EN    EN  EN 
 
EN    EN  COMMISSION OF THE EUROPEAN COMMUNITIES  
Brussels, 23.9.2009 
SEC(2009) 1223 
COMMISSION STAFF WORKING DOCUMENT  
 
accompanying the  
Proposal for a  
 
DIRECTIVE OF THE EUROPEAN P ARLIAMENT AND OF THE COUNCIL  
 
amending Directives 2003/71/EC on the prosp ectus to be published when securities are 
offered to the public or admitted to trad ing and 2004/109/EC on the harmonisation of 
transparency requirements in relation to information about issuers whose securities are 
admitted to trading on  a regulated market  
  
IMPACT ASSESSMENT   
{COM(2009) 491 final}  
{SEC(2009) 1222}  
 
EN    EN  
TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 3 
2. Procedure ................................................................................................................... .. 4 
3. Problem Definition....................................................................................................... 7 4. The baseline scenario, subsid iarity and proportionality............................................. 17 
5. Objectives.................................................................................................................. . 19 
6. Policy options............................................................................................................. 2 0 
7. Comparing the options ............................................................................................... 23 8. Analysis of impacts.................................................................................................... 42 9. Monitoring and Evaluation ........................................................................................ 49 Annex I – Reports .............................................................................................................. ...... 50 
Annex II – Outcome of the consultation .................................................................................. 52 Annex III – Meeting on the consultation of the Prospectus Directive ..................................... 53 
Annex IV – Assessment of the Prospectus Directive............................................................... 58 Annex V – Figures .............................................................................................................. ..... 65 
Annex VI – Estimation of Reducti on in Administrative Burden............................................. 68 
Annex VII – Policy options..................................................................................................... . 72 
Annex VIII – Number of Prospectus es Approved and Passports Sent – Source: CESR data . 80 
Annex IX – Additional minor changes .................................................................................... 82 
 
EN 3   EN 1. INTRODUCTION  
In January 2007, the European Commission launched the Action Programme for 
reducing administrative burdens in the Eu ropean Union to measure administrative 
costs arising from legislation in the EU and reduce administrative burdens by 25% by 
20121. The Prospectus Directive2 has been identified as one area that contains a 
number of burdensome obligations for comp anies, some of which could possibly be 
alleviated3. In addition, Article 31 of the Prosp ectus Directive requires the European 
Commission to assess the application of the Directive five years after its entry into 
force4 and to present, where appropri ate, proposals for its review.  
The financial crisis has provi ded a stark reminder of the importance of transparency 
and risk management in the financial market s. In the context of the current financial 
crisis, the Prospectus Direc tive has provided a sound framew ork in terms of investor 
protection and disclosure ob ligations for the financial instruments it covers. As 
stressed out in the ECOFIN Roadmap for fina ncial stability, the absence of accurate 
and timely information on exposures of banks to credit risk has be en the key factor 
for the generalized loss of confidence in financial markets5.  
Assessing the applicatio n of the Prospectus Directive,  the European Commission has 
concluded that the framework created by the Prospectus Dire ctive has eased the 
possibility to offer securities in diffe rent Member States. This has boosted 
competition among issuers and has generated a wider variety of products that are now available to investors, ensuring at the same time investor protection through a 
harmonized set of rules. The majority of  market participants believe that the 
prospectus has had an important role to pl ay as a legal document for investors in the 
single European market of securities and that the Prospectus Directive has had a 
significant positive impact on the quality  and appropriateness of information 
                                                
 
1 See http://ec.europa.eu/enterprise/admin-burdens-reduction/home_en.htm   
2 Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the 
prospectus to be published when securities are o ffered to the public or admitted to trading and 
amending Directive 2001/34/EC. OJ L 345, 31.12.2003, p. 64.  
3 For details see Annex VI.  
4 The Prospectus Directive entered into force on 31 December 2003. 
5 Questions about the adequacy of transparency ha ve been raised with respect to Special Purpose 
Vehicles (SPVs), banks' disclosure of securitization operations and exposures to Special Investment 
Vehicles (SIVs), the complexity in the structuring, risk measurement and valuation of structured finance 
products. These issues need to be tackled through the new rules on Credit Rating Agencies (CRAs), a 
sound and consistent implementation of the securiti zation related Capital Requirement Directive (CRD) 
disclosure requirements and a reliable valuation a nd auditing of illiquid assets . In particular, in the 
banking sector, there is the need  for clearer rules on: (i) large exposures, (ii) banks' trading book 
exposures, (iii) enhanced cooperation between supervisors, (iv) improvement of risk management 
standards by non-bank investors and (v) banks' liquidity requirements. The Regulation on CRAs has 
been approved by the European Parliament and the Council on 23 April 2009. P6_TA-
PROV(2009)0279. Moreover, the European Commission will table a proposal on CRD to further 
strengthen capital requirements for banks and investment firms in June. COM(2008) 602 final. On standards to be used for the valuation of financial instruments, ECOFIN Council reiterated on 9 June 
2009 a call for IASB to work urgently to achieve clarity and consistency in the application of standards 
used for the valuation of assets in distressed and inactive markets.  
 
EN 4   EN available to investors6. Therefore the Prospectus Dir ective has met its objectives of 
market efficiency and investor protection.  
However, despite these achievements, there is  still progress to be made. In particular, 
in order to further enhance investor prot ection and thus respond effectively to the 
current financial crisis, the summary of the prospectus should be improved only in terms of simplicity and actual readability. This exercise will be consistent with the approach to be adopted following the Commission's Communi cation on Packaged 
Retail Investment Products, which ai ms for horizontal requirements on pre-
contractual disclosures and se lling practices for a wide ra nge of retail investment 
product
7. Moreover, in order to simplify a nd improve the application of the 
Directive, increase its effectivene ss and enhance the EU's international 
competitiveness, the Commission has put forwar d suggestions for its review with the 
objective of reducing administrative burdens  for companies raising capital in the 
securities markets. This is  consistent with the objective of maintaining and, when 
necessary, enhancing the level of investor protection envi saged in the Directive and 
ensuring that the information provided is sufficient and adequate to cover the needs 
of retail investors.  
This document is the impact assessment accompanying the initiative for the review 
of the Prospectus Directive; it does not pre- judge the final form of any decision to be 
taken by the European Commission.  
2. PROCEDURE  
The review of the Prospectus Directive and its impact assessment have been prepared 
in accordance with the Commission's approach to applying the better regulation principles. The initiative is the result of  an extensive and continuous dialogue and 
consultation with all major stakeholders, including securities regulators, market 
participants (issuers, intermediaries and i nvestors), and consumer s. It is built upon 
the observations and analysis contained in the reports published by the Committee of European Securities Regulators (CESR)
8 and by the European Securities Markets 
Expert Group (ESME)9. The initiative and the impact as sessment make also use of 
                                                 
6 See CSES study, p.52. 58% of the respondents to the survey think that the Prospectus Directive has had 
a positive impact in terms of investor protection and quality of information for investors. This has been 
confirmed in the context of the curre nt financial crisis by the contri butions received from stakeholders 
participating in the public consultation launched from 9 January to 10 March 2009.  
7 The exercise of the review of the Prospectus Directive is not a duplication of the work to be undertaken 
under the Commission's Communicati on on Packaged Retail Investment  Products because this will 
cover different types of retail investment products (s uch as unit-linked life insurance, investment funds, 
certain structured notes and certif icates) which are outside the scope of the Prospectus Directive and do 
not benefit from the level of investor protection now granted by the Prospectus Directive.  
8 CESR is an independent advisory group to the European Commission composed by the national 
supervisors of the EU securities markets. See the European Commission's Decision of 23 January 2009 
establishing the Committee of European Securities Regu lators 2009/77/CE. OJ L25, 23.10.2009, p. 18). 
The role of CESR is to improve co-ordination among securities regulator s, act as an advisory group to 
assist the EU Commission and to ensure more consistent and timely day-to-day implementation of 
community legislation in the Member States.  
9 ESME is an advisory body to the Commission, composed of securities markets practitioners and 
experts. It was established by the Commission in April 2006 and operates on the basis of the 
Commission Decision 2006/288/EC of 30 March 2006 setting up a European Securities Markets Expert 
 
