The obligation to produce a prospectus and the content and format requirements of prospectuses across the EU are regulated by the Prospectus Directive and the Prospectus Regulation. In 2010 the Prospectus Directive was amended by the Amending Directive. Member states are required to implement the Amending Directive by 1 July 2012. In the UK, the Amending Directive was implemented by the Prospectus Regulations 2011 and the Prospectus Regulations 2012 along with accompanying amendments to the FSA Handbook.

The Amending Directive amends some of the exemptions from the requirement to produce a prospectus and the thresholds determining if a prospectus is required.

The Prospectus Regulations 2011

The UK implemented two aspects of the Amending Directive in 2011 by amending the Financial Services and Markets Act 2000 (FSMA). These regulations came into force on 31 July 2011. The key change implemented early was to increase the thresholds in relation to two exemptions from the requirement to produce a prospectus:

  • Private placements. The threshold for the private placement exemption was increased from 100 to 150 persons, other than qualified investors, per EEA state.
  • Total consideration. The threshold for the total consideration of public offers not requiring a prospectus was increased from €2.5m to €5m calculated on an EU wide basis.

The Prospectus Regulations 2012

The Prospectus Regulations 2012 (the 2012 Regulations) introduce the following changes, among others, to FSMA and the Prospectus, Listing and Disclosure Rules:

  • The threshold for the minimum consideration per investor was increased in order to qualify for the prospectus exemption from €50,000 to €100,000.
  • The minimum denomination of the offered securities was increased in order to qualify for the prospectus exemption from €50,000 to €100,000.
  • The threshold for the total consideration of debt securities issued in a continuous or repeated manner by a credit institution was increased in order to qualify for the prospectus exemption from €50m to €75m.
  • The new definition of the term "qualified investor" adopts the professional investor definition of the MiFID (the Markets in Financial Instruments Directive).
  • The employee share scheme exemption was extended to apply to:
    • all EU companies ;and
    • non-EU companies whose shares are traded on a regulated market or an equivalent third country market. 

The 2012 Regulations also make amendments to the requirements for prospectus summaries and the format and validity of a prospectus.

The 2012 Regulations were published on 15 June 2012 and came into force on 1 July 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.