Prospectus Directive: Implementation Appraisal

25-01-2016

As a part of the Capital Market Union, the Prospectus Directive 2003/71 provides investors with a considerable amount of information about the issuer and the issuer's securities and thus enhances the transparency of the financial markets. Also, the directive establishes a so-called prospectus passporting regime which allows for a prospectus approved in one Member State to be used in all other Member States without any special or additional conditions, thereby facilitating cross-border transactions. Although the Prospectus Directive sets the general conditions applicable to publishing and approving the prospectuses, it is an implementing act, Commission Regulation 809/2004, which prescribes the format and contents of prospectuses. Although the Prospectus Directive facilitates cross-border investments and enhances transparency, there are certain administrative and monetary burdens connected with this particular regime. SMEs in particular might be placed in a disadvantaged position as they might not be able to meet the criteria prescribed by the Prospectus Directive. In November 2015, the European Commission submitted a proposal for a prospectus regulation in order to improve access to finance for companies and simplify information for investors. The proposal reflects the newest market developments and addresses various aspects to strengthen transparency and allow SMEs and some other issuers an easier access to the capital markets. The proposal is currently awaiting the decision of the Parliament's committee (ECON).

As a part of the Capital Market Union, the Prospectus Directive 2003/71 provides investors with a considerable amount of information about the issuer and the issuer's securities and thus enhances the transparency of the financial markets. Also, the directive establishes a so-called prospectus passporting regime which allows for a prospectus approved in one Member State to be used in all other Member States without any special or additional conditions, thereby facilitating cross-border transactions. Although the Prospectus Directive sets the general conditions applicable to publishing and approving the prospectuses, it is an implementing act, Commission Regulation 809/2004, which prescribes the format and contents of prospectuses. Although the Prospectus Directive facilitates cross-border investments and enhances transparency, there are certain administrative and monetary burdens connected with this particular regime. SMEs in particular might be placed in a disadvantaged position as they might not be able to meet the criteria prescribed by the Prospectus Directive. In November 2015, the European Commission submitted a proposal for a prospectus regulation in order to improve access to finance for companies and simplify information for investors. The proposal reflects the newest market developments and addresses various aspects to strengthen transparency and allow SMEs and some other issuers an easier access to the capital markets. The proposal is currently awaiting the decision of the Parliament's committee (ECON).