EN 5   EN the findings of a study completed by the Cent re for Strategy & Evaluation Services 
(CSES)10, and of the comments received from stak eholders participat ing in the public 
consultation launched from 9 January to 10 March 2009.  
2.1. CESR report  
The CESR report on the supervisory functioning of the Prospectus Directive11 was 
adopted and published in June 2007. The repor t is based on evidence gathered from 
market participants by means of a cal l for evidence opened  in November 2006, 
including an open hearing in  January 2007, as well as on st atistical data provided by 
regulators. The report contains a detailed summary and analysis of the 38 responses 
received. It aims at assessing whether, after almost two year s in operation, the 
prospectus regime is achieving its objectiv es of investor protect ion, reduction in the 
cost of capital, and development of  the single market for securities12.  
2.2. ESME report  
The ESME report on the Prospectus Directive13 was published in September 2007 
and reflects the views and practical experi ence of ESME members. It assesses the 
effectiveness of the Prospectus Directive in achieving its primary objectives of 
investor protection and market efficien cy; identifies significant areas where the 
Directive may not have achieved its intende d effect, or where lack of clarity or 
flawed provisions are causing problems for market participan ts; and sets out detailed 
comments and suggestions on specific articles14.  
2.3. CSES study  
The "Study on the Impact of the Prosp ectus Regime on EU Financial Markets"15 was 
completed in June 2008 by the CSES. The study gives an overview of the impact of certain aspects of the Prospectus Directiv e on EU financial markets and supplements 
the evidence provided in the CESR and ESME reports. It also addresses some 
additional issues by providing qualit ative and quantitative evidence. 
16 
                                                                                                                                                         
Group to provide legal and economic advice on the ap plication of the EU securities Directives (OJ L 
106, 19.4.2006, p. 14–17). 
10 CSES is a private consultancy firm that carried out the study in response to a request for services in the 
context of the Framework Contract for Evaluation and Impact Assessment of Internal Market 
Directorate General activities.  
11 Ref. CESR/07-225, available at www.cesr-eu.org. 
12 See Annex I for a short summary of the CESR Report.  
13 The report is available at http://ec.europa.e u/internal_market/securities/esme/index_en.htm. 
14 See Annex I for a short summary of the ESME Report.  
15 The study is available at http://ec.europa.eu/internal_market/securities/prospectus/index_en.htm . The 
opinions expressed in the Study by CSES do not necessarily reflect the position of the European 
Commission. CSES is a private firm that was contr acted by the European Co mmission to undertake a 
fact finding exercise in relation to the review of th e Prospectus Directive. The statements and opinions 
expressed in the study are the responsibility of the firm. The European Commission does not endorse 
the CSES report, but uses it as a source of informat ion for the review of the Prospectus Directive.  
16 See Annex I for a short summary of the CSES Study.  
 
EN 6   EN 2.4. Public consultation  
On 9 January 2009, the European Commi ssion launched a two months public 
consultation on the review of the Prosp ectus Directive. For the occasion the 
Commission services made available to the public a consultation document with 
detailed suggestions for changes in the Directive, together with a background 
document explaining the reasoning for thos e changes as well as addressing some 
further issues where no concrete legislativ e suggestions were ma de. The Commission 
services received 121 contributions. The non-confidential contributions can be 
consulted in the Commission website17.  
2.5. Targeted discussion with 30 EU associations  
On 12 March 2009, the Commission services in vited 30 EU associations to express 
their views on the review of  the Prospectus Directive18. The discussion focused on 
the impact of the suggestions on the obj ectives of investor  protection, market 
efficiency, reduction in cost of capital, and development of the single market for 
securities. These views have been taken in to account in this impact assessment.  
2.6. Steering Group  
The Steering Group for this Impact Assessment was formed by representatives of a 
number of services of the European Commission, namely the Directorate General 
Internal Market and Services, the Direct orate General Competi tion, the Directorate 
General Economic and Financial Affairs, the Directorate General Enterprise, the 
Directorate General for Health and Consumer s, the Legal Service and the Secretariat 
General. This Group met three times, on 7 November 2008 and on 6 and 24 March 2009. The contributions of the members of the Steering Group have  been taken into 
account in the content and shape of this im pact assessment. The Directorate General 
Justice, Freedom and Security and the Directorate General Employment, Social 
Affairs and Equal Opportunities were invited to join the last meeting
19.  
2.7. Impact Assessment Board  
DG MARKT services met the Impact Assessment Board on 27 May 2009. The 
Board analysed this Imp act Assessment and delivered  its opinion on 29 May 2009. 
During this meeting the members of the Board provided DG Markt services with 
comments to improve the content of the Impact Assessment that led to some modifications of this final draft. These are the most relevant ones:  
– The analysis in the report should be pl aced in a broader c ontext, notably with 
regard to the reflections following the fi nancial crisis and th e parallel work on 
product disclosure for packaged retail products;  
                                                
 
17 See http://ec.europa.eu/internal_market/securities/prospectus/index_en.htm . See Annex II for a short 
summary of the consultation results.  
18 See Annex III for the outline of the discussion and the list of participants.  
19 In accordance with the rules for th e elaboration of impact assessments the minutes of the last meeting of 
the steering group have been submitted to the Impact Assessment Board together with this impact 
assessment. 
 
EN 7   EN – The case for additional EU legislative act ion should be better substantiated by 
analysing possible improvements in the im plementation of the current framework 
and clarifying the roles currently play ed by Member States and by the Committee 
of European Securities Regulators;  
– The analysis of the problems affecting sm all quoted companies and credit entities 
and the solutions proposed in the report should be strengthened.  
– The DG MARKT services incorporated in this final draft of the Impact 
Assessment Report the recommendations in the opinion of the Impact Assessment Board and the technical comments.  
3. P
ROBLEM DEFINITION  
After five years of its entry into force, the general assessment of the overall effect of 
the Prospectus Directive is positive. A general assessment of the Prospectus 
Directive with information on the cost of  producing a prospectus can be found in 
Annex IV. Despite the general success of the Prospectus Directive, there is evidence 
about some burdens and legal uncertain ties that increase cost and create 
inefficiencies hampering the process of  fundraising for companies and financial 
intermediaries in the EU. These problem s could be divided in two groups: (i) 
ineffectiveness derived from the lack of lega l clarity, and (ii) situ ations of unjustified 
burdensome requirements imposed to companies raising funds from securities markets and to the intermediaries involved. These two groups of problems have been 
tackled in this impact assessment bearing in mind the importance of enhancing the 
level of investor protection envisaged in the Directive and ensuring that the 
information provided is sufficient and adequate  to cover the needs of retail investors, 
particularly in the context of the cu rrent international financial crisis.  
3.1. Ineffectiveness derived from the lack of legal clarity 
There are situations of ineffectiveness derived from the lack of legal clarity or 
inconsistencies in the legal framework. The lack of legal certainty makes issuers and intermediaries liable for unexp ected risks. This may increas e the cost of legal advice 
and – in order to be protected against any contingency – issuers and intermediaries include non-mandatory disclo sure in the prospectus. The prospectus therefore 
becomes longer and obscure for retail investors.  
3.1.1.  Obligations in case of placement of securities through financial intermediaries 
(retail cascade) 
Article 3 requires the publica tion of a prospectus when securities are offered to the 
public (paragraph 1) and when they are ad mitted to trading on a regulated market 
(paragraph 3). Paragraph 2 sets out a number  of circumstances in which an offer of 
securities to the public is exempt from the requirement to publish a prospectus. The 
lack of clarity in Article 3(2) seems to  be causing problems for issuers in some 
markets where securities are distributed by "retail cascade". A retail cascade typically 
occurs when debt securities are sold to i nvestors (other than qua lified investors) by 
intermediaries and not directly by the issuer itself. Respondents to the various consultations have raised two points of uncertainty:  
 
