The new Prospectus Regulation (EU Regulation 2017/1129), which repeals the Prospectus Directive (EC Directive 2003/71/EC) entered into force on June 30, 2017. It creates a new prospectus regime and will be directly applicable in Malta on July 21, 2019, with some provisions having been applicable earlier on July 20, 2017 and July 21, 2018.

The Prospectus Regulation is considered as an essential step towards the completion of the Capital Markets Union, the principal aim of which is to help businesses tap into more diverse sources of capital from anywhere within the European Union and help markets work more efficiently.

New exemptions from the requirement to publish a prospectus are introduced by the Prospectus Regulation. One such exemptions is the “small scale offerings threshold” which has increased from €100,000 to €1 million with the result that the raising of capital of a value below €1 million (rather than €100,000) will no longer require a prospectus.

The new regulation aims to make it less costly to issue a prospectus

The new prospectus regime adapts applicable disclosure requirements to different types of securities, issuers, offers and admissions. In this respect, different rules apply to the following types of prospectuses: a standard prospectus, a wholesale prospectus for non-equity securities, a base prospectus, a simplified prospectus for secondary issuances, and an EU Growth prospectus, the latter prospectus being a new prospectus available to SMEs in a simplified and standardised form.

In the interest of investors, the new prospectus regime requires issuers to limit risk factors to those determined to be material and specific to the issuer and corroborated by the content of the prospectus. Additionally, risk factors will have to be categorised according to their nature, with the most material listed first.

The Prospectus Regulation aims to make it less costly for issuers to produce a prospectus, to improve the value of the prospectus as an information tool for investors and to create a proportionate regime for SMEs to draw up a prospectus and access capital markets. The changes which will be brought about by the Prospectus Regulation are, largely, welcome.

These and other salient developments shaping the capital markets will be discussed at Camilleri Preziosi’s Capital Markets Conference being held at the Corinthia Palace Hotel, Attard, on May 31 between 2 and 6pm. For more information contact capitalmarkets@camilleripreziosi.com, call on 21238989 or visit our website www.camilleripreziosi.com