On 30 November 2015, the European Commission published a proposal for new prospectus rules (the “Prospectus Regulations”) to seek to improve access to the capital markets for issuers and simplify information for investors. The Prospectus Regulations will (if adopted) replace the current Prospectus Directive (2003/71/EC). 

The new Prospectus Regulations includes the following key changes to the Prospectus Directive Regime.

Listing prospectus exemption – subsequent offering
According to the Prospectus Regulations, a subsequent listing of securities within the same class and on the same regulated market will not require the issuer to publish a listing prospectus if the securities to be listed represent less than 20% of the issuers existing issued share capital already admitted to trading on the same regulated market over the previous 12 months. The current 10% exemption is one of the most commonly relied upon exemptions from the requirement to publish a prospectus. The proposal to raise the threshold to 20% is therefore expected to save costs for issuers and be welcomed by market players.

Shorter prospectus summary
The summary must not exceed six printed A4-sized pages (using characters of reasonable size) and shall be divided on four separate sections:  i) warnings, ii) key information of the issuer, iii) key information on the securities and iv) key information on the offer/admission. The prospectus summary shall not contain cross-references to other parts of the prospectus or incorporate information by reference.

Risk factors
The risk factors shall be limited to those risk factors which are material and specific to the issuer and its securities and must be allocated across two or three categories based on materiality based on further guidelines to be developed by ESMA. The aim is to curb the tendency of “overloading” the prospectus with generic risk factors which can obscure the more specific risk factors that investors should be aware of.

Incorporation by reference
The range of information that may be incorporated in a prospectus by reference will be extended, provided that the information is published electronically and drawn up in a language accepted by the relevant Member State. Languages currently accepted in Norway are English, Swedish, Danish and Norwegian. This includes all regulatory information, annual and interim financial information, audit reports and financial statements, corporate governance statements and memorandum and articles of association.         

Minimum disclosure requirements for secondary issuances and SMEs
The new “minimum disclosure” regime contains two sets of rules, one for secondary issuance and the other for small-and medium sized enterprises (SMEs).

Issuers who have securities admitted to trading on a regulated market or an SME growth market for at least 18 months and issue additional securities of the same class will be able to prepare a prospectus which contains a minimum of financial information covering the last financial year only (which may be included by reference). In addition, the prospectus must include information about the terms of the offer, use of proceeds, risk factors, board practices, directors’ remunerations, shareholder structure or related-party transactions.

SMEs without securities admitted to trading on a regulated market may choose to prepare a distinct prospectus which may focus on information that is material and relevant for companies of such size. ESMA will provide further guidelines on the contents of a SME-prospectus.

Universal registration document
The Prospectus Regulations introduces a new feature called “universal registration document”. This is an optional shelf registration document for “frequent issuers” with its registered office in a Member State (not available for non-EEA issuers) which already has securities admitted to trading on a regulated market or MTF. Where such issuer prepares a registration document on an annual basis, it will be able to utilize a fast track procedure for approval within 5 working days instead of 10 days. This new regime will also allow “frequent issuers”, under certain circumstances to use its universal registration document to fulfill its on-going disclosure obligations under the Transparency Directive by integrating the annual and half-yearly report in the universal registration document.

Status and implementation of the proposed changes
The Prospectus Regulations will be sent to the European Parliament and the Council for discussion and adoption and the contents of the regulations could therefore be changed.  The Prospectus Regulations will be legally binding in all EU member states without transportation into national law, but needs to be implemented by law in the EEA states. The Prospectus Regulations is expected to be implemented in Norwegian law sometime in mid- 2017 at the earliest.