EN 8   EN - it is unclear how the requirement to produce and update a prospectus, and the 
provisions on responsibility and liability, should apply when securities are placed 
by the issuer with financial intermediari es and are subsequently, over a period 
that may run to many months, sold on to re tail investors, possibly through one or 
more additional tiers of intermediaries; and 
- where a prospectus is produced, it is uncl ear how the disclosure requirements in 
Annex V of the Prospectus Regulat ion apply to the multiple sales by 
intermediaries that make up the retail cascade20.  
The problem is only experienced by issuers in a limited number of EU markets. This 
may reflect established differences in di stribution patterns (i.e. selling by retail 
cascade may be common in some markets but not in others); or it may arise from 
differences in national implementation and a pplication of the final indent of Article 
3(2) and in the way a prospectus is used by persons other than those responsible for drawing it up. However, in those markets where it is experienced, it may cause some 
issuers to limit or suspend their retail debt programmes
21. The cost incurred in the 
event of a retail cascade is highly depe ndent on the obligation imposed on financial 
intermediaries. It is not possible to arrive  to any reliable estimate about the precise 
magnitude of this problem due to the divers ity and the very natu re of the markets. 
However, the cost of producing a non-equity prospectus is estimated to an average of € 63,000 in the CSES study.
22  
3.1.2.  Divergent definitions for qualified investors and professional clients  
The prospectus regime for qualified invest ors is different from the regime for 
professional clients set out in MiFID23. Article 2(1)(e) of th e Prospectus Directive 
defines qualified investors and Article 3( 2)(a) exempts offers of securities to 
qualified investors from the requirement of a prospectus. The Directive allows 
certain natural persons and small and medium-s ized enterprises to ask to be treated as 
qualified investors, and under Ar ticle 2(2) it requires them to register in a national 
register available to all issuers.  
                                                 
20 Particularly those under the heading "terms and conditions of the offer". See point 5 of Annex V of the 
Prospectus Regulation (Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained 
in prospectuses as well as the form at, incorporation by reference and publication of such prospectuses 
and dissemination of advertisements. OJ L 149, 30.4.2004, p.1) 
21 "For instance, the German comp etent authority considers that a Prospectus Directive compliant 
Prospectus needs to be prepared the first time a public offer is made (i.e. the first time a product is sold 
that does not qualify for on e of the exemptions within the Prospectus Directive) and that this prospectus 
is valid for all subsequent stages. The legal liability for the product sold at retail level would then lie 
with the issuer of the Prospectus Directive complia nt prospectus. In the UK, on the other hand, the 
competent authority has so far consid ered that a Prospectus Directive compliant prospectus is required 
every time an offer to the public is made. Clearly, this interpretation of the Prospectus requirements is 
much more costly for issuers and this may, in so me cases, affect the development of the retail bond 
market." (CSES Report, p 62-63) 
22 See Figure 8 in Annex IV.  
23 Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in 
financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 
2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC. 
OJ L 145, 30.4.2004, p. 1-44. 
 
EN 9   EN Annex II of MiFID defines natural and lega l persons that can request investment 
firms to provide them investment services  under the special treatment reserved to 
professional clients. The definition of prof essional clients and e ligible counterparties 
in MiFID is wider than the definition of  qualified investors in the Prospectus 
Directive. Investment firms cannot rely  on their categorization for a private 
placement and thus benefit from the exempti on in Article 3(2)(a) of the Prospectus 
Directive. This creates complexity and cost s for investment firms in case of private 
placements: a firm has to double check whether its professional clients are registered 
as qualified investors. Alternatively, the firm could opt to renounce to place 
securities within its professional clients. This  situation restricts the issuers' ability to 
conduct private placements with some classe s of experienced indi vidual investors. 
There is no justification in terms of investor protection for having divergent 
definitions for sophisticated investors in both Directives. The consultation 
contributions have confirmed that investme nt firms are subject to stringent rules on 
the criteria and procedur e for categorising a client as professional24.  
According to information provided by 27 natio nal supervisors in the EEA, there is a 
limited use of the national registers (mainly in  the form of a database). In 16 Member 
States, the registers have either not been se t up or have 2 or less  qualified investors 
registered25. In the remaining 11 Member States , the number of qualified investors 
registered in the national registers ranges from 11 to 526, with an average of 
approximately 120. This indicates that the us e of the register may be significant, at 
least in some countries. Moreover, nationa l registers play an important role for 
private placements facilitating offerings direc tly carried out by the issuer without the 
intervention of an intermediary. Issuers can use the register to offer directly their securities to registered qualified investors.  This ensures additional transparency in 
the European securities markets offering an  alternative to the broad use of private 
placements through financial intermediaries.  
Data provided by competent authorities indicate that in Member States with 
relatively active registers it is free for qualified investors to register. Similarly a query in the register is free or comes at a modest cost
26. Indirect costs may also fall 
upon investors and investment firms in pr oviding information to the register and 
accessing the register. However, it is likely that the most significant cost in relation 
to the divergent definition of qualified inve stors and professional clients is linked to 
the inability of investment firms to offer securities to investors that are considered 
professional under MIFID, but are not part of the register. The effect of an alignment 
of the definitions would depend on the increase  of securities sold to investors on this 
basis and hence the monetary gain of the investors and the issuers due to the more 
efficient exchange of capital. This effect is very difficult to quantify. 
In addition, many stakeholders suggested  in their contribu tions to the public 
consultation that in case the two defin itions are aligned, th e concept of large 
undertaking defined by opposition to small and medium size ente rprise in Article 
                                                 
24 See Section II in Annex II of the MiFID. 
25 See Figure 1 in Annex V.  
26 In the UK the fee to view the register is £25 + VAT for a one-off copy or £150  + VAT a year to receive 
monthly copy. In Finland a submission in electronic form, is free of charge. A submission on paper is 
free of charge for the first 30 pages, while additional pages cost 0.16€ per page. 
 
EN 10   EN 2.1.(e)(iii) of the Prospectus Directive should be aligned with the same concept set in 
Annex II, point I(2) in MiFID. 
3.1.3.  Legal uncertainty in relation to the obli gation of supplementing a prospectus and the 
exercise of the right of withdrawal (Ar ticle 16 of the Prospectus Directive)  
Article 16 regulates the publication of the supplement to the prospectus. Every time 
there is a significant new factor, material  mistake or inaccuracy relating to the 
information included in the prospectus, the prospectus has to be supplemented. 
Investors who have already agreed to purch ase or subscribe for the securities have 
the right to withdraw their acceptances. The wording of this Article leaves room for 
divergent application in the Member States . This has generated an intense debate 
among stakeholders. Some issues require cl arification in order to ensure legal 
certainty, such as, for instance, the meaning of "significant new factor"27 and the 
question whether — in a situation where there is both an offer and an admission to trading — the obligation to supplement the prospectus ceases once the trading 
begins, even if the public  offer is still open.  
Concerns have been raised with respect to cross-border offers  in relation to the 
period for the exercise of the right of withdrawal. Every time a prospectus is 
supplemented in the course of an offer, the Directive grants invest ors the exercise of 
the right of withdrawal of their previous  acceptances. Such a right can be exercised 
during a period no shorter than two days fo llowing the publication of the supplement. 
The time frame for the exercise of such a right is not harmonise d and Member States 
have set different periods through national implementing legislation. The period for 
withdrawal is two days in th e vast majority of Member States, three days in three 
Member States and it exceeds three days in  three other Member States (see Figure 2 
in Annex V)
28. Therefore, in the case of a cross-border offer, it is unclear whether the 
time frame set out in the national legislation of the home Member State of the issuer should apply or those stemming from the le gislation of each of the Member States 
where the offer or admission to trading takes place. The lack of common time frame increases therefore the cost of legal advice.  
3.1.4.  Lack of harmonised rules on liability 
Article 6(1) of the Prospectus Directive requires Member States to ensure that 
responsibility for the information given in  a prospectus attaches to a clearly 
identified person (normally the issuer). Article 6(2) furthermore requires Member 
States to ensure that their laws on civil liability apply to the person responsible for 
the prospectus. Article 6(2) does not, how ever, provide for a harmonised liability 
regime under the Prospectus Directive. It is often argued that the same information is subject to different liability regimes, de pending on the home Member State where the 
prospectus is approved, and possibly also  on the Member State where it is being 
used, in case, under the releva nt conflict of law rules, th e host Member State's regime 
for civil liability applies
29. There is divergent intensity in the various liability 
                                                 
27 In this regard, ESME noted that there should be an  element of proportionality in the application of this 
rule, and the withdrawal right should not be available, for instance, for positive news. 
28 See Figure 2 in Annex V.  
29 See, for instance, sectio n 3.6 of the ESME report. 
 
