Negotiators from the European Parliament and the German Presidency of the EU Council reached a political agreement on Thursday 10 December on the Commission's proposal to create an abridged “EU Recovery Prospectus” (see EUROPE 12620/31) so that companies may be able to quickly raise the capital needed to rebuild their business in the aftermath of the Covid-19 pandemic.
The agreement provides that the “EU recovery prospectus”, which is a simplified version of the prospectus for secondary issuances should stay in place until 31 December 2022, as required by the European Parliament, i.e. 6 months more than the 18 months proposed by the Commission and the EU Council.
It will reduce the length of the prospectus, traditionally several hundred pages, to only 30 pages, and the prospectus should include an explanation of the impact of Covid-19 on the issuer’s business, as requested by the European Parliament.
In a news release issued Thursday night, the MEP Ondřej Kovařík (Renew Europe, Czech Republic), European Parliament rapporteur, welcomed this agreement, which he believes should reduce the cost of drawing up a prospectus for eligible issuers by up to 50%.
According to our information, the final agreement also provides for the introduction of a ceiling to limit the use of the “EU recovery prospectus” to avoid extremely dilutive issuances. The EU Council had proposed to limit the use of the prospectus to offers equivalent to a maximum of 90% of the outstanding capital (expressed as a ratio between the number of shares issued and the total number of shares before the issue - see EUROPE 12586/30), but the ceiling which was finally set is 150%.
The EU Council’s proposal to amend the Transparency Directive (2004/109/EC) in order to give Member States the option of postponing by one year (see EUROPE 12578/21) the obligation for European companies listed on a regulated market to publish their annual financial report in the European Single Electronic Format (ESEF) was also upheld.
The agreement must now be confirmed in both institutions. This was the last missing piece to finalise the inter-institutional negotiations on the package of measures presented by the Commission in July (see EUROPE 12535/11) to help economic recovery after the Covid-19 pandemic. (Original version in French by Marion Fontana)