EUROPEAN PARLIAMENT
1999
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2004
Session document
FINAL
A5-0218/2003
13 June 2003
***II
RECOMMENDATION FOR
SECOND READING
on the Council common position for adopting a European Parliament and
Council directive on the prospectus to be published when securities are offered
to the public or admitted to trading
(5390/4/2003 – C5-0143/2003 – 2001/0117(COD))
Committee on Economic and Monetary Affairs
Rapporteur: Christopher Huhne
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EN
PE 323.161
EN
CODE2AMC
Symbols for procedures
*
**I
**II
***
***I
***II
***III
Consultation procedure
majority of the votes cast
Cooperation procedure (first reading)
majority of the votes cast
Cooperation procedure (second reading)
majority of the votes cast, to approve the common position
majority of Parliament’s component Members, to reject or amend
the common position
Assent procedure
majority of Parliament’s component Members except in cases
covered by Articles 105, 107, 161 and 300 of the EC Treaty and
Article 7 of the EU Treaty
Codecision procedure (first reading)
majority of the votes cast
Codecision procedure (second reading)
majority of the votes cast, to approve the common position
majority of Parliament’s component Members, to reject or amend
the common position
Codecision procedure (third reading)
majority of the votes cast, to approve the joint text
(The type of procedure depends on the legal basis proposed by the
Commission)
Amendments to a legislative text
In amendments by Parliament, amended text is highlighted in bold italics.
Highlighting in normal italics is an indication for the relevant departments
showing parts of the legislative text for which a correction is proposed, to
assist preparation of the final text (for instance, obvious errors or omissions
in a given language version). These suggested corrections are subject to the
agreement of the departments concerned.
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CONTENTS
Page
PROCEDURAL PAGE .............................................................................................................. 4
DRAFT LEGISLATIVE RESOLUTION .................................................................................. 5
EXPLANATORY STATEMENT............................................................................................ 35
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PROCEDURAL PAGE
At the sitting of 14 March 2002 Parliament adopted its position at first reading on the
proposal for a European Parliament and Council directive on the prospectus to be published
when securities are offered to the public or admitted to trading(COM(2001) 280 – 2001/0117
(COD)).
At the sitting of 27 March 2003 the President of Parliament announced that the common
position had been received and referred to the Committee on Economic and Monetary Affairs
(5930/4/2003 – C5-0143/2003).
The committee had appointed Christopher Huhne rapporteur at its meeting of 6 November
2000.
The committee considered the common position and draft recommendation for second reading
at its meetings of 27 August 2002, 2 October 2002, 17 March 2003, 23 April 2003, 11 June
2003, and 12 June 2003.
At the last meeting it adopted the draft legislative resolution by 26 votes to 6, with 1
abstention.
The following were present for the vote:Christa Randzio-Plath , chairman; José Manuel
García-Margallo y Marfil and Philippe A.R. Herzog vice-chairmen; Christopher Huhne,
rapporteur; Generoso Andria, Pervenche Berès, Hans Blokland, Roberto Felice Bigliardo,
Jean-Louis Bourlanges (for Othmar Karas ), Bert Doorn (For Mónica Ridruejo), Manuel
António dos Santos (for a member to be nominated), Harald Ettl, Ingo Friedrich, CarlesAlfred Gasòliba i Böhm, Robert Goebbels, Lisbeth Grönfeldt Bergman, Mary Honeyball,
Elisabeth Jeggle (for Hans-Peter Mayer pursuant to Rule 153(2)), Piia-Noora Kauppi,
Christoph Werner Konrad, Werner Langen (for Jonathan Evans), Astrid Lulling, Thomas
Mann (for John Purvis), Xaver Mayer (for Ioannis Marinos pursuant to Rule 153(2)), Miquel
Mayol i Raynal, Alexander Radwan, Bernhard Rapkay, Karin Riis-Jørgensen, Martine Roure
(for Fernando Pérez Royo) pursuant to Rule 153(2)), Olle Schmidt, Helena Torres Marques,
Ieke van den Burg, Theresa Villiers.
The recommendation for second reading was tabled on 13 June 2003.
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DRAFT LEGISLATIVE RESOLUTION
European Parliament legislative resolution on the Council common position for
adopting a European Parliament and Council directive on the prospectus to be
published when securities are offered to the public or admitted to trading (COM(2002)
460 – C5-0143/203 – 2001/0117(COD))
(Codecision procedure: second reading)
The European Parliament,
– having regard to the Council common position (5930/4/2003 – C5-0143/203),
– having regard to its position at first reading1 on the Commission proposal to Parliament
and the Council (COM(2001) 2802),
– having regard to the Commission's amended proposal (COM(2002) 4603),
– having regard to Article 251(2) of the EC Treaty,
– having regard to Rule 80 of its Rules of Procedure,
– having regard to the recommendation for second reading of the Committee on Economic
and Monetary Affairs (A5-0218/2003),
1. Amends the common position as follows;
2. Instructs its President to forward its position to the Council and Commission.
1
OJ C47, 27.2.2003, p. 511-524.
OJ C 240, 28.8.2001, p. 272-288.
3
OJ C20, 28.1.2003, p. 122-159.
2
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Council common position
Amendments by Parliament
Amendment 1
Recital 14a (new)
(14a) The disclosure requirements of the
present Directive do not prevent a Member
State or a competent authority or an
exchange through its rule book to impose
other particular requirements in the
context of admission to trading of securities
on a regulated market (notably regarding
corporate governance). Such requirements
may not directly or indirectly restrict the
drawing up, the content and the
dissemination of a prospectus approved by
a competent authority or limit the capacity
of an issuer or an offeror to offer securities
to the public and/or to ask for the
admission to trading of those securities on
a regulated market
Justification
It should be perfectly admissible that specific market regulations may impose higher
standards if it is deemed useful for the protection of the public and hence potentially a
competitive advantage to be gained over other markets.
Amendment 2
Recital 20
(20) Best practices have been adopted at
international level in order to allow
multinational offerings of equities to be
made using a single set of disclosure
standards by the International Organisation
Securities Commissions (IOSCO); the
IOSCO disclosure standards will upgrade
information available for the markets and
investors and, at the same time will simplify
the procedure for European issuers wishing
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(20) Best practices have been adopted at
international level in order to allow
multinational offerings of equities to be
made using a single set of disclosure
standards by the International Organisation
Securities Commissions (IOSCO); the
IOSCO disclosure standards will upgrade
information available for the markets and
investors and, at the same time will simplify
the procedure for European issuers wishing
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to raise capital in third countries. The
Directive also calls for tailored disclosure
standards to be adopted for others types of
securities and issuers.
to raise capital in third countries. These are
maximum standards, which should merely
provide a basis for the disclosure standards.
The Directive also calls for tailored
disclosure standards to be adopted for others
types of securities and issuers.
Justification
The Commission amended Article 7.2 and Recital 17 at the suggestion of the Parliament.
