Further to previous alerts, the EU Prospectus Regulation (EU 2017/1129) came into force on 20 July 2017, and has made a number of changes to EU prospectus law, and in particular the exemptions available from the requirement to produce and publish a prospectus in connection with a public offering or an admission to trading on a regulated market of transferable securities.
The Prospectus Regulation, as an EU Regulation rather than a Directive, has direct effect throughout the EU, although this is on a phased basis between 2017 and 2019. It also repeals the provisions of the Prospectus Directive 2003/71/EC with effect from 21 July 2019, apart from certain provisions which were repealed on earlier dates.
In order to bring Irish prospectus law into line with the provision of the Prospectus Regulation which are already effective, a new Statutory Instrument, S.I. No. 317 of 2018, entitled the Prospectus (Directive 2003/71/EC) (Amendment) Regulations 2018 (the 2018 Regulations), was published on Tuesday 14 August. It was made on 3 August, and is stated to have come into operation retrospectively, on 21 July.
In summary, the 2018 Regulations further amend the Prospectus Regulations of 2005 by:
- deleting the previous exemption from the requirement to produce a prospectus for offers of transferable securities with a total consideration in the EU of less than €5 million, and replacing it with a new exemption from this requirement for offers with a total consideration in the EU of less than €1 million, calculated over a 12 month period;
- deleting the previous exemption from the requirement to produce a prospectus for offers of transferable securities with a total consideration in the EU of less than €100,000 calculated over a 12 month period;
- introducing a new exemption (as permitted by a Member State option which is set out in the EU Prospectus Regulation) from the requirement to produce a prospectus, for offers of transferable securities in the State with a total consideration in the EU of less than €5 million calculated over a 12 month period, where the offer is not subject to the "passporting" notification provisions of Regulation 56 of the 2005 Prospectus Regulations (note that this amount is less than the maximum permitted under the Member State option of less than €8 million);
- confirming that the obligation to publish a prospectus shall not apply to an admission of transferable securities to trading on a regulated market in the State (i.e. the Main Securities Market of the Irish Stock Exchange PLC, now trading as Euronext Dublin), where the securities represent less than 20% (up from the previous maximum of less than 10%) of their securities which are already admitted to trading on the same regulated market (calculated over 12 months); and
- confirming that there is likewise no obligation to publish a prospectus where the admission to trading on a regulated market in the State involves shares resulting from conversion or exchange of other securities or rights, provided that (1) those resulting shares are of the same class as shares already admitted to trading on the same regulated market, and that (2) (unless some exceptions apply) the resulting shares represent, over a 12 month period, less than 20% of the shares of the same class already admitted to trading on that market.
Further changes due to apply from 21 July 2019
The remainder of the Prospectus Regulation (including e.g. the new rules on prospectus summaries, the amended exemption for offers to directors or employees, and new simplified "growth prospectus" requirements) will apply from 21 July 2019.
Additional delegated prospectus legislation
Draft technical advice from The European Securities and Markets Authority (ESMA) in relation to e.g. the format and content of prospectus, and procedures for the scrutiny and approval of prospectuses, will be incorporated into "delegated acts", to be adopted by the European Commission in the coming months. There will be a significant number of these additional legislative instruments produced by the Commission, in due course. Together with the Prospectus Regulation and the regularly updated ESMA Q&A on prospectuses, and any domestic measures taken by Ireland and Central Bank rules/guidance, this will then form the new corpus of EU and Irish prospectus law.
