Raising Capital in the EU Flashcards
(10 cards)
when is a prospectus mandated?
1) public offer of securities
2) admission to trading on a regulated market
(the 2 regimes slightly differ due to exemptions)
what’s is a prospectus drafting procedure?
The prospectus is drafted by the issuer.
It must undergo public vetting and approval by the NCA (National Competent Authority), followed by publication.
The NCA is identified through connecting factors (e.g. issuer’s location).
Under the passport regime, the applicant chooses the Member State (MS) for prospectus approval to enable cross-border offers or listings.
There is EU-level harmonisation of content, approval procedures, and publication.
However, liability rules remain largely national for both the applicant and the NCA.
what is a public offer?
A communication to persons in any form and by any means
* Presenting sufficient information on the terms of the offer and the securities to be offered
* So as to enable an investor to decide to purchase the securities (Art 2(d)
What are the general exemptions from the obligation to publish a prospectus for public offers of securities?
When the offer is made solely to qualified investors (as defined under MiFID II).
When addressed to fewer than 150 persons per Member State (excluding qualified investors).
When the securities are offered for at least €100,000 per investor (also minimum unit size).
Offers below €1,000,000 (EU-wide total within 12 months) are exempt.
Offers between €1,000,000 and €8,000,000 may be exempt at the discretion of the Member State.
what info goes into the prospectus?
Information which necessary and material to an investor for making an
informed assessment of:
1.the assets and liabilities, profits and losses, financial position, and
prospects of the issuer;
2. the rights attaching to the securities; and
3. the reasons for the issuance and its impact on the issuer
which factors may affect the amount and type of information going into the prospectus?
That information may vary depending on any of the following:
1.the nature of the issuer;
2. the type of securities;
3. the circumstances of the issuer;
4. restrictions to RM access by retail investors
which are the factors affecting information items of the prospectus?
o Primary vs secondary issuance
o Wholesale vs retail investors
o Equity vs non-equity
how can the prospectus be structured?
1) single document
2) tripartite
-with registration document
- with universal registration document
3) Base prospectus (exclusively for non equity securities)
what is the structure of the single document prospectus?
Structure of single document (art 24 L2R)
1. table of contents;
2. summary
3. risk factors
4. information items
what is the structure of the tripartite prospectus?
1) summary
2) registration /universal registration document: table of contents, risk factors and information items on issuer
3) securities note: table of contents, risk factors and information items on security
