a)

an introduction containing general and specific warnings , including the extent to which investors could lose their investment in a worst case scenario ;

(b)

key information on the issuer, the offeror or the person asking for admission to trading on a regulated market ;

(c)

key information on the securities;

(d)

key information on the offer itself and/or the admission to trading.

(a)

the name and international securities identification numbers (ISIN) of the securities;

(b)

the identity and contact details of the issuer, including its legal entity identifier (LEI);

(c)

the identity and contact details of the offeror , including its LEI if the offeror has legal personality, or of the person seeking admission;

(d)

the identity and contact details of the home competent authority and the date of the document.

(a)

the summary should be read as an introduction to the prospectus;

(b)

any decision to invest in the securities should be based on consideration of the prospectus as a whole by the investor;

(c)

where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the prospectus before the legal proceedings are initiated;

(d)

civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only where the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus, or where it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities.

(a)

under a sub-section titled ‘Who is the issuer of the securities?’, a brief description of the issuer of the securities, including at least the following:

(b)

under a sub-section titled ‘What are the key financial information regarding the issuer?’ a selection of historical key financial information, including where applicable pro forma information, presented for each financial year of the period covered by the historical financial information, and any subsequent interim financial period accompanied by comparative data from the same period in the prior financial year. The requirement for comparative balance sheet information shall be satisfied by presenting the year-end balance sheet information.

(c)

under a sub-section titled ‘What are the key risks that are specific to the issuer?’ a brief description of no more than 10 of the most significant risk factors specific to the issuer contained in the prospectus including in particular, operational and investment risks .

(a)

under a sub-section titled ‘What are the main features of the securities?’, a brief description of the securities being offered and/or admitted to trading including at least:

(b)

under a sub-section titled ‘Where will the securities be traded?’, an indication as to whether the securities offered are or will be the object of an application for admission to trading on a regulated market or for trading on a multilateral trading facility and the identity of all the markets where the securities are or are to be traded.

(c)

under a sub-section titled ‘Is there a guarantee attached to the securities?’ a brief description of the nature and scope of the guarantee, if any, as well as a brief description of the guarantor , including its LEI .

(d)

under a sub-section titled ‘What are the key risks that are specific to the securities?’ a brief description of no more than 10 of the most significant risk factors specific to the securities, contained in the prospectus .

(a)

under a sub-section titled ‘Under which conditions and timetable can I invest in this security?’, where applicable, the general terms, conditions and expected timetable of the offer, the details of the admission to trading, the plan for distribution, the amount and percentage of immediate dilution resulting from the offer and an estimate of the total expenses of the issue and/or offer, including estimated expenses charged to the investor by the issuer or the offeror.

(b)

under a section titled ‘Why has the issuer produced this prospectus?’ a brief narrative description of the reasons for the offer or for the admission to trading, as well as the use and estimated net amount of the proceeds.

(a)

a list of the information that will be included in the final terms of the offer;

(b)

a template, titled ‘form of the final terms’, to be filled out for each individual issue;

(c)

the address of the website where the final terms will be published.

(a)

that the final terms have been prepared for the purpose of this Regulation and must be read in conjunction with the base prospectus and its supplement(s) in order to obtain all the relevant information;

(b)

where the base prospectus and its supplement(s) are published in accordance with Article 20;

(c)

that a summary of the individual issue is annexed to the final terms.

(a)

the information contained in the registration document, or universal registration document;

(b)

the information which would otherwise be contained in the relevant securities note, with the exception of the final terms where the final terms are not included in the base prospectus.

(a)

the information of the base prospectus which is only relevant to the individual issue, including the essential information on the issuer;

(b)

the options contained in the base prospectus which are only relevant to the individual issue as determined in the final terms;

(c)

the relevant information given in the final terms which has been previously left in blank in the base prospectus.

(a)

upon the filing or submission for approval of each universal registration document, the issuer provides written confirmation to the competent authority that all regulated information which it is required to disclose under Directive 2004/109/EC, if applicable, and Regulation (EU) No 596/2014 has been filed and published in accordance with the requirements set out in those acts; and

(b)

where the competent authority undertakes the review referred to under paragraph 8, the issuer amends its universal registration document according to the arrangements set out in paragraph 9.

(a)

shall include in the universal registration document a cross reference list identifying where each item required in the annual and half-yearly financial reports can be found in the universal registration document;

(b)

shall file the universal registration document according to Article 19(1) of Directive 2004/109/EC and make it available to the officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC;

(c)

shall include in the universal registration document a responsibility statement in the terms required under Article 4(2)(c) and 5(2)(c) of Directive 2004/109/EC.