Whereas the May 2001 version of the Commission Proposal specified that the prospectus
“shall be in accordance with the information requirements set out by the IOSCO”, the
wording was then changed to “the rules .... shall be based on the standards in the field of
financial information set out by international organisations, and in particular by the
IOSCO”. While the suggested amendment has been reflected in both the wording of Article
7.2 and in Recital 17, the consultation papers of the Commission of European Securities
Regulators show that it is not just intended to adopt the IOSCO standards verbatim, but that
these standards are regarded as a basis in the sense of minimum standards. When drawing up
the disclosure standards, however, it should be possible to examine the IOSCO standards on
a case-by-case basis and deviate from them in certain instances.
Amendment 3
Recital 35
(35) A variety of competent authorities in
Member States, having different
responsibilities, may create unnecessary
costs and overlapping of responsibilities
without providing any additional benefit. In
each Member State one single competent
authority should be designated to approve
prospectuses and to assume responsibility
for supervising compliance with this
Directive. Under strict conditions, a
Member State should be allowed to
designate more than one competent authority
but only one will assume the duties for
international cooperation. Such an authority
or authorities should be established as an
administrative authority and in such a form
that their independence from economic
actors is guaranteed and conflicts of interest
are avoided. The designation of a competent
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(35) A variety of competent authorities in
Member States, having different
responsibilities, may create unnecessary
costs and overlapping of responsibilities
without providing any additional benefit. In
each Member State one single competent
authority should be designated to approve
prospectuses and to assume responsibility
for supervising compliance with this
Directive. Under strict conditions, a
Member State should be allowed to
designate more than one competent authority
but only one will assume the duties for
international cooperation. Such an authority
or authorities should be established as an
administrative authority and in such a form
that their independence from economic
actors is guaranteed and conflicts of interest
are avoided. The designation of a competent
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authority for prospectus approval should not
exclude cooperation between that authority
and other entities, with a view to
guaranteeing efficient scrutiny and approval
of prospectuses in the interest of issuers,
investors, markets participants and markets
alike. Any delegation of tasks relating to the
obligations provided for in this Directive and
in its implementing measures should, except
for publication on the Internet of approved
prospectuses, end five years after the entry
into force of this Directive.
authority for prospectus approval should not
exclude cooperation between that authority
and other entities, with a view to
guaranteeing efficient scrutiny and approval
of prospectuses in the interest of issuers,
investors, markets participants and markets
alike. Any delegation of tasks relating to the
obligations provided for in this Directive and
in its implementing measures should be
reviewed five years after the date of entry
into force of this Directive.
Justification
Especially in smaller Member States the delegation of certain tasks mentioned in Chapter III
has a long tradition without having caused serious complaints. Therefore we propose to make
an assessment of the practice after 5 years and review if necessary the principle of delegation.
If all areas of delegation (including the operation of the authority's website for approved
prospectuses) are reviewed after 5 years, no exemption is required for this particular item.
Amendment 4
Article 1, paragraph 2, point (j), subparagraph 1
(j) Non-equity securities issued in a
continuous or repeated manner by credit
institutions where the total consideration of
the offer is less than EUR 50 000 000, which
limit shall be calculated over a period of
twelve months, provided that these
securities:
(j) Non-equity securities issued in a
continuous or repeated manner by credit
institutions where the total consideration of
the offer is less than EUR 100 000 000,
which limit shall be calculated over a period
of twelve months, provided that these
securities:
Justification
Credit institutions issuing bonds in a continuous or repeated manner have also in the past
been granted considerable alleviations. This policy was and is based on the experience that
credit institutions are subject to the solvency supervision of the national regulatory
authorities. The smaller the issuing bank and the smaller the volume of issued bonds, the
more disproportionate are the costs of drawing up a prospectus. In order to avoid a
competitive drawback for small and medium sized credit institutions, the threshold of EUR
50m should be doubled. As a consequence, more banks could raise funds by issuing bonds
and could pass these funds to the clients in their region, in particular to SMEs and for
infrastructure.
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This amendment complements amendment 10 referring to the applicability of the base
prospectus in Art. 5 par. 4.
Amendment 5
Article 2, paragraph 1, point (b)
b) "equity securities" means shares and
other transferable securities equivalent to
shares in companies, as well as any other
type of transferable securities giving the
right to acquire any of the aforementioned
securities as a consequence of their being
converted or the rights conferred by them
being exercised, provided that securities of
the latter type are issued by the issuer of the
underlying shares or by an entity belonging
to the group of the said issuer.
b) "equity securities" means shares and
other transferable securities equivalent to
shares in companies, as well as any other
type of transferable securities giving the
right to acquire any of the aforementioned
securities as a consequence of their being
converted or the rights conferred by them
being exercised at the discretion of the
issuer, provided that, in the case of equity
securities other than shares, those
securities are issued by the issuer of the
underlying shares or by an entity belonging
to the group of the said issuer.
Justification
This new wording, in line with Recital 12, makes it clear that convertible bonds at the option
of the investor should be treated as non-equity securities whereas convertible bonds at the
option of the issuer should be treated as equity-securities.
Amendment 6
Article 2, paragraph 1, point (e), sub-point (iv)
(iv)
certain natural persons: subject to
mutual recognition, a Member State may
choose to authorise natural persons who
are resident in the Member State and who
expressly ask to be considered as qualified
investors if these persons meet at least two
of the criteria set out in paragraph 2;
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(iv)
natural persons who are resident in
the Member State and who expressly ask to
be considered as qualified investors if these
persons meet at least two of the criteria set
out in paragraph 2;
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Justification
The Member States should not be permitted an opt-out with regard to whether a natural
person or SME may choose to be classified as a qualified investor. These bodies should be
permitted, under the strict conditions outlined in paragraph 2. The Council text would
undermine a fundamental objective of the directive ie. the harmonisation of conditions for
raising capital across the EU. It would introduce an unnecessary complication where some
member states thought individuals were not to be trusted to make their own decisions. It
would also set up a distortion in the single market where individuals who wanted to trade
would merely set up an account in a member state that allowed them to do so. See
justification for amendment to Article 2, paragraph 1, point (e), sub-point (v).
Amendment 7
Article 2, paragraph 1, point (e), sub-point (v)
(v)
certain SMEs: subject to mutual
recognition, a Member State may choose
to authorise SMEs which have their
registered office in that Member State and
who expressly ask to be considered as
qualified investors,
(v)
SMEs which have their registered
office in that Member State and who
expressly ask to be considered as qualified
investors,
Justification
The Member States should not be permitted an opt-out with regard to whether a natural
person or SME may choose to be classified as a qualified investor. These bodies should be
permitted, under the strict conditions outlined in paragraph 2. The text of the Common
Position would undermine a fundamental objective of the directive, which is the
harmonisation of conditions for raising capital across the EU. See justification for
amendment to Article 2, paragraph 1, point (e), sub-point (iv).
Amendment 8
Article 2, paragraph 1, point (k)
(k)
"offering programme" means an
issuer's plan for the issuance of nonequity securities, including warrants in any
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(k)
"offering programme" means a
programme which would permit the
issuance of non-equity securities including
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form, , having a similar type and/or class,
in a continuous or repeated manner during
a specified issuing period.
warrants in any form, having a similar type
and/or class in a continuous or repeated
manner during a specified issuing period.
Justification
(i) At the time of the setting up of an offering programme such as an MTN programmes it is
not possible to know what the "plan" is with regards to the number of issues which will be
made since programmes are set up to enable issuers to make a wide range of types of issue.
