January 2014
On January 15th 2014, the European Securities and Markets Authority (“ESMA”) published an update of its Questions and Answers (the “Q&A”) on prospectuses including two new questions and answers.
The newly added questions and answers, Nos. 91 and 92 concern (i) the format of the individual summary for several securities and (ii) the applicable registration document schedule where a listed issuer proposes to issue convertible or exchangeable debt securities where the underlying securities are the issuer’s shares.
Q&A 91
Q&A 91 emphasises that if there is an individual summary relating to several securities (as provided for in article 24 (3) (second paragraph) of the Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements, as amended (the “Prospectus Regulation”)), the information in the individual summary needs to be easily accessible and the comprehensibility of the summary shall not be affected. In addition, we are reminded that the individual summary is subject to the length constraints set out in article 24(1) of the Prospectus Regulation. ESMA then describes two different formats which may be used for an individual summary relating to several securities, so long as the abovementioned conditions are satisfied.
Q&A 92
Q&A 92 clarifies that where an issuer proposes to issue convertible or exchangeable debt securities where the underlying securities are the issuer’s shares, a debt registration document can be used where those particular shares arising from the conversion or exchange are already issued and admitted to trading on a regulated market. We are reminded that pursuant to Article 4 of the Prospectus Regulation the use of the share registration document schedule (Annex I) (or Annexes XXIII or XXV if the proportionate schedules are applicable) is required, in cases of convertible or exchangeable securities, provided that these shares or other transferable securities equivalent to shares are or will be issued by the issuer of the security and are not yet traded on a regulated market.
The updated Q&A is available at the following link http://www.esma.europa.eu/system/files/2014-esma-35_21st_version_qa_document_prospectus_related_issues.pdf
October 2013
On October 28th 2013, the European Securities and Markets Authority (“ESMA”) published an update of its Questions and Answers (the “Q&A”) on prospectuses revising a number of current market practices and addressing some new issues related to the implementation of Directive 2003/71/EU of November 4th 2003 on the prospectus to be published when securities are offered to the public or admitted to trading, as amended by Directive 2010/73/EU of 24 November 2010 (the “Prospectus Directive”).
The Q&A includes revisions of two previous questions and answers dealing with:
- pro-forma financial information (whereby ESMA has updated its illustrative examples of where issuers may be required to provide pro-forma financial information in a prospectus -question 51); and
- the level of disclosure concerning price information for share offerings (whereby ESMA considers the level of price disclosure in prospectuses for share offerings, the method disclosed in the prospectus to determine final price where it is not known, and when withdrawal rights are triggered - question 58).
As these revised questions set out changes to current market practices, they are applicable only from January 28th 2014 to allow market participants sufficient time to adjust.
The Q&A addresses three new issues (which apply immediately), specifically:
- the statement of auditors’ agreement where a profit estimate is included in the prospectus (question 88);
- the application of the proportionate disclosure regime for prospectuses for rights issues that are not fully subscribed (question 89); and
- the proportionate disclosure regime for rights issues and admission to trading on a regulated market (question 90).
Q&A 88
Answer 88 clarifies that whilst agreement needs to be reached between the issuer and auditor, the “statement” (that agreement has been reached) may be made by (i) the auditor or (ii) the issuer/offeror/person asking for admission to trading. Furthermore answer 88 confirms ESMA’s opinion that the statement means that the auditors do not expect the figures to change substantially, except in case of unforeseen events.
Q&A 89
Answer 89 confirms that unless exemptions set out under article 3.2 of the Prospectus Directive apply, the proportionate disclosure regime for rights issues is not applicable to a subsequent offer to the public of shares not subscribed by the existing shareholders and/or not subscribed by pre-emptive rights holders.
Q&A 90
Answer 90 confirms that the proportionate disclosure regime for rights issues is applicable to the admission to trading on a regulated market of new shares neither subscribed by existing shareholders nor by pre-emptive rights holders but placed with other investors by using the exemptions provided in Article 3.2 of the Prospectus Directive.