(a)

the various types of information needed by investors relating to equity securities as compared with non-equity securities; a consistent approach shall be taken with regard to information required in a prospectus for securities which have a similar economic rationale, notably derivative securities;

(b)

the various types and characteristics of offers and admissions to trading on a regulated market of non-equity securities;

(c)

the format used and the information required in base prospectuses relating to non-equity securities, including warrants in any form;

(d)

where applicable, the public nature of the issuer;

(e)

where applicable, the specific nature of the activities of the issuer.

(a)

issuers whose securities have been admitted to trading on a regulated market or an SME growth market or an MTF, other than an SME growth market, with disclosure requirements equivalent to at least those provided for on an SME growth market as specified in Article 33(3)(d), (e), (f) and (g) of MiFID, for at least 18 months and who issue more securities of the same class;

(b)

issuers whose equity securities have been admitted to trading on a regulated market or an SME growth market or an MTF, other than an SME growth market, with disclosure requirements equivalent to at least those provided for on an SME growth market as specified in Article 33(3)(d), (e), (f) and (g) of MiFID, for at least 18 months and who issue non-equity securities.

(c)

offerors of a class of securities admitted to trading on a regulated market or an SME growth market or an MTF, other than an SME growth market, with disclosure requirements equivalent to at least those provided for on an SME growth market as specified in Article 33(3)(d), (e), (f) and (g) of MiFID, for at least 18 months.

(a)

prospects of the issuer and of any guarantor, based on ▌financial information included or incorporated by reference into the prospectus covering the last financial year only,

(b)

the rights attaching to the securities,

(c)

the reasons for the issuance and its impact on the issuer , in particular the working capital statement, the disclosure of capitalisation and indebtedness, the impact on the overall capital structure, and a concise summary of relevant information disclosed under Regulation (EU) No 596/2014 since the date of the last issue.

(a)

SMEs;

(b)

issuers, other than SMEs, where the offer to the public concerns securities which are to be admitted to trading on an SME growth market;

(c)

issuers, other than those referred to under points (a) and (b), where the offer of securities to the public is of a total consideration in the Union that does not exceed EUR 20 000 000 calculated over a period of 12 months .

(a)

key information on the issuer, such as:

(b)

key information on the securities, such as:

(c)

key information on the offer, such as:

(a)

the information that is material and relevant when making an investment in the securities issued for investors;

(b)

the need to ensure proportionality between the size of the company and its fundraising needs; and

(c)

the cost of producing a prospectus.

—

the need to ensure that the EU growth prospectus is significantly and genuinely lighter than the full prospectus, in terms of administrative burden and cost to issuers;

—

the need to facilitate access to capital markets for SMEs while ensuring investor confidence in investing in such companies;

—

the need to minimise costs and burden for SMEs;

—

the need to elicit specific types of information of special relevance to SMEs;

—

the size of the issuer and the length of time for which it has been in operation;

—

the various types and characteristics of offers;

—

the various types of information needed by investors relating to the different types of securities .

(a)

the criteria, and/or the conditions in accordance with which the above elements shall be determined or, in the case of price, the maximum price, shall be disclosed in the prospectus; or

(b)

the acceptances of the purchase or subscription of securities may be withdrawn for not less than two working days after the final offer price and/or amount of securities which will be offered to the public have been filed.

(a)

disclosure of such information would be contrary to the public interest;

(b)

disclosure of such information would be seriously detrimental to the issuer, provided that the omission of such information would not be likely to mislead the public with regard to facts and circumstances essential for an informed assessment of the issuer, offeror or guarantor, if any, and of the rights attached to the securities to which the prospectus relates;

(c)

such information is of minor importance in relation to a specific offer or admission to trading on a regulated market and would not influence the assessment of the financial position and prospects of the issuer, offeror or guarantor.

(a)

documents which have been approved by a competent authority▌, or filed with it, in accordance with this Regulation;

(b)

documents referred to in points (f) and (g) of Article 1(3) and points (d) and (e) of Article 1(4);

(c)

regulated information as defined in point (l) of Article 2(1);

(d)

annual and interim financial information;

(e)

audit reports and financial statements;

(f)

management reports as defined in Article 19 of Directive 2013/34/EU of the European Parliament and of the Council (22);

(g)

corporate governance statements as defined in Article 20 of Directive 2013/34/EU;

(h)

[remuneration reports as defined in Article [X] of [revised Shareholders Rights Directive (23)];

(ha)

annual reports or any disclosure information required under Article 22 and 23 of Directive 2011/61/EU;

(i)

memorandum and articles of association.

