Key provisions of the Amending Directive transposed into Belgian Law by the Amending Act
When transposing the Amending Directive and thus modifying those national laws that had transposed the Prospectus Directive and the Transparency Directive, little room for interpretation was left to the Member States.
The Amending Act therefore transposed into Belgian Law mutatis mutandis the key provisions of the Amending Directive.
The key provisions of the Amending Act are:
Exemption from the obligation to file a prospectus (article 3§2 of the newly amended Prospectus Act):
In order to be exempted from the obligation to file a prospectus the offer cannot be qualified as "public". The following offers are not qualified as "public":
- Offers to qualified investors - the definition of "qualified investors" in the Amending Act is aligned with the MIFID "professional client" and "eligible counterparty" definitions (article 10 of the newly amended Prospectus Act);
- Offers to less than 150 persons per Member State of the EEA other than qualified investors - previously this was 100 persons;
- Offers with a minimum denomination per security or minimum consideration per investor of at least EUR 100,000 - previously this was EUR 50,000;
- Offers where the total consideration of securities offered in the EEA over a 12-month period is less than EUR 5,000,000 - previously this was EUR 2,500,000.
In addition, a new requirement has been introduced that any advertisement with respect to a non-public offer must include a warning that no prospectus is required in accordance with the Prospectus Directive.
Increased requirements for prospectus summaries
The summary must:
- contain the key information items set out in article 24§2 of the newly amended Prospectus Act;
- contain the sections and the elements set out in such article, in the order in which they appear (where an element is not applicable, it must appear in the summary and be marked "not applicable");
- be drafted in clear, non technical language;
- present the key information in an easily accessible and understandable way which allows the investors to compare the offer with other offers of similar securities; and
- comprise five sections, the order of which is mandatory and each of which has information elements which must be completed. The order of each of these elements is also mandatory.
Retail cascade regime
The Amending Act implements the clarified so-called "retail cascade regime" by providing that a financial intermediary is not required to publish a new prospectus if the issuer allowed such intermediary in writing to use its prospectus and that the prospectus is still valid and is put at the disposal of the public (article 20 §2 of the newly amended Prospectus Act).
Final terms
A number of changes and clarifications are made to the form and content of final terms, such as:
- if the final terms are not included in the base prospectus or in a supplement, they must be published three banking days before the closing of the public offer and must be submitted to the FSMA;
- the final terms may only contain information relating to the securities and may not be used as a supplement. Therefore the final terms can contain no amendments to the conditions set out in the base prospectus;
- the prospectus must contain criteria or conditions on the basis of which the price of the offer and the amount of securities offered can be determined;
- the summary is completed when the final terms have been set in a delegated act in conformity with the terms of the Prospectus Directive. The completed summary does not need to be submitted again to the FSMA for approval.
Amendments with respect to supplements
Supplements can only be used to detail a new fact, a material mistake or inaccuracy relating to information contained in the prospectus and which could significantly influence the investors' evaluation of the securities.
Withdrawal rights following publication of a supplement may be exercised during a period of two days and, if a supplement affects only certain securities, the withdrawal rights will only apply to the affected securities.
New rules specific to Belgian Law
As previously mentioned, the Amending Act also includes provisions that impact other laws beyond just the Prospectus Act.
- Aligning the definition of "public offer" throughout Belgian legislation
The concept of "public offer" is also used in the Belgian law on takeover bids (Act of 1 April 2007 regarding Takeover bids) and in the Belgian funds legislation (Act of 3 August 2012 relating to certain forms of collective management of investment portfolios).
The Amending Act amends the Takeover bids and Funds legislation by aligning the definition of "public offer" and the relevant exemptions as set out above.
- Application by analogy of certain obligations for "harmonised" offers to "non-harmonised" offers
The Prospectus Act, as adopted on 16 June 2006, already provided for the application of certain requirements of the Prospectus Directive to offers qualified as "non-harmonised" for they were not included in the scope of the aforementioned Directive.
Once again the Amending Act provides for the application of the amendments brought about by the Amending Directive to offers qualified as "non-harmonised" such as requirements relating to format and content of the summary, final terms and exemptions from the obligation of filing a prospectus.
- Extension to certain non-public offers of the possibility to benefit from intermediation services
The Prospectus Act initially provided that only financial intermediaries could provide intermediation services in relation to public offers of investments instruments. The Amending Act extends this requirement by providing that, in the event where an issuer of certain types of offers which are non-public decides to seek intermediation services, the service may only be provided by financial intermediaries.
This extension seeks to increase the protection of investors by ensuring that the intermediation services, if called upon, must be conducted by financial institutions that are subject to supervision.
- Extension of the powers of the FSMA
The FSMA's supervisory powers are extended to include (i) control over intermediaries, (ii) a capacity to request additional information relating to non-public offers from auditors and directors, and (iii) investigation powers relating to possible breaches of European Commission regulations which are directly applicable in Belgium.
- Express notification of withdrawal rights
The Amending Act goes beyond the provisions of the Amending Directive with respect to the obligation to notify investors of their withdrawal rights. The Amending Directive provides that, where a supplement to a prospectus is to be published and unless the supplement has no impact or positively affects the investor's assessment of the investment, the investors should be notified of their withdrawal rights. The Amending Act stipulates that a mere mention of the withdrawal rights in the supplement or on the issuer's website does not suffice and that the investors should be informed personally or through the press.
