Shearman & Sterling LLP | FinReg | UK Government and Regulators Consult on Revised UK Prospectus Regime
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  • UK Government and Regulators Consult on Revised UK Prospectus Regime


    HM Treasury has published a near-final draft statutory instrument and related Policy Note setting out its proposed reforms to the U.K. prospectus regime. The U.K. Financial Conduct Authority has also published a series of six Engagement Papers seeking views on its proposed rules under the new regime.

    Once the new U.K. regime is finalized, the retained EU Prospectus Regulation will be repealed under the revocation framework established by the U.K. Financial Services and Markets Act 2023 (which we discuss in our client note, "A Boost for U.K. Financial Services: The U.K. Financial Services and Markets Act 2023").

    HM Treasury's near-final draft S.I. builds on the indicative S.I. published as part of the U.K. government's Edinburgh Reforms announced in December 2022 (discussed in our client note, "U.K. Government Publishes Edinburgh Reforms for Financial Services"). The near-final regime is designed to encourage wider participation in the ownership of public companies, make public capital-raising more efficient, improve the quality of information given to investors and establish a more agile and dynamic regulatory framework. The proposed changes will: (i) introduce a new framework for public offers, consisting of a general prohibition on public offers of securities with a number of exceptions; (ii) enhance the FCA's powers to make rules for the admission of securities to trading on U.K. regulated markets; (iii) grant the FCA rulemaking powers over "primary" MTFs (i.e., those which operate as primary markets, allowing companies to issue new capital); (iv) revise the regime for public offers of securities that are not admitted to trading — no prospectus will be required for these offers, but offers of £5 million or more must be made through a public offer platform (or rely on other exemptions); and (v) bring certain non-transferable securities within the scope of the new regime for public offers if they are not otherwise subject to appropriate supervision and may cause harm to investors. Offers of such securities over £5 million must be made through a public offer platform.

    Responses to HM Treasury's consultation should be submitted by August 21, 2023. The final S.I. is intended to be laid before Parliament before the end of 2023.

    The FCA's Engagement Papers on its proposed rules under the new regime cover: (i) admission to trading on a regulated market (Engagement Paper 1); (ii) further issuances of equity on regulated markets (Engagement Paper 2); (iii) protected forward-looking statements (Engagement Paper 3); (iv) non-equity securities (Engagement Paper 4); (v) the public offer platform (Engagement Paper 5); and (vi) primary multilateral trading facilities (Engagement Paper 6).

    The deadline for responses to the FCA's Engagement Papers is September 29, 2023.

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