New Prospectus Regulation comes into force

On 21 July 2019, the new EU Prospectus Regulation (the Regulation) comes fully into force, replacing the existing Prospectus Directive. 

The Regulation, which is directly effective in all Member States of the EU, was created as part of the European Commission's Capital Markets Union Action Plan, the objectives of which include making the publication of prospectuses less burdensome for issuers, and harmonising the approach taken to the approval of prospectuses by supervisory authorities across the EU.  The FCA has published a Policy Statement setting out the changes which are being made to the FCA Handbook as a result of the coming into force of the Regulation.

Whatever happens with Brexit, the Regulation will (at least in the short term) have a potentially significant impact on the drafting of prospectuses in the UK, and the approach taken by the FCA to their approval.  As a result, these changes will no doubt be of interest to practitioners involved in the drafting of UK prospectuses.

A number of changes brought about by the Regulation have already come into effect, the key ones being:

• the increase from 10% to 20% in the percentage of share capital that can be issued by an issuer in any 12 month period without having to publish a prospectus (which came into force on 21 July 2017); and
• the raising of the threshold for the small offers prospectus exemption to €8 million (which came into force on 1 July 2018).

A summary of some of the key changes now coming into force is set out below.