There may not be another issue during the "specified period" and the Council text means that
the first issue would not therefore part of an offering programme and that the type of
prospectus approved would not be correct. See justification for amendment to Article 2.1 (l).
(ii) The definition of offering programme should clarify that non-equity securities shall benefit
from the programme and that not just certain warrants should benefit.
Amendment 9
Article 2, paragraph 1, point (l)
(l)
"securities issued in a continuous or
repeated manner" means issues on tap with
at least two separate issues of securities of
a similar type and/or class over a period of
twelve months,
(l)
"securities issued in a continuous or
repeated manner" means at least two
separate issues of securities of a similar
type and/or class over a period of
twelve months,
Justification
(i) See justification for amendment to article 2.1.(k) as the definition of Article 2.1 (l) relates
to wording included in the definition of "offering programme". (ii) Only very few programme
issuers in the EU are by issuers which are raising such large amounts of money that they are
"on tap" and able to issue on every working day if an investor contacts them asking to buy an
issue from the issuer. This wording should therefore deleted. (iii) It should also be possible,
as is current practice, for different securities to be issued as part of the same offering
programme and the relevant wording should therefore be deleted.
Amendment 10
Article 2, paragraph 1 point (m) sub-point (ii)
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(ii)
for any issues of non-equity
securities whose denomination per unit
amounts to at least EUR 5000, and for any
issues of non-equity securities giving the
right to acquire any transferable securities or
to receive a cash amount, as a consequence
of their being converted or the rights
conferred by them being exercised, provided
that the issuer of the non-equity securities is
not the issuer of the underlying securities or
an entity belonging to the group of the latter
issuer, the Member State where the issuer
has its registered office, or where the
securities were or are to be admitted to
trading on a regulated market or where the
securities are offered to the public, at the
choice of the issuer, the offeror or the person
asking for admission, as the case may be;
(ii)
for any issues of non-equity
securities whose denomination per unit
amounts to at least EUR 1000, or a similar
amount customarily used as the minimum
denomination per unit in non-equity
issuance of other currencies that are widely
used in international finance, and for any
issues of non-equity securities giving the
right to acquire any transferable securities or
to receive a cash amount, as a consequence
of their being converted or the rights
conferred by them being exercised, provided
that the issuer of the non-equity securities is
not the issuer of the underlying securities or
an entity belonging to the group of the latter
issuer, the Member State where the issuer
has its registered office, or where the
securities were or are to be admitted to
trading on a regulated market or where the
securities are offered to the public, at the
choice of the issuer, the offeror or the person
asking for admission, as the case may be;
Justification
An amount of 1.000 EUR per issue is rather popular with retail investors and also with small
pension funds and UCITSs that follow a special index; they all invest often in small
denominations of non-equity securities. (For amounts less than 1.000 EUR the relative high
handling and depository costs of securities make bonds less attractive for retail investors than
savings accounts.) These investors would possibly have less access to cross-border issues of
those issuers who – due to a high threshold of 5.000 EUR - would have to concentrate on
their home market.
Amendment 11
Article 2, paragraph 1, point (qa) (new)
pa) ‘base prospectus’ means a document
containing all relevant information
concerning the issuer and the securities to
be offered to the public or admitted to
trading (excluding the final terms of the
offering).
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Justification
A definition for the new concept of "base prospectus"(Article 5.4) is needed.
Amendment 12
Article 2, paragraph 3
3.
For the purposes of paragraphs
1(e)(iv) and (v) the following shall apply:
Deleted
Each competent authority shall ensure
that appropriate mechanisms are in place
for a register of natural persons and
SMEs considered as qualified investors,
taking into account the need to ensure an
adequate level of data protection. The
register shall be available to all issuers.
Each natural person or SME wishing to
be considered as a qualified investor shall
register and each registered investor may
decide to opt out at any moment.
Justification
The concept of a "register" to maintain a record of natural persons and SMEs which are
considered to be qualified investors is impractical and would comprise a disproportionate
and unnecssary administrative burden for competent authorities and issuers alike. It could
discourage natural persons and SMEs from asking to be categorised as such. Furthermore,
the qualified investor regime in the Prospectus Directive should be consistent with that of the
Investment Services Directive, which does not require such a register. Hence, this paragraph
should be deleted.
Amendment 13
Article 3, paragraph 2, point (b)
(b) an offer of securities addressed to
investors to fewer than 100 natural or legal
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(b) an offer of securities addressed to
investors to fewer than 150 natural or legal
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persons per member States, other than
qualified investors, and or;
persons per member States, other than
qualified investors, and or;
Justification
A ceiling of 100 persons per Member State has been set by the Common Position for the
exemption of securities offered to a limited number of investors from the obligation to publish
a prospectus. This ceiling, which was set at 150 persons in the EP First Reading, is too low
however, particularly for large Member States. As it stands, the exemption would have only
little relevance in practice. The ceiling for offers exempt from the obligation to publish a
prospectus should therefore be at least 150 persons per Member State.
Amendment 14
Article 4, paragraph 1, point (ea) (new)
(ea) Securities offered to existing
shareholders by means of pre-emption
rights in connection with a capital increase,
provided that a document is available
containing information which is regarded
by the competent authority as being
equivalent to that of the prospectus, taking
into account the requirements of
Community legislation.
Justification
Article 4(1) does not include as an exemption the case of an increase of capital by issuing
securities in exchange for already listed securities to be offered as pre-emptive right to
current shareholders on the basis of the already existing information concerning the listed
securities. This kind of exemption should be provided by the Directive.
Amendment 15
Article 4, paragraph 2, point (a)
(a)
shares representing, over a period
of twelve months, less than 10 per cent of
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(a)
securities representing, over a
period of twelve months, less than 10 per
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the number of shares of the same class
already admitted to trading on the same
regulated market;
cent of the number of securities of the
same class already admitted to trading on
the same regulated market;
Justification
This exemption from the obligation to publish a prospectus should be applicable to securities
other than shares It is common for the numbers of depositary receipts outsanding to fluctuate
during a year as they are surrendered for shares or created from shares.
Amendment 16
Article 4, paragraph 2, point (h), sub-point (i)
(i)
that these securities, or securities of
the same class, have been admitted to
trading on that other regulated market for
more than 18 months;
(i)
that these securities, or securities of
the same class, have been admitted to
trading on that other regulated market for
more than 12 months;
Justification
According to Article 9 par 1 a prospectus shall generally be valid for 12 months. The
provision of 18 months as proposed by the Council would lead to the following inconsistency:
the issuer could during the first 12 months use its prospectus for a "secondary" admission, for
the next 6 months it could not, and then, after a total of 18 months, the issuer could use the
"old" prospectus again - only with updating summaries.
Amendment 17
Article 5, paragraph 2, point (c)
(c)
where a claim relating to the
information contained in a prospectus is
brought before a court, the plaintiff investor
might, under the national legislation of the
Member States, have to bear the costs of
translating the prospectus before the legal
proceedings are initiated, and
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(c) where a claim relating to the information
contained in a prospectus is brought before a
court, the plaintiff investor might bring his
claim before the court of his home country
or the court of the issuer home country,
and might under the national legislation of
the Member States and according to the
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decision of the court, have to bear the costs
of translating the prospectus before the legal
proceedings are initiated, and
Justification
This new wording gives explicitly the possibility to the plaintiff to bring his claim, at his
choice, either to the courts of his home country or to the courts of the "Home Member State"
of the issuer, regardless the origin of the prospectus. In addition, it is up to the court to decide
whether any translation of the prospectus is needed to initiate the proceedings.
