On 30 November 2015, the European Commission (EC) published a proposed new Prospectus Regulation (PD3) which will repeal and replace the existing Prospectus Directive and Prospectus Regulation. PD3 is on a fast track and is an important step in building the Capital Markets Union. Once finalised, PD3 will enter into force 20 days after publication in the Official Journal and will take “direct effect” in Member States 12 months thereafter (probably late 2017 or early 2018).
PD3 is intended to solve various problems present in the current regime, including:
- Prospectuses being unwieldy “liability management” tools with confusing summaries and numerous generic risk factors;
- SMEs continuing to avoid the capital markets; and
- Reduced liquidity and too few retail investors resulting from the large denominations encouraged by the public offer exemptions for EUR100,000 denominations and the wholesale disclosure regime.