The New Prospectus Regime

European Level

Snapshot of the main changes

1. On 21 July 2019, the old EU Prospectus Directive (and its implementing regulations) was fully repealed and replaced by the new EU Prospectus Regulation. Unlike the Directive, which needed to be transposed by all EU Member States, the Regulation has direct effect in all EU Member States without the need for additional national implementing acts, save for certain provisions related to, among others, the scope and exemption of the new regime, the designation of competent authorities, their powers, and the sanctioning regime.

2. The fundamental distinction between wholesale versus retail was preserved but this distinction was extended.

3. The requirements for the prospectus summary were revised but remain highly prescriptive. Prospectus summaries require to be a maximum of 7 sides of A4-sized paper, when printed, and the content must be accurate, fair, clear and not misleading.

4. The requirements for risk factors were also revised. Risk factors need to be presented in a limited number of categories and, within each category, be presented in order of priority.

5. Two new types of documents were created: The first, known as the "Universal Registration Document" (URD), aiming to accelerate the prospectus approval process for frequent issuers; the other, known as the "EU Growth prospectus", aiming to facilitate access to financing on capital markets, in particular, for SMEs in the European Union.

6. A simplified disclosure regime for secondary issuances allows issuers - under certain conditions - to draw up a simplified prospectus (e.g. issuers whose securities have been admitted to trading on a regulated market continuously for at least the last 18 months and that issue securities fungible with existing securities which have been previously issued).

7. Annexes setting out the content of the prospectus have been amended and reorganised.

8. Paper copies are no longer required (unless requested by an investor). The publication of a prospectus on the following websites is accepted:

• the issuer
• the offeror or the person asking for admission to trading
• the financial intermediaries
• the market where the admission to trading is sought.

9. The approved prospectus shall remain publicly available, in electronic form, for at least 10 years after its publication on any of the above websites.

10. The sanctioning regime was revised.

The section below lists the underlying EU legal and non-legal texts

Level 1

• Regulation (EU) 2017/1129, of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC

  Available here

Level 2

• Commission Delegated Regulation (EU) 2019/980, of 14 March 2019, supplementing Regulation (EU) 2017/1129 as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Commission Regulation (EC) No 809/2004

  Available here

• Commission Delegated Regulation (EU) 2019/979, of 14 March 2019, supplementing Regulation (EU) 2017/1129 with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal, and repealing Commission Delegated Regulation (EU) 382/2014 and Commission Delegated Regulation (EU) 2016/301

  Available here

• Commission Delegated Regulation (EU) 2020/1272, of 4 June 2020, amending and correcting Delegated Regulation (EU) 2019/979 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal

  Available here

• Commission Delegated Regulation (EU) 2020/1273, of 4 June 2020, amending and correcting Delegated Regulation (EU) 2019/980 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market

  Available here

Level 3

• NEW: ESMA Questions and Answers on the Prospectus Regulation – 18 February 2020

  Available here

• ESMA Guidelines on risk factors under the Prospectus Regulation – 1 October 2019

  Available here

• ESMA Guidelines on Alternative Performance Measures (APMs) – 5 October 2015 – and related Questions and Answers – 30 October 2017

  Available here and here, respectively

• ESMA update of the CESR recommendations – The consistent implementation of Commission Regulation (EC) No 809/2004 implementing the Prospectus Directive – 20 March 2013

  Available here

In Luxembourg

Snapshot of the main changes

1. Part II of the New Prospectus Act – Implementing the new EU Prospectus Regulation

• Offers of securities to the public with a total consideration of less than EUR 8 million in the European Union over a period of 12 months are exempted from the obligation to publish a prospectus as set forth by the new EU Prospectus Regulation. However, the Commission de Survaillance du Secteur Financier (CSSF) needs to be informed in advance.
   
• If, however, the total consideration of an offer amounts to at least EUR 5 million an information note (note d’information) needs to be published (with the content set forth by Part II of the New Prospectus Act).
   

2. Part III of the New Prospectus Act – Offers to the public and admissions to trading on a regulated market of securities not covered by the new EU Prospectus Regulation

• Obligation to publish an alleviated prospectus (prospectus allégé) and exemptions

  - In line with the “simplified” prospectus regime set forth by the Luxembourg Act of 10 June 2005, offers to the public and admissions to trading on a regulated market of securities which are not within the scope of the new EU Prospectus Regulation shall fall under Part III of the New Prospectus Act.

  - Similar to the exemptions set forth by the new EU Prospectus Regulation, the New Prospectus Act applies the same thresholds to the national regime, i.e. offers of securities to the public with a total consideration - calculated over a period of 12 months - of:

  -	less than EUR 8 million are exempted from the obligation to publish an alleviated prospectus; but prior notification to the CSSF is required.
  -	EUR 5 million or more (but lower than EUR 8 million) are also exempted from the obligation to publish an alleviated prospectus; in this case, however, an information note (note d’information) needs to be published (with the content set forth by Part III of the New Prospectus Act).

• Alleviated prospectus on a voluntary basis. Issuers exempted by the New Prospectus Act from the obligation to publish an alleviated prospectus are, however, allowed to prepare and publish such prospectus on a voluntary basis.
   
• The obligation to publish an alleviated prospectus shall not apply to the admission to trading on a regulated market of non-equity securities issued by the Luxembourg State, the municipalities of the country (communes), by another Member State or by public international bodies of which one or more Member States are members; only a document with the content set out by Part III (Chapter 2) of the New Prospectus Act needs to be published.

The section below lists the underlying national texts

National Law

• Law of 16 July 2019 on prospectus for securities and implementing Regulation (EU) 2017/1129, of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (in French only)

  Available here

CSSF Circulars and Q&A

• Circular CSSF 19/724: Technical specifications regarding the submission to the CSSF of documents under Regulation (EU) 2017/1129 and the Law of 16 July 2019 on prospectuses for securities and general overview of the regulatory framework on prospectuses (in French only)

  Available here

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