(a)

it shall inform the issuer, the offeror or the person asking for admission to trading on a regulated market within 10 working days from the submission of the draft prospectus and/or the supplementary information, and state the detailed reasons for the decision , and

(b)

the time limits referred to in paragraphs 2 and 3 shall then apply only from the date on which an amended draft prospectus and/or the supplementary information requested are submitted to the competent authority.

(a)

the website of the issuer, the offeror or the person asking for admission to trading,

(b)

the website of the financial intermediaries placing or selling the securities, including paying agents,

(c)

the website of the regulated market where the admission to trading is sought, or of the operator of the multilateral trading facility, where applicable.

(a)

the information requirements imposed by that third country legislation are equivalent to the requirements under this Regulation : and

(b)

the competent authority of the home Member State has concluded cooperation arrangements with the relevant supervisory authorities of the third country issuer in accordance with Article 28 .

(a)

to require issuers, offerors or persons asking for admission to trading on a regulated market to include in the prospectus supplementary information, where necessary for investor protection;

(b)

to require issuers, offerors or persons asking for admission to trading on a regulated market, and the persons that control them or are controlled by them, to provide information and documents;

(c)

to require auditors and managers of the issuer, offeror or person asking for admission to trading on a regulated market, as well as financial intermediaries commissioned to carry out the offer to the public or ask for admission to trading, to provide information;

(d)

to suspend an offer to the public or admission to trading for a maximum of 25 consecutive working days on any single occasion where there are reasonable grounds for suspecting that the provisions of this Regulation have been infringed;

(e)

to prohibit or suspend advertisements or require issuers, offerors or persons asking for admission to trading on a regulated market, or relevant financial intermediaries to cease or suspend advertisements for a maximum of 10 consecutive working days on any single occasion where there are reasonable grounds for believing that the provisions of this Regulation have been infringed;

(f)

to prohibit an offer to the public where it finds that the provisions of this Regulation have been infringed or where there are reasonable grounds for suspecting that they would be infringed;

(g)

to suspend or require the relevant regulated markets to suspend trading on a regulated market for a maximum of 10 consecutive working days on any single occasion where there are reasonable grounds for believing that the provisions of this Regulation have been infringed;

(h)

to prohibit trading on a regulated market where it finds that the provisions of this Regulation have been infringed;

(i)

to make public the fact that an issuer, an offeror or a person asking for admission to trading is failing to comply with its obligations;

(j)

to suspend the scrutiny of a prospectus submitted for approval or suspend an offer to the public or admission to trading where the competent authority is making use of the power to impose a prohibition or restriction pursuant to Article 42 of Regulation (EU) No 600/2014 of the European Parliament and of the Council (24), until such prohibition or restriction has ceased;

(k)

to refuse approval of any prospectus drawn up by a certain issuer, offeror or person asking for admission to trading for a maximum number of 5 years, where this issuer, offeror or person asking for admission to trading has repeatedly and severely infringed the provisions of this Regulation;

(l)

to disclose, or to require the issuer to disclose, all material information which may have an effect on the assessment of the securities admitted to trading on regulated markets in order to ensure investor protection or the smooth operation of the market;

(m)

to suspend or require the relevant regulated market to suspend the securities from trading where it considers that the issuer's situation is such that trading would be detrimental to investors' interests;

(n)

to carry out on-site inspections or investigations at sites other than the private residences of natural persons, and for this purpose to enter premises in order to access documents and other data in any form, where a reasonable suspicion exists that documents and other data related to the subject-matter of the inspection or investigation may be relevant to prove an infringement of this Regulation.

(a)

directly;

(b)

in collaboration with other authorities;

(c)

under their responsibility by delegation to such authorities;

(d)

by application to the competent judicial authorities.

(a)

where complying with the request is likely to adversely affect its own investigation, enforcement activities or a criminal investigation;

(b)

where judicial proceedings have already been initiated in respect of the same actions and against the same persons before the authorities of the Member State addressed;

(c)

where a final judgment has already been delivered in relation to such persons for the same actions in the Member State addressed.

(a)

carry out the on-site inspection or investigation itself;

(b)

allow the competent authority which submitted the request to participate in an on-site inspection or investigation;

(c)

allow the competent authority which submitted the request to carry out the on-site inspection or investigation itself;

(d)

appoint auditors or experts to carry out the on-site inspection or investigation, and/or

(e)

share specific tasks related to supervisory activities with the other competent authorities.