EN 11   EN regimes. Issuers may be liable to unexpected  risks. This may create a barrier to the 
effective use of the passport.  
3.1.5.  Functioning of the summary of the prospectus  
Article 5.2 requires the prospectus  to include a summary that "in a brief manner and 
in non-technical language, con vey the essential characteristics and risks associated 
with the issuer, any guar antor and the securities" .  
Due to the length and complexity of prospectuses, the summary is in practice a key 
element for retail investors in their investment decisions.  
However, the primary aim of the Prospect us Directive of informing investors may 
actually be hampered by the limitation im posed by recital 21 on the length of the 
summary to 2.500 words. In fact, this limita tion may prevent issuers from including 
relevant information in a more comprehe nsible way. Therefore many respondents to 
the public consultation highlighted that the summary should not be restricted to a 
prescribed length, but should enable issuer s to provide meaningful information.  
On the other hand, it is questionable whethe r all items in the indicative Annexes I 
and IV of the Prospectus Dire ctive are relevant to retail investors and are appropriate 
to enable them to make an  investment decision (for example, information on research 
and development, patents and licences).  
Finally, there are significant inconsistencie s in the form and the content of the 
summary disclosures for broadly comparab le products. This is the case for the 
structured securities in the Prospectus Di rective, the simplifie d prospectus of the 
investment funds regulated by the UCITS Di rective, the disclosure requirements of 
the Insurance Mediation Directive for unit-linked life insurance policies30. There are 
even other products that lack disclosure rules in Community La w (like structured 
term deposits). These inconsistencies impede the comparability of products which have different legal forms but which ma y compete for the same retail savings.
31  
3.2. Situations of burdensome re quirements imposed on comp anies raising capital in 
securities markets and to th e intermediaries involved.  
3.2.1.  Divergent regime for Employee Shares Schemes 
Article 4 of the Prospectus Directive contai ns a series of exemptions which remove 
the need to publish a prospectus that w ould otherwise apply where securities are 
offered to the public (paragraph 1) or ad mitted to trading on a regulated market 
(paragraph 2). The exemptions cover a wide  range of different situations, varying 
from securities offered free of charge, to  securities offered in connection with a 
merger or a takeover. Particularly relevant  is the exemption dealing with securities 
offered to employees.  
                                                 
30 Directive 2002/92/EC of the European Parliament and of the C ouncil of 9 December 2002 on insurance 
mediation. OJ L 9, 15.1.2003, p. 3–10  
31 COM (2009) 204 of April 30, 2009. 
 
EN 12   EN Offers of transferable securities to employees  are considered to be  offers of securities 
to the public in line with the definition in Ar ticle 2(1)(d) of the Prospectus Directive. 
A prospectus is therefore required unless an  exemption applies. Article 4(1)(e) grants 
an exemption specifically for offers of s ecurities to employees, provided that two 
conditions are met: (i) the issuer must ha ve securities admitted to trading on a 
regulated market; and (ii) a document must  be available containing information on 
the number and nature of the securities and th e reason for and the details of the offer.  
This exemption does not apply equally to all employees, but creates a less 
advantageous situation for the employees of two categories of companies, namely third country companies that do not have a listing on a regulated market within the 
EU, and EU non-listed companies or EU comp anies that have securities traded on 
EU "exchange-regulated" markets.  
The exemption is not available to third country issuers that do not have a listing on a 
regulated market because the concept of re gulated market is by definition limited to 
the EU, as provided for in Ar ticle 4(1)(14) of MiFID. In addition, it is equally 
impossible for EU non-listed companies or EU  companies that have securities traded 
on EU exchange-regulated markets (i.e. AI M in London) to satis fy this condition, 
because once again they are not listed on a regulated market in line with the 
applicable MiFID definition.  
Employee share schemes run by all such  companies are exempted from the 
obligation to publish a prospectus if there are less than one hundred scheme 
participants in a particular Member State
32. This may generate the perverse effect 
that executive share incentive plans are generally exempted, while "all employees" 
schemes require a (relativel y costly) prospectus. The Di rective could therefore be 
criticised as preserving the interests of directors while pe nalising ordinary 
employees.  
Views have been expressed that, with its current structure, the exemption fails to 
address the concern expressed by the Co mmission in its 2002 Communication on a 
framework for the promotion of employee financial participation33. EU employees 
working for non-EU companies or companies listed in a non-regulated EU market or 
EU non-listed companies should not be penalis ed in comparison to EU employees of 
companies listed on an EU regulated market . This could lead to unequal employment 
conditions for staff in Europe  as compared to outside Europe and have a negative 
effect on competitiveness of firms in the EU and wealth creation and accumulation by employees.  
A 2006 survey for Linklaters on employee share schemes referred to the CSES 
study
34 highlighted the following findings:  
– Some 20% of respondents to the su rvey were consid ering changing or 
withdrawing their employee share schemes; 
                                                 
32 If there are less than 100 scheme participants by Me mber State the issuer will not be obliged to produce 
a prospectus in accordance with Article 3.2(b) of the Prospectus Directive. 
33 COM(2002) 364. 
34 CSES study, pages 41 and 42. 
 
EN 13   EN – One third reported “serious inconsistencie s” among states in application of the 
Prospectus Directive to employee share sc hemes. Some of them have withdrawn 
schemes in those member states that present significant legal problems, resulting in a non-harmonised EU employment environment for their staff; 
– 90% considered that the EU should accept non-EU listing document as a base for 
offering employee share schemes.  
An updated survey by Linklaters in June 2008
35 shows that some global employers 
have removed or reduced their employee shar e schemes and others are in the process 
of doing so.  
Six Member States have appr oved prospectuses for the purpose of ESS in the period 
2006 to 2008, as specified in  Figure 3 in Annex V36. Accordingly, the recorded 
number of prospectuses appr oved that could have had benefit from an exemption in 
that period was at least 114. The vast major ity (at least 102) fall in the category Non-
EU listed companies. Based on the estimated  cost of producing a prospectus ranging 
from € 480,000 to € 720,000 (excluding insura nce of comfort lette r) a conservative 
estimate of the annual cost savings on Eu ropean level is € 18 million. In addition, 
stakeholders often mention that the costs associated with producing a prospectus is 
an important and sometimes decisive factor when assessing the feasibility of offering 
ESS.  
A survey conducted by Baker & McKenzie LLP offers information on the operation 
of ESS within 75 companies. Most of th e companies are non-EU listed and many 
have chosen to rely on the exemptions provi ded for offers addressed to less than 100 
natural or legal persons  and for offers with a total consideration of less than € 2.5 
million within a period of 12 months. This ve rifies that ESS may be artificially held 
within thresholds specified in the Prosp ectus Directive to a void the obligation of 
producing a prospectus. 
3.2.2.  Overlap of transparency obligations (Artic le 10 of the Prospectus Directive)  
Article 10 of the Prospectus Directive requires issuers w ith listed securities to 
provide annually a document containing or referring to all information published in 
the twelve months preceding the issuance of the prospectus37.  
The requirement imposed by Article 10 of  the Prospectus Directive has been 
superseded by the Transparency Directive38. This directive provides for a 
                                                 