Amendment 18
Article 5, paragraph 2, point (d)
d)
no civil liability attaches to any
person solely on the basis of the summary,
including any translation thereof, unless it is
misleading, inaccurate or inconsistent when
read together with the other parts of the
prospectus.
d)
civil liability attaches to those
persons who have tabled the summary and
applied for its notification, including any
translation thereof, but only if the summary
is misleading, inaccurate or inconsistent
when read together with other parts of the
prospectus.
Justification
The (translated) summary is the most important means of information for cross-border offers
of securities. Investors, especially retail clients, rely on it to make their decision. Therefore
the warning addressed to them should not be misleading but should express the liability of the
persons who have contributed to the compilation and notification of the summary.
Amendment 19
Article 5, paragraph 4, subparagraph 1
4.
For the following types of
securities, the prospectus shall consist of a
base prospectus containing all relevant
information concerning the issuer and the
securities offered to the public or to be
admitted to trading on a regulated market:
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4.
For the following types of
securities, the prospectus can, at the
choice of the issuer, consist of a base
prospectus containing all relevant
information concerning the issuer and the
securities to be offered to the public or
admitted to trading on a regulated market:
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Justification
The optionality for the shelf-registration format should also be replicated for the base
prospectus. The issuer should be able to decide whether to use a base prospectus, shelf
registration or a single document.
Amendment 20
Article 5, paragraph 4, point (b)
(b) non-equity securities issued in a
continuous or repeated manner by credit
institutions,
(b) non-equity securities issued in a
continuous or repeated manner by credit
institutions,
(i) where the sums deriving from
the issue of the said securities,
under national legislation, are
placed in assets which provide
sufficient coverage for the liability
deriving from securities until their
maturity date; and
Deleted
(ii) where, in the event of the
insolvency of the related credit
institution, the said sums are
intended, as a priority, to repay the
capital and interest falling due,
without prejudice to the provisions
of Directive 2001/24/EC of the
European Parliament and of the
Council of 4 April 2001 on the
reorganisation and winding up of
credit institutions.
Deleted
Justification
The new type of format as drafted applies only to a very specific type of bonds which is too
restrictive. Credit institutions are supervised entities under a strong solvency regime. The
possibility to use a base prospectus regime should therefore be extended to all types of nonequity securities issued in a continuous or repeated manner by credit institutions. It should be
remembered that this provision does not refer to an exemption, but merely the possibility of
using a flexible format. Widening the scope of the base prospectus regime in this way would
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not undermine investor protection.
Amendment 21
Article 5, paragraph 4, subparagraph 3
If the final terms of the offer are not
included in either the base prospectus or a
supplement, the final terms shall be
provided to investors and filed with the
competent authority when each public offer
is made as soon as practicable and if
possible in advance of the beginning of the
offer. The provisions of Article 8(1)(a)
shall be applicable in any such case.
The final terms of the offer shall be
provided to investors and filed with the
competent authority when each public offer
is made as soon as practicable and if
possible in advance of the beginning of the
offer.
Justification
It is not possible to include the "final terms" in either the base prospectus or in the
supplement since the final terms of an issue that is part of a programme are not known in
advance. Hence, this provision should be deleted.
Amendment 22
Article 6, paragraph 1
1.
Member States shall ensure that
responsibility for the information given in a
prospectus attaches at least to the issuer or
its administrative, management or
supervisory bodies, the offeror, the person
asking for the admission to trading on a
regulated market or the guarantor, as the
case may be. The persons responsible shall
be clearly identified in the prospectus by
their names and functions or, in the case of
legal persons, their names and registered
offices, as well as declarations by them that,
to the best of their knowledge, the
information contained in the prospectus is in
accordance with the facts and that the
prospectus makes no omission likely to
affect its import
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1.
Member States shall ensure that
responsibility for the information given in a
prospectus attaches at least to the issuer or
its administrative, management or
supervisory bodies, the offeror, the person
asking for the admission to trading on a
regulated market or the guarantor, as the
case may be. The persons responsible shall
be clearly identified in the prospectus by
their names and functions or, in the case of
legal persons, their names and registered
offices, as well as declarations by them that,
to the best of their knowledge, the
information contained in the prospectus is in
accordance with the facts and that the
prospectus makes no omission likely to
affect its import. Member States shall
ensure that chief accountants, auditors,
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analysts and consultants mandated by the
management of the issuer and having
delivered essential contributions to the
prospectus are notified to the competent
authority and can be called to responsibility
by investors.
Justification
Member States should be forced to implement specific provisions to fulfil the requirements of
civil liability for all natural and legal persons who are/were responsible for the drafting and
updating of a prospectus including the statutory auditor (who has audited the financial
reports, the financial status and the outlook of the issuer), the natural and legal persons who
are/were particularly responsible for auditing the prospectus, financial advisers and financial
intermediaries who have been formally involved in the preparation and the dissemination of
the prospectus.
Amendment 23
Article 6, paragraph 2, subparagraph 1
Member States shall ensure that their laws,
regulation and administrative provisions on
civil liability apply to those persons
responsible for the information given in a
prospectus.
Member States shall ensure that their laws,
regulation and administrative provisions on
civil liability apply to those persons
responsible for the information given in a
prospectus and the summary applied for
notification.
Justification
It should be clear that the persons responsible for the information given in a prospectus are
also responsible for the accuracy and consistency of the summary and its translation.
Otherwise the restriction in Art.6 par.2 second sentence, could be interpreted to place the
burden of proof at the expense of the investor or limit civil liability in a non-appropriate way
unfavourably to (retail) investors.
Amendment 24
Article 7, paragraph 1
1.
Detailed implementing measures
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1.
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regarding the specific information which
must be included in a prospectus, avoiding
duplication of information when a
prospectus is composed of separate
documents, shall be adopted by the
Commission in accordance with the
procedure referred to in Article 24(2). The
first set of implementing measures shall be
adopted by ............ *.
the specific information which must be
included in a prospectus and avoiding
duplication of information when a
prospectus is composed of separate
documents shall be adopted by the
Commission in accordance with the
procedure referred to in Article 24(2). The
first set of implementing measures shall be
adopted within 180 days after the entry into
force of this Directive.
*. 6 months after the date of entry into
force of this Directive.
Justification
Clarification of the scope of the comitology procedure will strengthen the principle of legal
certainty. The overall aim of the comitology procedure is to speed up legislation and to
strengthen flexibility. It would be detrimental if the detailed implementing measures lead to
over-regulation. The scope of the detailed measures should therefore be limited to essential
prospectus requirements necessary for the implementation of the passport regime.
Amendment 25
Article 7, paragraph 2, subparagraph 1
2.
In particular, for the elaboration of
the various models of prospectuses, account
shall be taken of the following:
2.
In particular, while developing the
different broad models of prospectuses,
account shall be taken of the following:
Justification
See justification for amendment to article 7, paragraph 1.
