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The new prospectus regime: a foretaste

March 2017

The European rules on prospectuses will soon be given a substantial facelift. Greater harmonisation, more specific risk factors, a briefer summary and special regimes for frequent issuers and SMEs are only some of the innovations.


The Council and the European Parliament reached a consensus on the draft Prospectus Regulation just before New Year. It is expected that the final text will be adopted soon.

The key aspects of the innovations are briefly set out below. A more detailed review (in Dutch) is available here.

Type of legislative act – From a directive to a regulation: this implies a direct effect in the Member States, resulting in the repeal of the current rules in the Belgian Prospectus Act on "harmonised transactions" (i.e. offerings or listings which fall within the scope of the Prospectus Directive).

Scope of the new Prospectus Regulation – The new European regime will apply to offerings with an overall value from EUR 1 million upwards (instead of EUR 5 million). The scope in respect of admission to trading on a regulated market remains unchanged.

Prospectus exemptions – The 10% exemption threshold for admission to trading will be increased to 20%. The same 20% threshold will also apply to shares resulting from the exercise or conversion of other instruments (whereas currently no such threshold exists). This may have implications for shares to be listed, for example, following the exercise of warrants given to employees.

(More) limited content of the summary – The summary will be limited to a maximum of seven A4 pages, with a maximum of 15 risk factors. In a limited number of circumstances, the number of pages may be slightly increased.

Introduction of a universal registration document – Issuers will have the possibility to file a "universal registration document" which may subsequently be part of a prospectus. Certain issuers in Belgium already apply such a practice. After two years of filing of this "universal registration document", subsequent registration documents can be filed without prior approval by the FSMA. If a universal registration document is filed, but not approved, and is subsequently used as part of a prospectus, then it will nonetheless need to be approved, together with the other documents (securities note and summary).

Shorter approval period for frequent issuers – Frequent issuers will be able to obtain, under certain conditions, the review (or approval) of the prospectus within a period of five business days instead of ten business days. Under certain conditions, the FSMA was already applying such a five-day approval period in the context of bond transactions.

Simplified regime for secondary issuances – Issuers whose securities have been listed on a regulated market or an SME growth market for a continuous period of 18 months will be subject to a simplified prospectus regime. It is, however, required that the securities being issued are fungible with securities already issued, or that the issue pertains to non-equity securities.

EU growth prospectus – SMEs, issuers with a small stock market capitalisation, and issuers (whose securities are not traded on an MTF) with an average of up to 499 employees, which have offered securities for a maximum of EUR 20 million over a period of 12 months, can benefit from a "light regime". The main aspects are already provided for in the (draft) regulation, and will be implemented through delegated acts of the Commission.

Risk factors – The risk factors need to be specific to the issuer and may not be formulated in generic terms. In addition, risk factors must be presented in a limited number of categories depending on their nature and should present the likelihood of the risks materialising and the expected magnitude of the negative impact on the issuer. The most important risk factors should be mentioned first (per category).

Information incorporated by reference – The different types of documents which may be incorporated in the prospectus by reference will be extended. This will apply to the annual and interim financial information, audit reports, management reports, corporate governance statements, valuation reports linked to the issuer or the issuer's assets, remuneration reports and articles of association. In addition, hyperlinks to such documents should be inserted.

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