The EU Commission has proposed changes to the Prospectus Regulation 2017/1129 in order to simplify the documentation work involved in the securities prospectus for small and medium-sized companies when raising money on the capital market. According to this, the threshold for the exemption from the prospectus requirement for small public offerings of securities is to be increased. Small and medium-sized enterprises (SMEs) currently have the option of creating a so-called growth prospectus instead of a regular securities prospectus. Its content requirements are less extensive than for a regular securities prospectus. The current growth prospectus is to be replaced by a new EU growth emissions document with less stringent requirements. The EU growth prospectus can also be used for cross-border offers within the EU. This system should also apply to growth emissions document.
Prospectus exemption threshold to be increased to EUR 12 million
Commission’s proposal envisages amending the prospectus regulation in such a way that a uniform, harmonized threshold value of EUR 12 million is set. According to the EU Commission’s proposal, no securities prospectus should be drawn up, approved and published for public offerings of securities that remain below this threshold. The threshold of 12 million euros is to be calculated on the basis of the total amount of aggregated offers from one and the same issuer in within a period of 12 months. Currently, this threshold is EUR 8 million, while issuers are still allowed to draw up a prospectus on a voluntary basis.
Commission would like to continue to restrict the exception, according to which the member states can demand disclosure documents under national law for public offerings of securities under EUR 12 million, provided this does not represent a disproportionate burden for the issuer. The German legislature, for example, made use of this option in the current regime by stipulating the obligation to prepare a three- or four-page securities information sheet for public offers in Germany with a total equivalent value of up to EUR 8 million. It remains to be seen whether the legislature will completely change the structure again or whether the current regulations will simply be increased to EUR 12 million.
New EU growth document to facilitate cross-border borrowing
The proposal will also introduce a new EU growth emissions document to permanently replace growth prospectus. Under the proposed changes, the preparation and publication of an growth issuance document for public offerings of securities by certain categories of offerors, including SMEs, would in principle be mandatory. However, the preparation and publication would not be necessary if an exception to the obligation to publish a prospectus under Prospectus Regulation were relevant for a public offer.
The EU growth issuance document should have a standardized format and sequence and be able to be drafted in a language commonly used in the world of international finance. If growth offering document is prepared for an offering of shares, the document will not exceed a certain number of pages. In the case of securities other than shares (so-called non-equity securities), there is no limit on the number of pages. Nevertheless, the scope of the issue document for non-equity stocks should be smaller than for an growth prospectus due to the new standardized presentation. According to the system of Prospectus Regulation, Growth Issuance Document should also be usable for cross-border public offerings of securities by SMEs.
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