On October 20th 2017 the European Securities and Markets Authority (“ESMA”) updated its Questions and Answers on Prospectuses (“Q&A”) aligning them with those provisions of Regulation (EU) 2017/1129 (the “New Prospectus Regulation”) which are in effect since July 20th 2017, specifically points (a), (b) and (c) of the first subparagraph of Article 1(5) and the second subparagraph of Article 1(5). For more information on the New Prospectus Regulation, please see our Newsflash – Publication of the New Prospectus Regulation and our October 2017 Newsletter.
Pursuant to Article 1(5)(a) of the New Prospectus Regulation, there is an exemption from the obligation to publish a prospectus prior to the admission to trading on an EU-regulated market of securities fungible with securities already admitted to trading on the same regulated market, provided that they represent, over a period of 12 months, less than 20% (increased from 10%) of the number of securities already admitted to trading on the same regulated market. Previously, there was an exemption for the admission to trading of shares resulting from the conversion or exchange of other securities or from the exercise of rights conferred by other securities, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market. Article 1(5)(b) of the New Prospectus Regulation imposes a restriction (subject to the second sub-paragraph of Article 1(5)) on this exemption such that the resulting shares must represent over a period of 12 months, less than 20% of the number of securities already admitted to trading on the same regulated market. Finally, pursuant to Article 1(5)(c), there is a new exemption from the obligation to publish a prospectus prior to the admission to trading on an EU-regulated market of securities resulting from the conversion or exchange of other securities, own funds or eligible liabilities by a resolution authority pursuant to specific powers under Directive 2014/59/EU on bank recovery and resolution.
As a consequence, ESMA has amended the Q&A as set out below.
Question 27 has been deleted because Article 1(5) of the New Prospectus Regulation sufficiently clarifies the restriction on the exemption for convertible and exchangeable securities.
Answer 29 has just been amended to update the cross-reference to Article 1(5)(b) of the New Prospectus Regulation.
Answers 31 and 32 have been amended to update the cross-reference to Article 1(5)(a) of the New Prospectus Regulation and to reflect that the threshold for admission under this exemption has changed from 10% to 20%. The working examples in Answer 31 have been updated accordingly.
Finally, answer 44 has been updated to confirm that for securities issued on or after July 20th 2017, ESMA maintains its view that exemptions in relation to offers and exemptions in relation to admission to trading under the New Prospectus Regulation are stand-alone, i.e. an exempt offer will still require a prospectus for an admission to trading unless one of the exemptions set out in points (a) to (c) of the first subparagraph of Article 1(5) applies.
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