European Securities and Markets Authority Consults on Draft Technical Advice under the Prospectus Regulation

The European Securities and Markets Authority has launched three consultations, setting out its draft technical advice to supplement the provisions of the Prospectus Regulation with delegated legislation to facilitate and reduce the costs of capital raising and to make prospectuses more accessible for investors. The Prospectus Regulation enters into force on July 20, 2017 and will take effect directly across the EU partly on July 20, 2017, partly on July 21, 2018 and the remainder of its provisions take effect on July 21, 2019. The Prospectus Regulation will repeal and replace the existing Prospectus Directive and its supplemental Regulation on the form and content of a prospectus. ESMA is consulting under its mandate from the European Commission, which requested technical advice on possible delegated acts on the format and content of the prospectus, the content, format and sequence of the EU Growth Prospectus and scrutiny and approval of the prospectus.

The consultation on the format and content of the prospectus contains ESMA's draft technical advice on the format of the prospectus, base prospectus and final terms, including the various schedules that make up the prospectus. It also considers the order of items in the prospectus, including the cover page and its contents. ESMA's draft technical advice on content covers the detailed content of the prospectus and proposes changes to the schedules included in the current supplemental Regulation. Where possible, ESMA's proposals attempt to soften the existing disclosure requirements, particularly for secondary issuances. The consultation also sets out ESMA's proposals on the format and content of the new "universal registration document", which is intended to be used by frequent issuers as a "one stop" document for publication of annual and half-yearly financial reports under the Transparency Directive and publication of a registration document within the prospectus regime. ESMA also sets out its proposals for the secondary issuance regime.

In the consultation on the format and content of the EU Growth prospectus, ESMA proposes a standardized format and sequence of the specific registration document and the specific securities note, but includes flexibility in the order of the disclosure items within the individual sections so that issuers can draw up a prospectus that is easy to read. The consultation also sets out ESMA's proposals on the content of the specific registration document and the specific securities note of the EU Growth prospectus. ESMA states in the consultation that the content proposals aim to strike a balance between the needs of issuers eligible to use the EU Growth prospectus and the need for investor protection. The consultation also sets out ESMA’s proposal for the specific summary of the EU Growth prospectus and sets out general considerations in relation to its format and content.

The consultation on ESMA's draft technical advice on scrutiny and approval of the prospectus sets out ESMA's proposals that standard criteria for scrutiny of the completeness, comprehensibility and consistency of the prospectus be adopted, coupled with flexibility for national regulators to take into account that prospectus scrutiny is by nature a qualitative process and that, as such, it is not possible to set out an exhaustive list of scrutiny criteria. ESMA also considers that these scrutiny proposals can be extended to apply to the universal registration document, adjusted as necessary to account for the specificities of the universal registration document regime. Regarding approval of the prospectus, ESMA proposes that its technical advice should largely reiterate the regulatory technical standards that have been enacted in the 2015 Commission Delegated Regulation on prospectus approval and dissemination of advertisements. Finally, regarding delegated acts on the conditions for losing the status of frequent issuer, ESMA provides no technical advice. It considers that the conditions for losing the status of frequent issuer should be based on the conditions for obtaining the status of frequent issuer and that, as the latter conditions are clearly defined in the Prospectus Regulation, no further elaboration is needed.

Responses to all three consultations are requested by September 28, 2017. ESMA proposes to publish its final report on its technical advice by March 31, 2018.

View the consultation webpage and press release.