Amendment 26
Article 7, paragraph 2, point (f)
(f)
if applicable, the public nature of the
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(f)
if applicable, the public nature of the
issuer or guarantor, in particular Member
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issuer.
States´ regional and local authorities.
Justification
Given that every public authority is entitled to opt-in for an European passport as mentioned
in Article 1 Paragraph 3, when the Commission will adopt implementing measures and
elaborate various models of prospectuses, the public nature of the issuer or guarantor should
be taken into account, especially regarding the kind of information to be contained in the
prospectus.
Amendment 27
Article 7, paragraph 3
3.
The implementing measures referred
to in paragraph 1 shall be based on the
standards in the field of financial and non
financial information set out by international
securities commission organisations, and in
particular by IOSCO and on the indicative
Annexes to this Directive.
3.
The implementing rules referred to
in paragraph 1 shall take account of the
standards in the field of financial and non
financial information set out by international
securities commission organisations as well
as of the indicative Annexes to this
Directive. For equity securities, account
shall particularly be taken of the standards
developed by the International
Organisation of Securities Commissions
(IOSCO).
Justification
See justification to amendment to article 7, paragraph 1.
Amendment 28
Article 8, paragraph 1, subparagraph 1
1. Member States shall ensure that where the
final offer price and amount of securities
which will be offered to the public cannot be
included in the prospectus:
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1. Member States shall ensure that where
the final terms of the offering including, but
not limited to the offering price and amount
of securities which will be offered to the
public cannot be included in the prospectus:
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Justification
All main conditions of such offers, in particular the offering price but also, if applicable,
interest rate and maturity can not be fixed earlier than immediately before the issue and
should therefore be covered by this exemption. This is enforced by market conditions and is in
line with the rationale of Art.8 par.1.
Amendment 29
Article 11, paragraph 1
1.
Member States shall allow
information to be incorporated in the
prospectus by reference to one or more
previously published documents that have
been approved by the competent authority
of the home Member State or filed with it
in accordance with this Directive, in
particular pursuant to Article 10, or with
Titles IV and V of Directive 2001/34/EC.
This information shall be the latest
available to the issuer. The summary shall
not incorporate information by reference.
1.
Member States shall allow
information to be incorporated in the
prospectus by reference to one or more
previously or simultaneously published
documents that have been approved by the
competent authority of the home Member
State or filed with it in accordance with
this Directive, in particular pursuant to
Article 10, or with Titles IV and V of
Directive 2001/34/EC or equivalent
legislation in 3rd countries. This
information shall be the latest available to
the issuer. The summary shall not
incorporate information by reference.
The following information may be
incorporated by a reference:
(a) annual reports,
(b) memorandum and articles of
association,
(c) other material and non-material
information filed by the issuer as part of
its ongoing obligations.
In the case of an offering programme,
the base prospectus may also incorporate
by reference annual or half yearly
financial reports and quarterly financial
information that will be so approved or
filed, but such incorporation shall only be
effective in relation to issues under the
offering programme made after the date
of such approval or filing.
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Justification
(i) Simultaneous filing should be permitted. (ii) The documents that issuers can incorporate
by reference should not be limited only to those filed under EU law as this would restrict the
development of EU markets by discouraging 3rd country issuers from issuing in the EU.
(iii) The concept of incorporation by reference should be applicable to offering programmes,
to enable documents produced after publication of the base prospectus to be incorporated by
reference.
Amendment 30
Article 12, paragraph 2
2. In this case, the securities note shall
provide information that would normally be
provided in the registration document if
there has been a material change or recent
development which could affect investors'
assessments since the latest updated
registration document or any supplement
as provided for in Article 16 was approved.
The securities and summary notes shall be
subject to a separate approval.
2. The securities note shall provide
information exclusively on publicly offered
securities or those admitted to trading on a
regulated market.
Where a new event arises, which is not
already published in accordance to laws or
regulations in force and capable of
affecting the assessment of securities,
between the date of approval of the
registration document or the prospectus
and the date of the final closing of the
offer, a specific supplement must be issued
in accordance with the later art. 16.
Justification
The second sub-paragraph of art. 12 arranges that the Securities Note, if there has been a
material change or recent development, shall provide information that would normally be
provided in the registration document. This law overlaps the law of Supplement introduced in
the latter part of art. 16 and complicates the Securities Note with information on the issuer. It
should be coherent with what has been indicated in the previous art. 5.3 that the information
contained in the Securities Note are objectively limited only to the securities. In this way we
would also reach the effect of simplifying and accelerating the procedures for authorisation
of the Securities Note.
The updates for the Issuer’s information, which are not already published in accordance to
laws or regulations in force, will be provided by Supplements or with other more rapid and
effective instruments in the hands of the Authority.
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Amendment 31
Article 13, paragraph 2, subparagraph 1
2.
This competent authority shall notify
the issuer, the offeror or the person asking
for admission to trading on a regulated
market, as the case may be, of its decision
regarding the approval of the prospectus
within 15 working days of the submission of
the draft prospectus.
2.
This competent authority shall notify
the issuer, the offeror or the person asking
for admission to trading on a regulated
market, as the case may be, of its decision
regarding the approval of the prospectus
within 10 working days of the submission of
the draft prospectus.
Justification
A general approval period for prospectuses of 15 working days constitutes an unnecessarily
lengthy period of time, at variance with best practice in the Member States. In order to allow
companies to react to fast-changing market conditions and to minimise uncertainty, while
allowing regulators sufficient time to review a prospectus, it is reasonable to set the maximum
period of approval at 10 working days. Competent authorities should also be obliged to
improve their procedures in order to ensure a general improvement in disclosure conditions.
Amendment 32
Article 13, paragraph 2, subparagraph 2
If the competent authority fails to give a
decision on the prospectus within the time
limits laid down in this paragraph and
paragraph 3, this shall not be deemed to
constitute approval of the application.
If the competent authority of the home
Member State fails to give a decision on the
prospectus within the time limit laid down in
this paragraph and paragraph 3, thereof the
documents shall be deemed to be an
approval of the application.
Justification
It is foreseen that the legislator reintroduces the silent approval, clearly more suitable to give
certainty of rules and behaviour.
Amendment 33
Article 13, paragraph 3
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3.
The time limit referred to in
paragraph 2 shall be extended to 30
working days if the public offer involves
securities issued by an issuer which does
not have any securities admitted to trading
on a regulated market and who has not
previously offered securities to the public.
3.
The time limit referred to in
paragraph 2 shall be extended to 20
working days if the public offer involves
securities issued by an issuer which does
not have any securities admitted to trading
on a regulated market and who has not
previously offered securities to the public.
Justification
An initial public offering (IPO) will require a longer approval time than a subsequent issue,
but 30 working days would constitute a disproportionate long approval period. A period of
20 working days is more than sufficient to enable a full review without unduly disrupting the
financing plans of the company or increasing its exposure to market risk.
Amendment 34
Article 13, paragraph 4
4.
If the competent authority finds, on
reasonable grounds, that the documents
submitted to it are incomplete or that
supplementary information is needed, the
time limits referred to in paragraphs 2 and
3 shall apply only from the date on which
such information is provided by the issuer,
the offeror or the person asking for
admission to trading on a regulated market.
4.
