New FSMA guidelines for the treatment of dossiers relating to public offers and admissions to trading on a regulated market applicable since 1 July 2012
Directive 2010/73/EU (1) (the Amending Directive) amending the Prospectus Directive should have been transposed into national law by Member States by 1 July 2012. The aim is to simplify and reduce the administrative burden of the Prospectus Directive, without compromising the protection of investors and the securities markets’ proper functioning in the European Union.
Application of the new regime
Although the Amending Directive has not yet been transposed into Belgian law, its provisions have been applied by the FSMA since 1 July 2012, with the exception of provisions imposing new constraints upon issuers. Issuers may nonetheless apply the more stringent provisions voluntarily. All provisions of the Amending Directive are, according to the FSMA, sufficiently clear, precise and unconditional to have direct vertical effect.
Scope of the prospectus obligation
The Prospectus Directive only applies to a securities offer if the total consideration of the offer exceeds certain thresholds. The Amending Directive modifies these thresholds and, consequently, the Prospectus Directive’s scope. As a result, the Prospectus Directive only applies to offers where the total consideration in the European Union is at least EUR 5m (2) (the threshold prior to 1 July 2012 was EUR 2.5m). In Belgian law however, the significance of that threshold is mitigated by the fact that legislation also requires the publication of a prospectus for public offers where total consideration is less than the above mentioned threshold. In such cases, since 1 July, issuers can use prospectus schedules published in the Royal Decree of 31 October 1991 on the prospectus to be published when securities are offered to the public (schedules applicable to non-harmonised operations). However, if they wish to benefit from the prospectus’ Community-wide approval (passport) in order to extend their operations to other Member States, they will have to use the schedules provided for in the EU Regulation (3).
The Amending Directive also introduces further changes to the Prospectus Directive:
Exemption from the prospectus obligation
Certain exemptions from the prospectus obligations are modified as follows:
- Private placements: in order to reduce the administrative burden, the number of investors who may be approached has been increased from 100 to 150. Since 1 July 2012, when an offer of securities is addressed to fewer than 150 persons per Member State (other than qualified investors) the prospectus obligation does not apply.
- Minimum consideration: the minimum consideration of EUR 50,000 was raised to EUR 100,000. The Amending Directive stipulates that no prospectus must be published (i) in the event a securities offer is addressed to investors who acquire securities for a total consideration of EUR 100,000 per investor and (ii) if a securities offer with a denomination per unit of at least EUR 100,000 is made.
- Additional demerger exemption: the exemption for securities offered within a merger framework has also been extended to securities offered in the event of a demerger.
- Employee share schemes: the Amending Directive introduces an exemption from the prospectus obligation to all companies which have their head or registered office in the European Union in the event of an offer to existing or former directors or employees by the employer or by an affiliated undertaking. The exemption will also apply to companies established outside the European Union provided that adequate information is available and that the document containing information on the number and nature of the securities and the reasons for and details of the offer, is available at least in a language customary in the sphere of international finance, and provided that the Commission has adopted an equivalence decision regarding the third-country market concerned.
Key information
The Amending Directive also changes the summary’s content and format by inserting a new definition for “key information” in the Prospectus Directive. The prospectus needs to include a summary that provides key information as defined in article 2, such as: (i) a short description of the associated risks and essential characteristics of the issuer and any guarantor, including assets, liabilities and financial position, (ii) a short description of the associated risk and essential characteristics of the investment in the relevant security, including any rights attached to the securities, (iii) the general terms of the offer, including estimated expenses charged to the investor by the issuer, (iv) details of the admission to trading and (v) reasons for the offer and use of proceeds. The FSMA stipulates that issuers who wish to benefit from the prospectus’ Community-wide approval must ensure that they include key information in the prospectus. They must also present this information in accordance with the schedules of the EU Regulation.
Validity of the prospectus
The prospectus remains valid for a period of twelve months. However, this validity period starts upon the prospectus’ approval and no longer on publication date.
Abolition of annual information update
According to the Prospectus Directive, issuers whose securities are admitted to trading on a regulated market had to annually provide a document that contained or referred to all information published or made available to the public over the previous twelve months. The Amending Directive cancelled this obligation.
Withdrawal rights
Withdrawal rights, which can be exercised when the investor already agreed to purchase or subscribe to the securities before a supplement is published, is clarified in the Amending Directive: (i) this right must be exercised within two days after the supplement’s publication, but (ii) the issuer may extend this term, and (iii) the final date upon which withdrawal rights can be exercised must be specified in the supplement. Withdrawal rights can be exercised provided that (i) the initial prospectus relates to a public offer of securities, and (ii) the new decision factor, mistake or inaccuracy occurred before the offer’s final closing and delivery of acquired securities.
Qualified investor
The Amending Directive introduces a new definition for “qualified investor” which refers to those persons that are classified as professional/institutional clients or eligible counterparties in accordance with Annex 2 of the Markets in Financial Instruments Directive (MiFID).
Prospectus schedules
The FSMA acknowledges the possibility of an abbreviated prospectus schedule. These schedules are defined in the EU Regulation complementing the Directive and specifically apply to small and medium-sized enterprises.