35 How the EU’s Prospectus Directive is Adversely Affecting Employee Share Plans . Senior executives 
from 65 global firms were interviewed. 
36 See Figure 3 in Annex V.  
37 In its opinion of 18 September 2008 the High Level Group of Independent Stakeholders on 
Administrative Burdens advised the European Commission to consider the suppression of Article 10 of 
the Prospectus Directive. The deletion of Articles 10, 14.7 (see section 3.2.6) and 18 (see section 3.2.7) 
were suggested to the "Stoiber group" by the Dutc h Ministry of Finance, in association with the 
representatives of the Dutch financial sector (Dutch Banking Association, Association of Dutch 
Insurers, Dutch Fund and Asset Management Associa tion, Dutch Association of Investment Firms) and 
the national financial supervisors (De Dutch Central Bank and the Financial Markets Authority). See: 
http://ec.europa.eu/enterprise/admin-burdens-
reduction/docs/OpinionOfflineSuggestions080918_Final.pdf   
 
EN 14   EN comprehensive regime for the disclosure of  information about issuers with listed 
securities, comprising the periodic financial informa tion (annual and half-yearly 
financial reports, interim management statement) and the ongoing information 
(market abuse disclosures – i.e. inside information, information about major 
holdings, etc). This information has to be  stored in the o fficially appointed 
mechanism set in Article 21.2 of the Tr ansparency Directive and is publicly 
available. The provisions of the Transparency Directive have made the requirement of Article 10 redundant, genera ting a duplication of the same  requirement for issuers. 
There is no added value in terms of investor  protection in the obligation of Article 10 
of the Prospectus Directive. 
The cost for the issuer of fulfilling th is obligation could amount from 2,500 to a 
maximum of 5,000 € per year
39. At least 12,000 companies are listed on a regulated 
market in Europe40 and are consequently subject to this obligation. A conservative 
estimate of the annual costs saved by re moving the obligation would be € 30 million 
per year.  
3.2.3.  Restriction for the choice of home Me mber State for the issuers of debt 
Article 2(1)(m)(ii) imposes a restriction on the choice of the home Member State for 
issues of non-equity securiti es. The choice is available only  for debt securities with a 
denomination above €1.000 (issuers could choose supervisor among those Member 
States where the issuer has its registered office or where the debt is going to be 
admitted to trading on a regulated market or where the debt is offered to the public). 
Below this threshold the home Member St ate mandated by the Directive is the one 
where the issuer has its registered office. It  is argued that this restriction is causing 
practical problems for issuers, either because  it obliges them to maintain additional 
debt issuance programmes41 or because the threshold does not accommodate certain 
structured products which are not  denominated (i.e. certificates)42.  
                                                                                                                                                         
38 Directive 2004/109/EC of the Eu ropean Parliament and of the Co uncil of 15 Decem ber 2004 on the 
harmonisation of transparency requirements in relati on to information about issuers whose securities are 
admitted to trading on a regulated market and amending Directive 2001/34/EC, OJ L 390 of 31.12.2004, p.38. The Transp arency Directive entered into force on 20 January 2005, and was due to be 
transposed by all Member States by 20 January 2007.  
39 The document required by Article 10 of the Prosp ectus Directive is more or less a collection and 
compilation of already published information. The number of employees assigned to the preparation of 
this document is medium. However, given the possible legal consequences in case of non-compliance, a 
senior officer is in charge of th e control. Overall, the preparation time for a company should not exceed 
two days and the cost varies from about €2,500 to €5,000. Dr. Wolfgang Gerhardt, member of ESME, 
provided this cost estimation for Germany in his reply to a questionnaire sent by the Commission 
services for the elaboration of this  impact assessment. According to Dr . Gerhardt, this cost estimation is 
can be considered a reasonable approximation of the average cost across all EEA member countries.  
40 This figure is calculated based on the number of co mpanies with listed shares (12,299), as provided by 
FESE monthly statistics, February 2009, and the estimated annual cost of meeting the obligation (€2,500). Some companies may not have shares traded  on a regulated market but only other securities, 
such as bonds. These companies sh ould also be taken into account. However, the number of companies 
with listed shares is the most reliable figure available. 
41 The threshold is causing practical problems to issu ers of non-equity securities who may need to draw up 
several prospectuses, i.e. one to cover a debt issuance program within the threshold and another for the remaining debt issuance activities which might exceed that threshold (see the ESME report, p.13). 
42 Only issuers of securities that are denominated ca n opt to benefit from a choice reserved to offers 
denominated above 1.000€. See ESME report, section 3.2 and Annex. See also CSES study, section 4.6. 
 
EN 15   EN 3.2.4.  Burdensome disclosure requirements in some cases 
3.2.4.1.  Rights issues43  
Stakeholders have expressed concerns in re lation to the obligation to publish a full 
prospectus for rights issues44 or "open offers"45, notably because of the fact that the 
cost for producing a full prospectus for this  type of offer might not be justified. 
Indeed, these are share offerings to existi ng shareholders; stakeholders claim that 
these investors do not need th e special protection provided for by a full prospectus as 
they are familiar with and confident in the company in which they have invested in 
the past. The cost of producing a prospectus for rights issues is comparable with the 
general estimate provided for the production of  a prospectus. This implies a cost in 
the range of € 480,000 to € 720,000, excludi ng insurance of comfort letter46. 
3.2.4.2.  Small quoted companies47  
Companies with reduced market capitaliza tion have expressed their concerns about 
the low level of the threshold relating to  the exemption for offers with a total 
consideration below €2.5 million set in Article 1(2)(h) of the Prospectus Directive. Indeed they claim that the threshold is to o low relatively to their financial needs and 
that it creates difficulties when raising capital on the financial markets because from 
a cost-benefit perspective there is no incen tive to raise capital below it, whereas 
above it they incur the costs of producing a full prospectus, whic h may be relatively 
costly given their size and the amount they  raise. This forces companies with small 
market capitalization to ra ise funds mainly through priv ate placements. Therefore, 
given the size of companies with small ma rket capitalization and the amount they 
generally raise on the financial markets, it seems that the costs of producing a full 
prospectus are always prohibitive and that the disclosure requirements for such kind 
of issuers might be alleviated wher e excessive. Small credit institutions 
In accordance with Article 1.2(j) of the Pros pectus Directive, certain offers of non-
equity securities issued by credit institu tions are excluded from the scope of the 
Directive
48. The total consideration of the o ffer should amount to  less than €50 
million calculated over a period of 12 months . Offers included in the scope of the 
Prospectus Directive require  the publication of a pros pectus. Though the wording of 
this Article only refers to the size of the offers, the exemption in Article 1.2(j) is 
                                                 
43 For the number of rights issues in the EU see Figure 4 in Annex V.  
44 A rights issue is a pre-emptive issue like an open offe r, but it allows the existing shareholder to sell the 
right to subscribe for shares.  
45  In the UK, the expression "open offer" enco mpasses placings with clawback where shares are 
conditionally placed and then offered to existing shar eholders via a clawback. Existing shareholders are 
offered shares in proportion to their existing holdings (the pre-emptive right). Those shares not taken up 
by shareholders are usually taken by placees. 
46 See the cost breakdown of producing a prospectus in Annex IV. 
47 There is no legal or academic definition of "small quoted company. It could be conventionally 
considered that a "small cap" is a company with less than 500 Million € of market capitalization. 
48 The article refers to non-equity securities issued  in a continuous or repeated manner by credit 
institutions where the total consideration of the offer is less than EUR 50 000 000, which limit shall be 
calculated over a period of 12 months, provided that these securities: (i) are not subordinated, 
convertible or exchangeable; (ii) do not give a right to subscribe to or acquire other types of securities 
and that they are not linked to a derivative instrument. 
 