If the competent authority finds, on
reasonable grounds, that the documents
submitted to it are incomplete or that
supplementary information is needed, the
time limits referred to in paragraphs 2 and
3 shall apply only from the date on which
such information is provided by the issuer,
the offeror or the person asking for
admission to trading on a regulated market.
The competent authority should notify the
issuer if the documents are incomplete
within 5 working days of the submission
of the application
Justification
(i) The deadline for the approval period should be extended only for those cases where the
information is "materially"incomplete. This is in line with Article 16.1 regarding the wording
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"material" mistakes. (ii) The competent authority should be obliged to check the completeness
of the documents within a set time period of 5 working days, otherwise the right to extend the
deadline could be misused to the disadvantage of issuers.
Amendment 35
Article 13, paragraph 5
(5) The competent authority of the home
Member State may transfer the approval of a
prospectus to the competent authority of
another Member State, subject to the
agreement of that competent authority.
Furthermore, this transfer shall be notified to
the issuer, the offeror or the person asking
for admission within 5 working days from
the date of the decision taken by the
competent authority of the home Member
State. The time limit in paragraph 2 shall
apply from this date.
(5) The competent authority of the home
Member State may transfer the approval of a
prospectus to the competent authority of
another Member State, subject to the
agreement of that competent authority and
of the issuer, the offeror or the person
asking for admission to trading on a
regulated market. Furthermore, this transfer
shall be notified to the issuer, the offeror or
the person asking for admission within one
working day from the date of the decision
taken by the competent authority of the
home Member State. The time limit in
paragraph 2 shall apply from this date.
Justification
A transfer to another authority substantially delays the approval and alters the competent
authority responsible for the approval. It should therefore only be possible if the issuer, the
offeror or the person asking for admission to trading on a regulated market agree to it. To
limit the delay as much as possible, information about the transfer should be given within one
working day after the decision.
Amendment 36
Article 14, paragraph 2, point ca (new)
ca (new) in an electronic form on the
website of the regulated market where the
admission to trading is sought, or
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Justification
The Common Position imposes a new requirement that home Member States may require
issuers who publish their prospectus in a printed form, to also publish it on the issuers
website. This obliges the issuer to use its own website and the related costs and issuer should
be given the choice to publish the prospectus on the website of the relevant regulated market,
as is the case in several Member States.
Amendment 37
Article 14, paragraph 4
The competent authority of the home
Member State shall publish on its web-site
over a period of twelve months, at its
choice, all the prospectuses approved, or at
least the list of prospectuses approved in
accordance with Article 13, including, if
applicable, a hyperlink to the prospectus
published on the web-site of the issuer.
The competent authority of the home
Member State shall publish on its web-site
over a period of twelve months, at its
choice, all the prospectuses approved, or at
least the list of prospectuses approved in
accordance with Article 13, including, if
applicable, a hyperlink to the prospectus
published on the web-site of the issuer, or
on the web-site of the regulated market.
Justification
See justification to amendment to Article 14.2
Amendment 38
Article 15, paragraph 3
3.
Advertisements shall be clearly
recognisable as such. The information
contained in an advertisement shall not be
inaccurate, misleading or inconsistent with
that contained in the prospectus or that
expected to be contained therein.
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Advertisements shall be clearly
recognisable as such. The information
contained in an advertisement shall not be
inaccurate, misleading or inconsistent with
the information contained in the
prospectus, if the prospectus is already
published, or inconsistent with the
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information required to be in the
prospectus, if the prospectus is published
afterwards.
Justification
The sentence in paragraph 3 of Article 15 creates confusion as to whether the inaccurate,
misleading or inconsistent nature of the prospectus must be checked up against the
expectation of investors or authorities. In the case of an advertisement that precedes the
prospectus, the consistency or accuracy of the information in the advertisement should be
evaluated not against subjective expectations, but rather against objective information that is
required to be in the prospectus, whenever this may be published. If the sentence is not
changed to clarify this point, it would leave too much room for censuring an advertising
campaign merely on the basis of subjective expectations of investors.
Amendment 39
Article 16, paragraph 1
1.
Every significant new factor,
material mistake or inaccuracy relating to
the information included in the prospectus
which is capable of affecting the
assessment of the securities and which
arises or is noted between the time when
the prospectus is approved and the final
closing of the offer to the public or, as the
case may be, the time when trading on a
regulated market begins, shall be
mentioned in a supplement to the
prospectus. Such a supplement shall be
approved in the same way and published
in accordance with at least the same
arrangements as were applied when the
original prospectus was published. The
summary, and any translations thereof,
shall also be supplemented, if necessary to
take into account the new information
included in the supplement.
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1.
Every significant new factor,
material mistake or inaccuracy relating to
the information included in the prospectus
which is capable of affecting the
assessment of the securities and which
arises or is noted between the time when
the prospectus is approved and the final
closing of the offer to the public or, as the
case may be, the time when trading on a
regulated market begins, shall be
mentioned in a supplement to the
prospectus. Such a supplement shall
normally be approved in a maximum of
three working days. The summary, and
any translations thereof, shall also be
supplemented, if necessary to take into
account the new information included in
the supplement.
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Justification
The supplement contains information that needs to be accessed by investors as soon as
possible. If the supplement were to be subjected to the same approval procedure as the
prospectus itself, this could mean that its approval could last several weeks which would
contradict the general principle concerning the immediate dissemination of price sensitive
information.Also, the supplement should normally be approved within three working days.
Amendment 40
Article 18, paragraph 1
1. The competent authority of the home
Member State shall, at the request of the
issuer or person responsible for drafting the
prospectus, within three working days from
that request provide the competent authority
of the host Member States with a certificate
of approval attesting that the prospectus has
been drawn up in accordance with this
Directive and a copy of said prospectus. If
applicable, this notification is accompanied
by the translation of the summary produced
under the responsibility of the issuer or
person responsible for drafting the
prospectus. The same procedure shall be
followed for any supplement to the
prospectus.
1. The competent authority of the home
Member State shall, at the request of the
issuer or the person responsible for drawing
up the prospectus and within three working
days following that request or, if the request
is submitted together with the draft
prospectus, immediately after the approval
of the prospectus, provide the competent
authority of the host Member States with a
certificate of approval attesting that the
prospectus has been drawn up in accordance
with this Directive and a copy of said
prospectus. If applicable, this notification is
accompanied by the translation of the
summary produced under the responsibility
of the issuer or person responsible for
drafting the prospectus. The same procedure
shall be followed for any supplement to the
prospectus.
Justification
For this regulation, a clarification would be helpful such that applications for certificates of
approval can already be made together with the application for the approval of the
prospectus.
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Amendment 41
Article 19, paragraph 2, subparagraph 1
2. Where an offer to the public is made or
admission to trading on a regulated market is
sought in one or more Member States
excluding the home Member State, the
prospectus shall be drawn up either in a
language accepted by the competent
authorities of those Member States or in a
language customary in the sphere of
international finance, at the choice of the
issuer, offeror or person asking for
admission, as the case may be. The
competent authority of each host Member
State may only require that the summary be
translated into its official language(s).
