The new EU Prospectus Regulation – which has been adopted two years ago – is in full effect since 21 July 2019. The new Regulation is repealing the previous Prospectus Directive and replaces the prospectus regimes contained in the national legislation (the Slovenian Market in Financial Instruments Act), thereby constituting an important step towards the completion of a common European capital market.
Even though the Regulation is based on the same principles as the Directive, the issuers, the investors and other market participants should be aware of the changes, in particular in the following areas:
- Prospectus summary: The new Regulation aims to make the prospectus summary – often the only part of prospectus thoroughly examined by the investors – as useful as possible. To this end, the prospectus summary is now limited to 7 pages and may include a reference to a maximum of 15 risk factors. The purpose of these provisions is to focus the summary of what is important and specific to the particular issue. For the same reason, the issuers are permitted to include in the summary other information that they deem “material and meaningful”.
- Simplified prospectus: The Regulation introduces the option of the so-called simplified prospectus, i.e. a prospectus that only contains simplified disclosures. Such prospectus may be used for secondary issues of securities that have already been listed for at least 18 months on a regulated market or small-and-medium enterprises growth market.
- Growth prospectus: With a view to simplifying SMEs’ access to capital markets – and hence to capital required for their growth – the Regulation is introducing the so-called EU Growth prospectus – i.e. a standardized prospectus that should be easier to prepare and should be associated with lesser administrative burdens.