EN 16   EN designed for small credit institutions49. Representatives of sma ll credit institutions 
consider that in practice the limit of €50 million is too low for the annual issuing 
volume and, as a consequence, small banks cannot fully benefit from this exemption. 
The case is similar as the one of the small quoted companies mentioned in the previous section. Below the limit of €50 milli on they claim that the threshold is too 
low relatively to their financial needs and that it creates difficulties when raising capital on the financial markets because fr om a cost-benefit pers pective it is not 
worth to raise capital below it, whereas a bove it they incur th e costs of producing a 
full prospectus, which may be prohibitively costly given their size and the amount 
they raise. This forces small credit institu tions to raise funds mainly through private 
placements. Therefore, given the size of sm all credit institutions and the amount they 
generally raise on the financial markets, it seems that the costs of producing a full 
prospectus are always prohibitive and that the disclosure requirements for such kind 
of issuers might be alleviated where excessive. 
3.2.5.  Burdensome disclosures for government guarantee schemes 
In the context of the current financial crisis  Member States have decided to guarantee 
the issuance of debt by banks. Due to the novelty of this scheme, uncertainties have 
been reported on the legal regime applicable  to this type of offers concerning the 
information to be provided in the prosp ectus in relation to the State guarantor.  
Article 5.1 of the Prospectus Directive sets  out that the prospectus has to include 
information about the issuer, the securiti es and the guarantor of the offer. In 
accordance with the Annex VI of the Pros pectus Regulation, when an offer of 
securities is guaranteed by a third party, th e issuer has to give in the prospectus 
information about the nature and scope of the guarantee and about the guarantor. In 
particular, the guarantor of the offer "must disclose information about itself as if it 
were the issuer of that same type of secur ity that is the subject of the guarantee". In 
case the guarantor is a State, the information to be provided in the prospectus is contained in Annex XVI of the Prospectus Regulation. 
In accordance with Article 1(2)(d), the Prospectus Directive does not apply to 
securities unconditionally and irrevocably guaranteed by a Member State. However, 
in accordance with Article 1(3) of the Di rective, the issuers benefiting from the 
guarantee of a State could opt to produce a pr ospectus in order to benefit from the 
passport mechanism and make a multinational offer in the EU. In this case the prospectus must comply with the disc losure requirements mentioned above. The 
reason for the exemption foreseen in Article  1(2)(d) of the Prospectus Directive is 
that the public has constant access to su fficient information on the solvency and 
economic status of the States
50. Information on public finances of Member States are 
already public, thus there is no added value for investors in requiring the issuer to 
include in the prospectus information about  the State required by Annex XVI of the 
Prospectus Regulation.  
                                                 
49 The size of offering programs used by the big cred it institutions for funding purposes is usually €10 – 
15 billion.  
50 Among other sources, Eurostat provides information about the solvency and economic status of the 
States. See:  
 http://epp.eurostat.ec.europa.eu/portal/page?_p ageid=2373,47631312,2373_58674332&_dad=portal&_
schema=PORTAL   
 
EN 17   EN 3.2.6.  Printed form (paper form) of the prospectus  
Article 14 of the Prospectus Directive la ys down the rules con cerning the publication 
of the prospectus. Paragraph 2 of Article 14 permits the publication of the prospectus 
either in printed or electronic form. In cas e the prospectus is published in electronic 
form, paragraph 7 of this article grants the right of the investor to receive a paper copy of the prospectus. Upon the request of the investor to the offeror, the person 
asking for the admission to tr ading or the financial intermediaries placing or selling 
the securities have to deli ver a paper copy of the prospectus free of charge.  
In its opinion of 18 September 2008 th e High Level Group of Independent 
Stakeholders on Administrative Burden s advised the European Commission to 
consider the suppression of this obliga tion. A group of indus try stakeholders 
suggested that this obligation would have no added value and advocated for the deletion of obligations to provide docum ents and information on paper. It was 
considered that the electronic provisi on of information would be sufficient for 
effective supervision.  
3.2.7.  Translation of the summary of the prospectus  
The rules for the functioning of the passport of the prospectus for cross border offers 
and admission to trading are laid down in  Articles 17 and 18 of the Prospectus 
Directive. In accordance with Article 17 a prospectus approved by the authority of 
one Member State (home competent authority) is valid for the rest of the Members States included in the scope of a cross border offer or admission to trading (host 
competent authorities).  
The only condition for the acceptance of the pr ospectus is stipulat ed in Article 18.1: 
the home competent authority has to certify to  the host competent authorities that the 
prospectus has been drawn up in accordance with the Prospectus Directive. This 
notification has to be accompanied by a transl ation of the summary of the prospectus 
into the language accepted by the host Member States. The translations of the summary have to be produced under the responsibility of the issuer or the person responsible for drawing up the prospectus.  
In its opinion of 18 September 2008 th e High Level Group of Independent 
Stakeholders on Administrative Burden s advised the European Commission to 
consider the suppression of the obligation to provide the translation of the summary. 
A group of stakeholders considered that  this requirement was unnecessary and 
advocated for the harmonisation of the la nguage regime for the whole internal 
market.  
4. T
HE BASELINE SCENARIO , SUBSIDIARITY AND PROPORTIONALITY  
The problems detected in section 3 stem  from EU legislation and can only be 
addressed through changes in EU legislat ion. If no action is taken through the 
modification of the Prospectus Directiv e, the problems deriving from the EU 
legislation may continue to generate legal uncertainty which might find only 
temporary and partial clarification through clarification, coordi nation and convergent 
 
EN 18   EN application by CESR51. CESR is indeed an indepe ndent advisory group to the 
European Commission composed by the national supervisors of the EU securities markets. At the same time, its role is to improve co-ordination among securities regulators, act as an advisory group to a ssist the EU Commission and to ensure more 
consistent and timely day-to-day implement ation of community legislation in the 
Member States
52. However, despite the fact th at such an "improved policy 
implementation" through CESR and the nationa l supervisors of the Member States is 
analysed, when appropriate, among the possible policy options of this report, this is 
not the most effective solution to the problems identified because the legal uncertainty derives from the existing EU legi slation and it may lead to inconsistent or 
conflicting implementation by national competent authorities. Thus it can only be addressed at this same level. In addition, th e review of the Prospectus Directive aims 
at increasing effectiveness and reducing the administrative burdens for companies raising capital in the EU. Taking into acc ount that offers of securities could have 
cross border dimension in the EU this exercise will be better addressed in an EU legal text. A consistent approach is essentia l in order to avoid regulatory arbitrage in 
the Member States and competition distortion in the various markets. The 
amendment of the Prospectus Directive proposed by the Eur opean Commission 
respects therefore the prin ciple of subsidiarity.  
                                                
