Shearman & Sterling LLP | FinReg | UK Financial Conduct Authority Publishes Near Final Changes to Handbook Implementing the EU Prospectus Regulation
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  • UK Financial Conduct Authority Publishes Near Final Changes to Handbook Implementing the EU Prospectus Regulation
    The U.K. Financial Conduct Authority has published a Policy Statement containing its near final rules implementing the EU Prospectus Regulation, which will be set out in the FCA's new Prospectus Regulation Rules sourcebook. The FCA's new rules are aimed at aligning the U.K. rules with the EU Prospectus Regulation. The changes remain subject to finalization of certain related changes under the Financials Services and Markets Act 2000 and relevant EU legislation. Issuers seeking approval of a draft prospectus on or after July 21, 2019 must ensure their draft is in line with the EU Prospectus Regulation and PRR sourcebook. In the event the U.K. leaves the EU before that date, the proposals will not come into effect, and the U.K. would use the Financial Services (Implementation of Legislation) Bill to permit alignment of U.K. rules with those of the EU. The FCA would, in that situation, expect to issue a further Consultation Paper setting out proposals for replicating the EU Prospectus Regulation in the U.K. domestic regime. The FCA has so far declined to comment on the detail of any such proposals.

    The EU Prospectus Regulation sets out information that companies need to disclose to investors and potential investors in a prospectus when raising capital. Certain provisions of the EU Prospectus Regulation became applicable directly in the U.K. on July 20, 2017 and July 21, 2018. The remainder of the Regulation will apply directly in the U.K. from July 21, 2019. The new Regulation overhauls the previous regime under the Prospectus Directive in a bid to enhance investor protection and market efficiency. The FCA's PRR sourcebook ensures these rules are implemented in the U.K. for firms subject to the requirements of the sourcebook.

    Issuers should be aware that any prospectus approved by the FCA before July 21, 2019 will be governed by national law under the Prospectus Directive regime until either: (i) the end of the prospectus' validity; or (ii) July 21, 2020. Prospectuses submitted for approval under the Prospectus Directive Regime or FCA's previous sourcebook after July 21, 2019 will not be approved.

    View the FCA's Policy Statement.

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