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Capital markets union: Council confirms deal on prospectus rules


22 Dec 2016


Euro & Finance

Brussels (20 December) - The Permanent Representatives Committee approved, on behalf of the Council, an agreement with the European Parliament on prospectuses for the issuing and offering of securities.

"This regulation will help companies gain access to European capital markets by reducing some of the administrative formalities", said Peter Kažimír, Slovak minister for finance and president of the Council. "Our aim is to reinforce the role of market-based finance, alongside bank finance, in the European economy."

The draft regulation is aimed at lowering one of the main regulatory hurdles that companies face when issuing equity and debt securities. Replacing directive 2003/71/EC, it is intended to simplify administrative obligations related to the publication of prospectuses in a manner that still ensures that investors are well informed.

The proposal is a key element of the EU’s plan to develop a fully functioning capital markets union by the end of 2019. It will also help improve the business environment in line with the EU's  'investment plan for Europe'.

Prospectuses present information about a company that enables investors to decide whether to purchase securities issued or offered by that company. Their publication is required by law when securities are offered to the public or admitted to trading. However SMEs can be deterred from issuing or offering securities because of the paperwork and costs involved in issuing a prospectus.

Issues resolved

Under the agreement reached with the European Parliament:

  • no prospectus will be required for capital raisings and crowdfunding projects up to €1 million;
  • the threshold beyond which a prospectus is mandatory is increased from €5 million to €8 million in capital raised. Below that threshold, issuers can raise capital in accordance with rules set for local growth markets;
  • the EU growth prospectus, a new type of prospectus, will be available for SMEs, non-SMEs (small mid-caps) admitted to an SME growth market or small issuances by unlisted companies with up to 499 employees;
  • a new corporate bond prospectus, previously only for debt issued in denominations of at least €100 000, will be available for admission to wholesale debt markets;
  • a frequent issuer regime will be available for frequent participants in capital markets, reducing approval times from 10 days to five;
  • for secondary issuances, issuers already admitted to stock markets and SME growth markets will benefit from a lighter prospectus for follow-up issuances;
  • prospectus summaries will be shorter and the language used clearer;
  • paper prospectuses will no longer be required, unless a potential investor requests one;
  • a European online prospectus database will be operated free of charge by the European Securities and Markets Authority.

Next steps

Provisional agreement with the Parliament was reached on 7 December 2016. The Parliament is now expected to approve the regulation at first reading. The text will then be submitted to the Council for adoption.


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