 
51 In its conclusions in March 2000, the Lisbon Euro pean Council emphasised that in order to accelerate 
completion of the internal market for financial services, steps should be taken to set a tight timetable so 
that the Financial Services Action Plan (FSAP) is implemented by 2005. In this context, the Committee 
of Wise Men (chaired by A. Lamfalussy) in February 2001 proposed a new legislative approach, which 
was endorsed in a Resolution of the Stockholm European Council in March 2001 and by the European 
Parliament in a Resolution adopted on 5 February 2002. The core of this process centres around a new 4 
level legislative approach: Level 1 : Level 1 is traditional EU decision making, i.e. Directives or 
Regulations proposed by the Commission containing framework principles, reflecting key political choices to be co-decided by the EP and the Council, with implementing powers being delegated to a 
second level. Level 2 : Technical implementing measures to rend er the level 1 princi ples operational, 
can be adopted, adapted and updated through comitology: they are adopted by the Commission after having been submitted to the European Securities Committee (ESC) and the European Parliament for 
their opinion. The ESC is a comitology committee; however, a part from its legislative capacity, the 
ESC is also responsible for assisting the Commission with respect to policy issues in the field of 
securities. Upon request in the form of mandates, the Committee of European Securities Regulators 
(CESR), an independent advisory group, can advise the Commission on the technical implementing 
details to be included in level 2 legislation. Both the ESC and CESR are high level Committees. Level 
3: In order to facilitate coherent implementation an d uniform application of EU legislation by the 
Member States CESR may adopt non-binding guide lines (level 3). CESR can also adopt common 
standards regarding matters not covered by EU legisl ation (but these standards have to be compatible 
with level 1 and 2 legislation). Level 4 : Enforcement: This refers to monitoring correctness of 
implementation of EU legislation into national legislation by the Commission and, in case of non-
conformity, launching of infringem ent proceedings. In order to ensu re coherence in the field of 
financial services, this approach was extended in 2004 to include UCITS (Undertakings for Collective 
Instruments in Transferable Securities) within th e CESR/ESC process and set up similar Lamfalussy 
structures for banking and insurance. With respect to  UCITS, extension of the scope of the activities of 
both the ESC and CESR has been provided to also cover these products, whereas in the field of banking 
and insurance four new level 2 and 3 committees have  been created: At level 2 the new organisations 
are the European Banking Committee (EBC) and the European Insurance and Occupational Pensions 
Committee (EIOPC); at level 3 the Committee of European Banking Supervisors (CEBS) and the 
Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).  
52 An "improved policy implementation" would certainly be more effective under the European financial 
supervision regime of the Communication of 27 May 200 9 if an enforced coordination role is attributed 
to CESR. COM (2009) 252 of May 27, 2009.  
 
EN 19   EN The European Commission considers that  the solutions proposed respect the 
principle of proportionality: all solutions ha ve been drafted b earing in mind cost-
efficiency; the calculations and estimates that are brought forwar d in section 8.3 and 
Annex VI advocate that the objectives in terms of effective product disclosure and 
investor protection are fully respected while  important cost savi ngs and reduction of 
administrative burden are possible. The anal ysis of the impact of the solutions on 
stakeholders presented in sections 8.1 and 8.2 shows that the changes proposed by 
the European Commission are likely to have  positive impact on investors, companies 
issuing securities, intermediaries, sh areholders and small and medium size 
enterprises. Concerning this last category of stakeholders, the European Commission 
proposes the introduction of a new "proporti onate" prospectus in order to avoid 
excessive burden and costs (see sections 7.2.4, 7.2.5 and 7.2.6) 
5. OBJECTIVES  
The review of the Prospectus Directive aims at (i) increasing legal clarity and 
effectiveness in the prospectus regime; and (ii) reducing the burdens for EU 
companies when raising capital in the Eu ropean securities markets. These two 
objectives are consistent with the overa ll objective of maintaining and, when 
necessary, enhancing the level of investor protection envi saged in the Directive and 
ensuring that the information provided is sufficient and adequate to cover the needs 
of retail investors, particularly in the context of the current international financial crisis.  
5.1. Increase legal clarity and effectiveness in the prospectus regime 
Within the first objective, the suggestions of the Commission seek to achieve the 
following sub-objectives:  
– Clarify the obligations in case of placem ent of securities through financial 
intermediaries (retail cascade);  
– Align the definitions for qualified in vestors and professional clients;  
– Provide legal certainty in relation to the exercise of the right of withdrawal 
(Article 16 of the Prospectus Directive);  
– Clarify the rules on liability;  
– Improve the functioning of the Prospectus.  
5.2. Eliminate the disproportionate requirem ents for EU companies when raising 
capital in the European securities mark ets and to the intermediaries involved. 
Within the second objective, the suggestions  of the Commission seek to achieve the 
following sub-objectives:  
– Provide a level paying field for Empl oyee Shares Schemes in the EU;  
– Avoid the overlapping disclosure obliga tion of Article 10 of the Prospectus;  
 
EN 20   EN – Provide the choice of the home Memb er State for issuers of debt; 
– Provide proportionate disclosure requi rements for right issues, small quoted 
companies and small credit institutions;  
– Provide proportionate disclosures fo r Government Guarantee Schemes.  
6. POLICY OPTIONS  
With the intention to meet  the objectives set out in the previous section, the 
Commission services have anal ysed different policy options53. The first section 
reflects the most relevant polic y options that have been co nsidered in relation to the 
increase of effectiveness in the prospect us regime. The second section contains the 
list of policy options that have been anal ysed in relation to the situations of 
unjustified burdensome requirements imposed to companies raising funding in securities markets and to the intermediaries involved.  
6.1. Policy options for the increase of legal clar ity and effectiveness in the prospectus 
regime.  
6.1.1.  Policy options in case of subsequent pl acements of securiti es through financial 
intermediaries (retail cascade).  
(1) Option 1 – No action at EU level.   
(2) Option 2 – Clarify that the further resale of the securities to retail 
investors through financial intermediari es following the initial issue does 
not qualify as a public offering of the initial issuer
54.  
(3) Option 3 – Amend Article 3( 2) of the Prospectus Di rective to clarify that 
whenever an intermediary offers securities to the public (i.e., makes a non-exempted offer) the intermediary should put at the disposal of the 
public a valid prospectus.   
6.1.2.  Policy option in relation to the diverge nt definitions for qua lified investors and 
professional clients  
(1) Option 1 – No action at EU level.  
(4) Option 2 – Amend the Directive and align the definitions of qualified 
investors in Article 2.1(e)(i) and (ii)  of the Prospectus Directive and of 
professional clients and eligible counterparties in MiFID.   
(5) Option 3 – In addition to the alignm ent proposed in option 2, the system 
of central registers could be removed from the Prospectus Directive.   
                                                
 
53  For a full description of the policy options see Annex VII.  
54 This option was suggested by ESME. See ESME report on the Prospectus Directive, September 2007, 
p. 15. 
 
EN 21   EN 6.1.3.  Policy options in relation to  the obligation of supplem enting a prospectus and the 
exercise of the right of withdrawal (Ar ticle 16 of the Prospectus Directive) 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Harmonize the different peri ods of time for the exercise of the 
right of withdrawal.  
(6) Option 3 – Harmonize the different p eriods of time with possibility for 
issuer to grant longer time.   
(7) Option 4 - Harmonize the different periods of time  at the settlement of 
the securities55.  
6.1.4.  Policy options in relation to the la ck of harmonised rules on liability 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Harmonize the liabilit y standards applicable to the 
prospectus.   
6.1.5.  Policy options in relation to th e summary of the prospectus  
(1) Option 1 – No action at EU level.   
(2) Option 2 – Provide retail investors wi th appropriate information in an 
easily analyzable and comprehensible form in order to make investment 
decisions in full kn owledge of facts.   
6.2. Situations of disproportionate or  burdensome requirements imposed to 
companies raising capital in securities  markets and to the intermediaries 
involved.  
6.2.1.  Policy options for bringing forward a le vel playing field for Employee Shares 
Schemes  
(1) Option 1 – No action at EU level.  
(2) Option 2 – Amend the Directive and extend the exemption in Article 
4.1(e) to the employee share schemes launched by companies that are 
listed in a non-regulated market (third country and EU issuers).   
(3) Option 3 – Amend the Directive and extend the exemption in Article 
4.1.(e) including not only the employ ee share schemes of companies that 
are listed in a non-regulated market  ("exchange-regulated" market or 
                                                 
55 The settlement of securities is the process whereby securities or interests in securities are delivered, 
usually against payment, to fulfil contractual obliga tions, such as those arising under securities trades. 
This involves the delivery of securities to perfor m contractual delivery obligations. It usually also 
involves the corresp onding payment of a purchase price. Usua lly settlement is pr eceded by trading, 
which involves entering into c ontracts of sale and purchase. 
 
