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UK Implementation of Amendments to the Prospectus Directive, Contributed by Adrian Brown and Sam Robinson, Nabarro LLP

Wednesday, September 28, 2011

The Prospectus Directive1 was implemented in the UK in 20052 and, in summary, outlines the circumstances in which a prospectus is required in relation to public offers of securities and admissions of securities on a regulated market. Where such a prospectus is required, the Prospectus Directive also outlines the format and content of that prospectus. Similar to other European directives, a prospectus that complies with the requirements in the Directive can be "passported" into other countries within the European Economic Area (EEA). The Prospectus Directive contained a clause that required the European Commission to review and assess the application of the legislation once it had been in force for five years. In this respect, the Commission has undertaken this review and concluded that although the overall effect of the Prospectus Directive has been positive, some improvements could be made.3 As a result of the Commission's review, certain amendments to the prospectus regime under this legislation are outlined in an amending Directive,4 (PD Amending Directive) which must be implemented in EEA Member States by 1 July 2012. This article outlines the UK's implementation of these amendments. While this article focuses on amendments being made to the Prospectus Directive, the PD Amending Directive is also making certain amendments to the Transparency Directive.5

Amendments Already Implemented in the UK

Following the financial crisis, the UK Government published a consultation document entitled "Financing a Private Sector Recovery."6 This considered the impact of the financial crisis on finance for businesses and whether there are any future risks which should be addressed in the short term. One of the points raised in feedback related to the relatively high cost involved in producing a prospectus under the Prospectus Directive, with an estimate that this amounted to between 7 and 12 percent of the funds raised where the total of the offer was below

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