Brussels, 30/11/2015 (Agence Europe) - On Monday 30 November, the European Commission tabled a draft regulation modifying the rules on the prospectuses which must be published by European companies wishing to raise capital, in order to provide potential investors with information.
My aim is to “make it easier for companies of any size to raise funds on the capital markets, by making the prospectus publication regime simpler, easier and faster”, said the Commissioner for Financial Services, Jonathan Hill, reiterating that this legislative initiative is part of the Capital Markets Union project (see EUROPE 11400). He noted that in 2014, European companies issued €375 billion euros' worth of securities, whilst their American counterparts raised three times that amount on the markets.
European law requires companies wishing to raise funds on the markets to publish a prospectus containing information on the securities issued and the issuing company. The Commission considers that this obligation is too much of an administrative and financial burden on SMEs, due to the amount of information required. Once the prospectus has been validated by the national supervisor, the company in question may raise capital within the European Economic Area. In 2014, fewer than 4,000 prospectuses were published.
Threshold for exemption from prospectus publication requirement doubled
Under the proposed regulation, it will no longer be necessary to establish a European prospectus for issuances of shares of less than €500,000, with the current threshold set at €100,000. For purely national issuances, the member state may even be able to set a higher threshold, which may rise from five to ten million euros. Additionally, the publication of a simplified prospectus will be authorised for SMEs with a market capitalisation of less than €200 million, compared to a threshold of €100 million today.
Currently, 70% of the prospectuses approved every year are published by listed companies raising additional funds. The administrative requirements for these secondary emissions will be relaxed. Amongst other things, the legislative proposal extends the range of cases for which a simplified prospectus will be required, such as for listed SMEs issuing the same category of securities on the same regulated platform within up to 18 months. Additionally, the publication of a prospectus will not be obligatory if new securities issued do not exceed 20% of the securities placed on a regulated market.
Companies which are frequently active on the capital markets will be able to draw up and annually update a sort of reference prospectus ('universal registration document'). The national supervisor will be able to approve this document within five working days instead of ten.
Finally, the European Securities and Markets Authority (ESMA) will create a free online portal listing all prospectuses approved within the EEA. (Original version in French by Mathieu Bion)