Brussels, 22/09/2009 (Agence Europe) - On Wednesday 23 September, the European Commission will present a draft directive amending the prospectus regulation (2003/71/EC) which allows issuers of securities (shares, bonds, derivatives) to publish a single information document that is valid throughout the European Union (see EUROPE 8496). One of the main reasons for this legislative amendment is to simplify existing rules and, therefore, reduce issuers' costs without altering the level of protection for investors. The Commission says that total potential savings could be as much as €302 million every two years.
Simplification. According to a draft directive, a copy of which has been obtained by EUROPE, the following measures for simplifying bonds are planned: - the introduction of a proportionate system of publication of information for a) small listed companies whose share offers exceed €2,500,000 and b) banks for securities offers other than equity securities of more than €50 million (potential savings of €173 million every two years); - scaled-down requirements on capital raising by means of rights issues (potential savings of €30 million); - exemption from publication of a prospectus for share option schemes for listed company employees (potential savings of €18 million); - removal of the requirement on issuers of securities guaranteed by a member state or a local authority to publish details on the guarantor (potential savings of €812,000). Also removed will be the requirement on issuers to provide a document every year gathering together all the information published in the 12 months preceding the publication of a prospectus. However, contrary to the call from the high level group on administrative simplification, the Commission is keeping in place the requirement to publish a paper prospectus and to have a summary of the prospectus translated into the language of the country where the investor is located when the securities offer is cross-border.
The prospectus directive currently allows issuers of securities, other than capital, the unitary value of which is over €1,000, to select the regulator where the prospectus is to be registered. This limit causes difficulties for some issuers, sometimes required to draft several prospectuses, the Commission says. It suggests, therefore, getting rid of the €1,000 limit since this would not create any definite risks in terms of investor protection. The Commission believes that exemption for the requirement to publish a prospectus poses a problem when securities are distributed within a retail cascade. It wants financial intermediaries reselling securities to be allowed to re-use the issuers' initial prospectuses if the issuer agrees. Without consent, the intermediary will have to draw up a new prospectus. The Commission proposes to increase the length of time prospectuses remain valid from 12 to 24 months, provided that they have been duly completed. Lastly, it is proposed that, in the event of publication of a supplement to the prospectus, the cooling-off period during which investors can change their minds on investment decisions taken prior to the full publication of information be harmonised to two working days. (M.B./transl.rt)