(a)

infringements of Article 3, Article 5, Article 6, Article 7(1) to (10), Article 8, Article 9(1) to (13), Article 10, Article 11(1) and (3), Article 12, Article 14(2), Article 15(1) and (2), Article 16(1), Article 17(1) and (3), Article 18(1) to (3), Article 19(1), Article 20(1) to (4) and (7) to (10), Article 21(2) to (4), Article 22 (1), (2) and (4), and Article 25 of this Regulation;

(b)

failure to cooperate or comply in an investigation or with an inspection or request covered by Article 30.

(a)

a public statement indicating the natural person or the legal entity responsible and the nature of the infringement in accordance with Article 40 ;

(b)

an order requiring the natural person or legal entity responsible to cease the conduct constituting the infringement;

(c)

maximum administrative pecuniary sanctions of at least twice the amount of the profits gained or losses avoided because of the infringement where those can be determined;

(d)

in the case of a legal person, maximum administrative pecuniary sanctions of at least EUR 5 000 000, or, in the Member States whose currency is not the euro, the corresponding value in the national currency on [date of entry into force of this Regulation ], or 3 % of the total annual turnover of that legal person according to the last available financial statements approved by the management body.

Where the legal person is a parent undertaking or a subsidiary of a parent undertaking which is required to prepare consolidated financial accounts according to Directive 2013/34/EU, the relevant total annual turnover shall be the total annual turnover or the corresponding type of income in accordance with the relevant Union law in the area of accounting according to the last available consolidated accounts approved by the management body of the ultimate parent undertaking.

(e)

in the case of a natural person, maximum administrative pecuniary sanctions of at least EUR 700 000, or, in the Member States whose currency is not the euro, the corresponding value in the national currency on [date of entry into force of this Regulation ].

(a)

the gravity and the duration of the infringement;

(b)

the degree of responsibility of the person responsible for the infringement;

(c)

the financial strength of the person responsible for the infringement, as indicated by the total turnover of the responsible legal person or the annual income and net assets of the responsible natural person;

(d)

the impact of the infringement on retail investors' interests;

(e)

the importance of the profits gained, losses avoided by the person responsible for the infringement or the losses for third parties derived from the infringement, insofar as they can be determined;

(f)

the level of cooperation of the person responsible for the infringement with the competent authority, without prejudice to the need to ensure disgorgement of profits gained or losses avoided by that person;

(g)

previous infringements by the person responsible for the infringement;

(h)

measures taken after the infringement by the responsible person to prevent its repetition.

(a)

specific procedures for the receipt of reports of actual or potential infringements and their follow-up including the establishment of secure communication channels for such reports;

(b)

appropriate protection for employees working under a contract of employment who report infringements at least against retaliation, discrimination and other types of unfair treatment by their employer or third parties;

(c)

protection of the identity and personal data of both the person who reports the infringements and the natural person who is allegedly responsible for an infringement, at all stages of the procedure unless such disclosure is required by national law in the context of further investigation or subsequent judicial proceedings.

(a)

delay the publication of the decision to impose a sanction or a measure until the moment where the reasons for non-publication cease to exist;

(b)

publish the decision to impose a sanction or a measure on an anonymous basis in a manner which is in conformity with national law, where such anonymous publication ensures an effective protection of the personal data concerned; In the case of a decision to publish a sanction or measure on an anonymous basis the publication of the relevant data may be postponed for a reasonable period of time where it is foreseen that within that period the reasons for anonymous publication shall cease to exist;

(c)

not publish the decision to impose a sanction or measure in the event that the options laid down in points (a) and (b) are considered to be insufficient to ensure:

(a)

an analysis of the extent to which the disclosure regimes set out in Articles 14 and 15 and the universal registration document set out in Article 9 are used throughout the Union;

(b)

statistics on base prospectuses and final terms, and on prospectuses drawn up as separate documents or as a single document;

(c)

statistics on the average and overall amounts raised by way of an offer of securities to the public subject to this Regulation, by unlisted companies, companies whose securities are traded on multilateral trading facilities, including SME growth markets, and companies whose securities are admitted to trading on regulated markets. Where applicable, such statistics shall provide a breakdown between initial public offerings and subsequent offers, and between equity and non-equity securities;

(ca)

statistics on the costs of producing prospectuses broken down at least by different classes of issuers, sizes of issue and locations as well as the classes of fees and charges incurred by issuers and the classes of service providers that charge them; the statistics shall be accompanied by an analysis of the effectiveness of competition between services providers involved in drawing up prospectuses and recommendations on how to reduce costs.