Key changes in the revised prospectus regulation

The revised Prospectus Regulation, as part of the EU Listing Act, represents a major step forward in the modernisation of Europe’s capital markets. It introduces several important changes designed to simplify the listing process, reduce costs, and improve the quality of information provided to investors. The main changes include:

A simplified prospectus for secondary offerings

One of the most significant changes is the introduction of a simplified prospectus for secondary offerings by companies already listed on regulated markets. Companies that have been listed for a sufficient period and have reached a certain market capitalisation will benefit from reduced disclosure requirements.

This streamlined approach eliminates redundant information, as investors can access up-to-date financial and operational data through the company’s ongoing reporting obligations. This change is expected to reduce the time and cost associated with preparing a prospectus for follow-on offerings, making it easier for listed companies to raise additional capital.

EU Follow-On Offerings

The regulation also introduces a new type of prospectus tailored for secondary issuances by listed companies. The EU Follow-On Offering (“EU FO”) is a shorter and more standardised document that focuses on the specific terms of the offering and any material changes since the last annual report, rather than repeating information already available to the market. This change reduces duplication and allows for faster access to capital markets, particularly benefiting frequent issuers.

Proportionality for SMEs

Recognising the challenges faced by SMEs in accessing capital markets, the revised regulation introduces proportionality measures to reduce the burden on smaller issuers. SMEs and companies with a smaller market capitalisation will benefit from lighter disclosure requirements, including shorter prospectuses and exemptions from certain financial reporting obligations.

Additionally, the new rules allow SMEs to use a universal registration document (“URD”), a standardised template for annual disclosures, which can be converted into a prospectus when needed. This simplifies the process for SMEs to prepare for public offerings and encourages more small businesses to consider listing.

Expanded EU Growth Prospectus

The scope of the EU Growth Prospectus is expanded from a simplified disclosure regime initially introduced for SMEs. The updated rules make the EU Growth Prospectus available to a broader range of smaller issuers. This simplified prospectus focuses on key data points relevant to investors, reducing the cost and complexity of preparing a full prospectus and making it an attractive option for smaller issuers.

Digitalisation and accessibility

The importance of digitalisation in improving the accessibility and usability of prospectuses is also noted and emphasised. Issuers are encouraged to use digital formats to make these more user-friendly and easier to navigate. Additionally, the regulation mandates the use of machine-readable formats for certain data, enabling investors and analysts to process and analyse information more efficiently. This shift toward digitalisation aligns with broader trends in financial markets and reflects the growing demand for accessible and transparent information.

Streamlined approval process

To further reduce the administrative burden on issuers, the revised regulation introduces a streamlined approval process for prospectuses. National competent authorities (“NCAs”) are required to approve prospectuses within a set timeframe for standard issuances and a shorter period for secondary offerings. This accelerated process is expected to improve the efficiency of capital markets and shorten the listing timeline.

Enhanced investor protection

While the revised regulation focuses on simplification, it also includes measures to enhance investor protection. Issuers are required to provide a summary of the prospectus in a standardised format, making it easier for investors to compare different offerings.

The summary must include key information about the issuer, the securities being offered, and the associated risks. Additionally, the regulation introduces stricter requirements for the disclosure of environmental, social, and governance (“ESG”) factors, reflecting the growing importance of sustainability in investment decisions.

Implications for issuers and investors

The changes introduced are expected to have a significant impact on both issuers and investors. For issuers, the simplified disclosure requirements and streamlined approval process will reduce the cost and complexity of accessing capital markets. This is particularly beneficial for SMEs and smaller issuers, which often face disproportionate barriers to listing.

For investors, the new rules aim to improve the quality and accessibility of information, enabling more informed decision-making. The emphasis on digitalisation and standardised summaries will make it easier for investors to analyse and compare investment opportunities.

Conclusion

By simplifying disclosure requirements, reducing administrative burdens, and enhancing investor protection, the new rules aim to make public listings more accessible and attractive for companies of all sizes. These changes are expected to stimulate growth, encourage innovation, and strengthen the EU’s position as a global

financial hub. As the regulation takes effect, stakeholders will need to adapt to the new requirements and seize the opportunities presented by a more dynamic and inclusive capital market.

This article was authored by Hector Brito, Tribecca Abogados.