Key Prospectus Directive changes implemented early
The Prospectus Regulations 2011 (“Regulations”) have now been published and will come into force on 31 July 2011.
The Regulations implement two key provisions of EU directive (2010/73/EU) which amends the principal Prospectus Directive (2003/71/EC). As a result:
- an offer of transferable securities to the public will be an exempt offer (such that an approved prospectus does not have to be made available) if made to or directed at fewer than 150 persons, other than qualified investors, per EEA State. This increases the current threshold of 100 persons; and
- there is to be an increase from €2.5 million to €5 million for the total consideration of an offer in the EU below which an approved prospectus does not first have to be made available to the public.
These changes are to be effected by amending the relevant figures in Section 86(1)(b), and paragraph 9(1) of Schedule 11A, of the Financial Services and Markets Act 2000.
It was decided to introduce these two changes early on the basis that they would be especially beneficial to smaller public companies and enable such companies to raise capital more cost-efficiently.
The remaining provisions of the amending directive have to be implemented into UK law by no later than 1 July 2012. These will include further significant reforms such as amending the definition of a qualified investor, and altering various other financial thresholds.
Care is needed on multi-jurisdictional transactions in the meantime since other EU countries may wait until the 2012 deadline to introduce the two changes above alongside the other reforms.
For further information, including copies of the amending directive and the consultation documentation leading to the Regulations, see the HM Treasury website.