Since 21 July 2019, the new EU Prospectus Regulation has applied in full. As you explore the changes brought by this new legislation, here is some information to guide you through the key modifications and help you understand the new regime.
What is the Prospectus Regulation?
The Prospectus Regulation (Regulation (EU) 2017/1129) is an EU regulation that sets out the revised regime for the prospectus that must be published by a company when its securities (whether equities or non-equities) are offered to the public or are admitted to trading on a regulated market. While some of the provisions included in the regulation have already taken effect, the complete Prospectus Regulation applies as from 21 July 2019.
What is it for?
The Prospectus Regulation aims to help companies gain better access to capital markets to finance their growth by simplifying and streamlining how to present information to investors and regulatory authorities in a more cost-effective way, especially for small and medium-sized companies
The new legislation is also a significant milestone in the implementation of the Capital Markets Union (CMU), which aims to establish an integrated capital market in the European Union.
The Prospectus Regulation does not apply retrospectively: prospectuses approved by relevant authorities under the previous regime will remain valid.
What are the main changes?
The key changes arising from the provisions that applied as from 21 July 2019 include the following
1. Introduction of an EU Growth Prospectus
The EU Growth Prospectus is a tailored prospectus for SMEs.
The following types of company may choose to draw up an EU Growth prospectus, provided that they have no securities admitted to trading on a regulated market:
- companies which meet at least two of the three following criteria:
- an average number of employees of less than 250
- a total balance sheet not exceeding €43 million
- an annual net turnover not exceeding €50 million;
- companies with market capitalisation of less than €200 million or;
- companies with a market capitalisation of less than €500m and with securities traded on a SME Growth market.
With its simplified and proportionate approach, the EU Growth Prospectus aims to make it easier and less costly for these companies to access capital markets.
2. Introduction of a simplified prospectus for secondary issuances
The Prospectus Regulation introduces a simplified prospectus for companies that have had securities admitted to trading on a regulated market or an SME growth market continuously for at least 18 months, and that wish to issue additional shares or raise debt (secondary issuance).
The simplified prospectus aims to be a time-saving tool for companies already familiar with capital markets who are seeking additional financing.
3. Introduction of a Universal Registration Document to secure fast-track approval from supervisors
The Prospectus Regulation introduces the Universal Registration Document (URD), established on an optional basis every year by companies which have securities admitted to trading on a regulated market or an MTF, and which decide to draw up their prospectus as separate documents.
A URD describes the company’s organisation, business, financial position, earnings and prospects, governance and shareholding structure.
The URD aims to become a useful tool for companies that repeatedly raise financing on capital markets. An issuer that has filed and received approval for a URD for two consecutive years is permitted to file its subsequent URD without prior approval. The issuer is then described as a 'frequent issuer'. Also, a frequent issuer that submits an URD for approval can benefit from a faster prospectus approval process – reduced from 10 to 5 working days.
4. Other key changes
The updated disclosure rules also limit the number of risks that can be included in the summary and restrict the summary length to 7 pages. In addition, the risk factors in the prospectus must be limited to risks which are specific to the issuer and/or to the securities and which are material for making an informed investment decision.
The Prospectus Regulation inaugurates a European online database, operated free of charge by the European Securities and Markets Authority (ESMA) and containing all prospectuses approved in the European Economic Area. This database will help you easily review other companies’ prospectuses to facilitate the drafting of your own prospectus.
Who is your point of contact?
If you would like to find out more or have any questions, please contact your national competent authority, your legal advisor or your Euronext account manager.
Official Journal of the European Union
Links to implementing and delegated acts for prospectus regulation
Questions and Answers on the Prospectus Regulation
 The Prospectus Regulation was published in the Official Journal of the European Union on 30 June 2017.
 Some provisions of the Prospectus Regulation are applicable since 21 July 2017 and 21 July 2018. These provisions will not be presented in the present communication.
 SME Growth market is a new status introduced under MiFID II and designed to facilitate access to capital markets for SMEs. Euronext intends to register Euronext Growth as an SME Growth Market as provided for in MIFID II. II.