2. Where an offer to the public is made or
admission to trading on a regulated market is
sought in more than one Member State, the
prospectus shall be drawn up either in a
language accepted by the competent
authorities of those Member States or in a
language customary in the sphere of
international finance, at the choice of the
issuer, offeror or person asking for
admission, as the case may be. The
competent authorities of home and host
Member States may require that the
summary be translated into its official
language(s).
Justification
The issuer should be free to choose the language regime in all cases of cross-border issuing,
irrespective of whether the home Member State is involved or not. While the regime proposed
in the paragraph 19.2 is essentially useful, it should be extended to also those cases of issuing
that include the home Member State.
Amendment 42
Article 19, paragraph 3
3. Where an offer to the public is made or
admission to trading on a regulated market
is sought in more than one Member State
including the home Member State, the
prospectus shall be drawn up in a language
accepted by the competent authority of the
home Member State and shall also be made
available either in a language accepted by
the competent authorities of each host
Member State or in a language customary
in the sphere of international finance, at
the choice of the issuer, offeror, or person
asking for admission to trading, as the case
may be. The competent authority of each
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host Member State may only require that
the summary referred to in Article 5(2) be
translated into its official language(s).
Justification
See justification for amendment to article 19, paragraph 2, subparagraph 1
Amendment 43
Article 21, paragraph 2, subparagraph 1
2. Member States may allow their competent
authority or authorities to delegate tasks.
Except for delegation of the publication on
the Internet of approved prospectuses as
mentioned in Article 14, any delegation of
tasks relating to the obligations provided for
in this Directive and in its implementing
measures shall end on ............ *. Any
delegation of tasks to entities other than the
authorities referred to in paragraph 1 shall be
made in a specific manner stating the tasks
to be undertaken and the conditions under
which they are to be carried out.
2. Member States may allow their
competent authority or authorities to
delegate tasks. Any delegation of tasks
relating to the obligation provided for in this
Directive and in its implementing measures
are due to be reviewed 5 years after the date
of entry into force of this Directive. Any
delegation of tasks to entities other than the
authorities referred to in paragraph 1 shall be
made in a specific manner stating the tasks
to be undertaken and the conditions under
which they are to be carried out.
*
Five years after the date of entry
into force of this Directive.
Justification
Especially in smaller Member States the delegation of certain tasks mentioned in Chapter III
has a long tradition without having caused serious complaints. Therefore we propose to make
an assessment of the practise after 5 years and review if necessary the principle of delegation.
In addition, we suggest to the Commission to explore ways to guarantee the independence of
delegated bodies.
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Amendment 44
Article 21, paragraph 2, subparagraph 3
Member States shall inform the Commission
and the competent authorities of other
Member States of any arrangements entered
into with regard to delegation of tasks,
including the precise conditions regulating
such delegation.
Member States shall inform the Commission
and the competent authorities of other
Member States of any arrangements entered
into with regard to delegation of tasks,
including the precise conditions regulating
such delegation.
The assessment by the Commission as
referred to in Article 31 should give special
attention to possible conflicts of interest
and whether the competent authorities of
Member States should be entitled to
approve the appointment of the directors of
the delegated entities.
Justification
See justification for amendment to article 21, paragraph 2, subparagraph 1.
Amendment 45
Article 21, paragraph 4, point (d)
(d)
carry out on-site inspections in its
territory in accordance with national law,
in order to verify compliance with the
provisions of this Directive and its
implementing measures. Where
necessary under national law, the
competent authority or authorities may
use this power by applying to the relevant
judicial authority and/or in cooperation
with other authorities.
Deleted
Justification
The possibility for competent authorities to carry out on-site inspectiions is a
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disproportionate power for the case of the approval of prospectuses.
Amendment 46
Article 22, title
Professional secrecy and cooperation
between authorities
Professional secrecy and cooperation
between authorities as well as with other
entities
Justification
Competent authorities requiring suspension or prohibition of trading should cooperate
closely with their counterparts in other Member States in order to ensure a level playing field
between trading venues in Europe and ensure adequate investor protection. Furthermore,
market operators should be consulted, since an exchange of information between competent
authorities and market operators is key to ensure that adequate decisions are taken.
Amendment 47
Article 22, paragraph 2, subparagraph 1a (new)
2.
Competent authorities of
Member States shall cooperate with each
other whenever necessary for the purpose
of carrying out their duties and making use
of their powers. Competent authorities
shall render assistance to competent
authorities of other Member States. In
particular, they shall exchange information
and cooperate when an issuer has more
than one home competent authority
because of its various classes of securities.
Where appropriate, the competent authority
of the host Member State may request the
assistance of the competent authority of the
home Member State from the stage at
which the case is scrutinised, in particular
as regards a new type or rare forms of
securities. The competent authority of the
home Member State may ask for
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2.
Competent authorities of
Member States shall cooperate with each
other whenever necessary for the purpose
of carrying out their duties and making use
of their powers. Competent authorities
shall render assistance to competent
authorities of other Member States. In
particular, they shall exchange information
and cooperate when an issuer has more
than one home competent authority
because of its various classes of
securities,or where the approval of a
prospectus has been transferred to the
competent authority of another Member
State pursuant to Article 13 par 5. They
shall also closely cooperate when
requiring suspension or prohibition of
trading for securities traded in various
Member States in order to ensure a level
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information from the competent authority
of the host Member State on any items
specific to the relevant market.
playing field between trading venues and
protection of investors. Where appropriate,
the competent authority of the host
Member State may request the assistance
of the competent authority of the home
Member State from the stage at which the
case is scrutinised, in particular as regards
a new type or rare forms of securities. The
competent authority of the home
Member State may ask for information
from the competent authority of the host
Member State on any items specific to the
relevant market.
Competent authorities of Member States
shall consult with operators of regulated
markets as necessary and, in particular,
when deciding to suspend, or to ask a
regulated market to suspend trading or to
prohibit trading.
Justification
See justification for amendment to Article 22, title.
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EXPLANATORY STATEMENT
The prospectus directive is a central plank in the Financial Services Action Plan and will
contribute to the creation of a legal framework which enhances the conditions for raising of
capital via Europe's financial markets and improves disclosure standards for investors. It is
vital to reach consensus and ensure a rapid adoption of the directive.
The Council has taken on board a majority of the amendments of the European Parliament's
1st Reading and your Rapporteur broadly welcomes the Common Position. There are several
main issues which relate to the need to reinstate Amendments adopted by the Parliament at 1st
Reading eg. regarding choice of competent authority, exemption for government debt,
definition of qualified investor, approval periods and deemed approval, delegation, on-site
inspections. There are also some other more technical points which relate to new text which
has been inserted by the Council in accordance with new text in the amended proposal.
Choice of competent authority
Amendment 16 of the European Parliament established a free choice of EU competent
authority for both equity and non-equity securities. However, Article 2.1.(m) of the Common
Position provides a threshold whereby choice of competent authority is contemplated only for
non-equity securities whose denomination per unit is at least EUR 5 000.
In the interests rapid adoption, and taking account of the fact that the Council has already
moved a considerable way towards the Parliament's 1st Reading, your Rapporteur considers
that an appropriate compromise by the Parliament is to move the threshold away from the
arbitrary figure selected by the Council and to provide choice of competent authority for all
non-equity securities.
There is some rationale for this compromise since almost all equity issuers go at present to
their home market and regulator first. Although this locks in this situation for the future, it is
at least less disruptive than the original proposal of insisting that all issuers go to their home
regulator, even though currently they have choice on the debt side.
Convertible bonds and warrants: Related to the discussion on issuer choice is the lack of
clarity regarding the definition of "equity securities" and "non-equity securities". There is a
confusion in the Common Position concerning the categorisation of convertible bonds and
warrants, since in Article 2.1 (b) of the Common Position, convertible bonds and warrants
where the underlying shares are shares of the issuer are defined as "equity securities", whereas
Recital 12 refers to convertible bonds as "non-equity securities". Convertible bonds and
warrants should be classified as non-equity instruments in accordance with Recital 12.
Restriction of exemption for government debt
The Council has failed to incorporate Amendment 65/rev which restricted the exemption for
government debt only provided that their credit ratings were the same as the most
creditworthy Member States. Your Rapporteur considers that in the interests of proper
disclosure for investors, Member States and their sub-national authorities should not be
excluded from the directive. The Council text does provide that sovereign issuers may only
benefit from the passport if they draw up a prospectus (Article 1.3). This does not, however,
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resolve the issue of information provision to investors.
A number of new Member States have bonds outstanding with ratings hovering just above
investment grade (eg Poland, Latvia, Lithuania, Slovakia) and their bonds cannot therefore be
regarded as comparable to those, say of top rated issuers like the Federal Republic of
Germany or the Republic of France. Several sub-national authorities issue non-investment
grade bonds. It is not in the interests of investor protection to pretend that all EU government
bonds are equivalently secure, and this has been recognised by the Member States themselves
in the ‘no bail-out’ clause of the Maastricht treaty.
Definition of Qualified Investors
The Common Position allows Member States, subject to mutual recognition, to choose not to
allow natural persons and SMEs to be considered as "qualified investors" even if they
expressly ask to be considered as such. This is counter to Amendment 15 since investors are
capable of deciding for themselves whether they should be deemed qualified investors and the
provision would create a non-harmonised definition.
The new concept of a competent authority having to keep a "register" of natural
persons/SMEs who are considered as qualified investors would entail an unjustified
administrative burden without significant commensurate benefits for investors. It would also
be inconsist with the Investment Services Directive.
Approval periods
Approval periods are crucial since issuers should not be subject to bureaucratic delays and
queues which paralyse EU capital raising. In order to complete the overall improvement in
disclosure by issuers and given that issuers will have to tighten up procedures, competent
authorities should also strive to improve their practices:
General approval period: Article 13.2 provides the competent authority with an
unnecessarily lengthy 15 working days for the notification of its decision to issuers.
Amendment 36 should be re-instated, providing for 7 working days.
Deemed approval: Amendment 38 should be included that if the competent authority does
not react, the prospectus is deemed to be approved. The Council provides that non-action
should be deemed to be a rejection, which would involve significant administrative delay.
However, deemed approval should only apply when the issuer is locked into one regulator.
Where issuers have choice, they are able to avoid queues and delays by going elsewhere.
IPOs: Amendment 37 should be re-instated regarding an approval delay of 20 working days
for an IPO, instead of 30 working days.
Incomplete documents: This new wording should be tightened up so that only "materially"
incomplete information incurs the publication of a supplement. Also, the competent authority
should notify the issuer if documents are incomplete within 5 working days.
Delegation
Amendment 7 and 56 should be reinstated, which provide that delegation should take place
within a clearly defined framework. Also, when admission to trading is sought in a country
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other than the home Member State, the competent authority should not delegate power. Also,
delegation is undertaken in several Member States and there appears to be no investor
protection reason why delegation should be permitted only for 5 years.
On-site inspections
Amendment 57 of the European Parliament has not been reflected which had deleted the
power for a competent authority to carry out on-site inspections. This provision is
disproportionate and should be deleted.
Base prospectus
A definition should be included for this new concept. In the interests of consistency with the
optional shelf-registration format, the issuer should be permitted to use a base prospectus, a
shelf registration or a single document. Also, it is not practical that if the final terms of the
offer are not included in either the base prospectus or a supplement , they should be filed
separately since the final terms of an issue that is part of a programme cannot be known in
advance, hence will not be available to be included in the base prospectus or supplement.
Definition of offering programmes
The new definitions in Article 2.1 (k) and 2.1 (l). However they are problematic (and are
counter to Amendment 20), as when a programme is set up the issuer will not be certain of the
number of issues which will be made in the following 12 months - there might not be a further
issue during the period which would mean that the first issue was not part of an offering
programme and therefore that the type of prospectus approved was incorrect. Very few issues
are "on tap" in that they are willing to issue on every business day if an investor requests to
buy an issue from the issuer. As is market practice, it should be possible for different
securities to be issued as part of the same offering programme.
Private placements/ Resales
In the Common Position, the definition of public offer applies to decide whether a prospectus
should be published for resales, yet for private placements, clear criteria are applied in (a) to
(e). It should be ensured that both situations are eligible for the same clear criteria tests in (a)
to (e) in order to enhance legal certainty.
Securities representing less than 10% of the market
Part of Amendment 20 provided that securities representing over 12 months less than 10% of
the securities already admitted to trading on regulated markets should be exempted from the
need to publish a prospectus. The Common Position allows this exemption only for the
relevant "shares".
Internet publication
The Common Position imposes in Article 14.2 a new requirement on issuers that home
Member States may require issuers publishing their prospectus in a printed form, to also
publish it electronically on the issuers website. This obliges the issuer to use its own website
and the related costs and the issuer should be given the choice to publish the prospectus on the
website of the relevant market.
Advertising
Article 15.3 creates confusion as to whether the inaccurate, misleading or inconsistent nature
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of the prospectus must be checked up against the expectation of investors or authorities. The
consistency/accuracy should be evaluated not against subjective expectations, but against
objective information that is required to be in the prospectus.
Supplement
Content: The supplement contains information that needs to be accessed by investors as soon
as possible. If the supplement were to be subjected to the same approval procedure as the
prospectus itself, this could mean that its approval could last several weeks which would
contradict the general principle concerning the immediate dissemination of price sensitive
information. The supplement should be normally be approved within three working days.
Right of withdrawal: The materiality test is necessary in order to prevent a potential abuse of
the right by investors who might simply change their minds.
Summary
The language regime in the common position is not ideal, since it will allow certain regulators
to add costs for issuers by insisting on a full prospectus produced in at least two languages
rather than one. However, that provision is likely to be applied by relatively few regulators,
and may be regarded as a price for the acceptance of the directive. However, a provision
allowing regulators to insist on official language summaries for bonds with a minimum
denomination of €50,000 should be struck out, since this is a professional marketplace where
such investor protection is unnecessary and burdensome, adding to both costs and time delays.
Incorporation by reference
Simultaneous filing should be permitted. Also, the documents that can be incorporated by
reference should not be limited to only those filed under EU law, as this would restrict the
development of EU markets by discouraging 3rd country issuers from issuing in the EU.
Icorporation by reference should also be applicable to offering programmes.
Professional secrecy
The Common Position has expanded the provisions on professional secrecy and co-operation
in accordance with the amended proposal. Competent authorities which require suspension or
prohibition of trading should co-operate with their counterparts in other Member States and
should consult the market.
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