EN 22   EN third country securities markets) as  proposed in option 2, but also 
encompass companies that are not listed.  
6.2.2.  Policy options in relation to the overlappi ng of transparency obligations (Article 10 
of the Prospectus Directive)  
(1) Option 1 – No action at EU level.  
(2) Option 2 – Eliminate the obligation established in Article 10 of the 
Directive.  
6.2.3.  Policy options in relation to the restricti on for the choice of home Member State for 
the issuers of debt  
(1) Option 1 – No action at EU level.     
(8) Option 2 – Provide for the choice of the home Member State for issues of 
non-equity securities below the €1000 threshold.    
6.2.4.  Policy options for facilitating the raise of capital through the issuance of rights 
(1) Option 1 – No action at EU level.    
(2) Option 2 – Share offerings to existing shareholders by the way of a rights 
issue could be exempted from  the prospectus requirement .  
(3) Option 3 – The principle of a "proport ionate" prospectus for right issues 
could be introduced.   
6.2.5.  Policy options for providi ng proportionate disclosure requirements for small quoted 
companies 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Small quoted companies could be exempted from the 
obligation to publish a prospectus by raising the threshold in Article 1(2)(h) of the Prospectus Directive.   
(3) Option 3 – The principle of a "proportionate" prospectus for small 
quoted companies could be introduced.   
6.2.6.  Policy options for providing proportionate di sclosure requiremen ts for small credit 
institutions 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Small credit institutio ns could be exempted from the 
obligation to publish a prospectus by raising the threshold in Article 1(2)(j) of the Prospectus Directive.  
(3) Option 3 – The principle of a "proportionate" prospectus for small 
credit institutions could be introduced.  
 
EN 23   EN 6.2.7.  Policy options in relation to the prospect us disclosures in case of government 
guarantee schemes should be rationalised 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Issuers of securities gu aranteed by the government of a 
Member State could be exempted from the obligation to provide 
information about the guarantor in the prospectus.  
(3) Option 3 – The same policy option  could be extended to cover the 
information not only about the guaran tor, but also about the guarantee.   
6.2.8.  Policy options in rela tion to the printed form (pape r copy) of the prospectus  
(1) Option 1 – No action at EU level.  
(2) Option 2  – Abolish the obligation to deliver a paper copy of the 
prospectus.    
6.2.9.  Policy options in relation to the transla tion of the summary of the prospectus 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Abolish the obligation to translate the summary of the 
prospectus.   
7. COMPARING THE OPTIONS  
This section discusses the advantages a nd disadvantages of the different policy 
options against the following criteria: 
1. Investor protection56: the option proposed should ma intain and, when necessary, 
enhance the level of invest or protection achieved by the Prospectus Directive.  
2. Consumer confidence57: the option proposed shoul d maintain consumers' 
confidence in the securities markets.  
3. Reduction of disproportionate burdens/ administrative burden: the option 
proposed should reduce the administrative  burden for companies in the EU.  
4. Clarity and legal certainty: the opti on proposed should pr ovide the highest 
possible confidence to stakeholders as  of the rules to comply with.  
                                                 
56 "Investor protection" defines the entity of efforts and activities to observe, safeguard and enforce the 
rights and claims of a person in his role as an investor. This includes advice and legal action. The 
assumption of a need of protection is based on the experience that financial investors are usually 
structurally disadvantaged compared to providers of financial services and products due to lack of 
professional knowledge, information and/or experience.  
57 "Consumer confidence" is the degree of optimism a nd confidence that consumers feel about the overall 
state of the financial markets. Therefore it serves as  one of the key indicators of their purchase activity. 
In essence, if consumer confidence is higher, consumers are making more purchases, boosting the 
financial markets.  
 
EN 24   EN 5. Effectiveness: the extent to which the option achieves the problem specific 
objectives and facilitates the opera tion of EU securities markets. 
The options are measured against the a bove-mentioned pre-defi ned criteria in the 
tables below. Each scenario is rated between "---" (very negative), 0 (neutral) and "+++" (very positive). In some cases not all cr iteria are applicable to the issues under 
analysis. The assessment highlights the polic y option which is best placed to reach 
the objectives outlined in section 5 and therefore th e preferred one. 
7.1. Analysis of the options related to situatio ns of lack of clarity or inconsistencies 
in the securities market legal framework 
7.1.1.  Policy options in case of subsequent pl acements of securiti es through financial 
intermediaries (retail cascade) 
Option 1. No action at the EU level:  If the EU legislat or took no action (the  
"baseline scenario" ), the market would be expect ed to develop in the following 
way. The uncertainties surrounding the retail  cascade issue could be partially and 
temporarily solved by applying the common interpretation agreed by the members of 
CESR
58 (the "improved policy implementation option" ). In accordance with this 
interpretation any subsequent resale of securities shall be regarded as a separate offer 
and therefore each level of a retail cascade is to be separately considered as to 
whether or not an exemption from the oblig ation to publish a pros pectus is available 
to such public offer. A valid prospectus should be required at each level of the 
offering mechanism. If the issuer ha s published a prospectus, all financial 
intermediaries may use such prospectus for their resale of the securities to retail 
investors if they act in association with the issuer and thereby ensure that the issuer's 
prospectus is still valid. No further prospect us shall be required for a public offer as 
long as a valid prospectus is available59. If the issuer has not published a prospectus 
because a retail cascade was not foreseen, or  if the issuer has published a prospectus 
but the intermediary is not acting in asso ciation with the issuer but selling the 
securities on its account, then a separate prospectus would be required. In these circumstances, it is up to the offeror to us e the issuer's prosp ectus by incorporating 
the relevant parts by reference into its ow n prospectus in accordance with Article 11 
of the Prospectus Directive ("incorporati on by reference") subject to the provisions 
of Article 28 of the Prosp ectus Regulation ("arrangeme nts for incorporation by 
reference").  
A number of respondents to the public consul tation have pointed out that for the sake 
of certainty and eff ectiveness the solution to the retail cascade  problem should be 
clarified in the text of the Directive.  
                                                
 
58 This interpretation is applied by the EU competent authorities and is inspired in CESR's common 
interpretation (see question number 56 "Retail cascade offers" of the frequently asked questions 
regarding prospectuses). The concept of 'acting in association' between the issuer and the financial 
intermediary is the key element of this interpretation. See www.cesr.eu 
59 According to Article 9 (1) of the Prospectus Direc tive a prospectus is only valid on condition that it is 
completed by any supplements required pursuant to Article 16 of the Prospectus Directive and only the 
issuer can update its prospectus by publishing supplements thereto.  
 
EN 25   EN Option 2. Clarify that the further resale  of the securities to retail investors 
through financial intermediaries following the initial issue does not qualify as a 
public offering of the initial issuer:  as a number of contributors have signalled, the 
option of deleting the last sentence of th e Article 3.2 of the Prospectus Directive 
could not solve the problem either but create  more uncertainty. The last sentence of 
Article 3.2 was meant to be an anti-avoida nce provision: to avoid the circumvention 
of the obligation to publish a prospectus by breaking a pu blic offer into different 
private placements through financial inte rmediaries. Therefore this option could 
harm consumers' confidence in the proper f unctioning of the securities markets legal 
framework and should be negatively assessed  in terms of investor protection. Such 
an option would permit interm ediaries to circumvent the obligation to publish a 
prospectus. 
Option 3. Amend Article 3( 2) of the Prospectus Directive to clarify that 
whenever an intermediary offers securities to th e public (i.e., makes a non-
exempted offer) the intermediary should  put at the disposal of the public an 
updated and valid prospectus: the option of amending the Prospectus Directive to 
clarify that Member States shall not re quire another prospectus in any such 
subsequent resale of securities or final placement of securiti es through financial 
intermediaries as long as a valid prospectus  is available in accordance with Article 9 
and the issuer or the person responsible fo r drawing up such pros pectus consents to 
its use,has benefits in terms of invest or protection, reducti on of administrative 
burden, consumer confidence and effectiveness: investors will be better protected because there will be a valid prospectus availa ble for these type of offers; the cost of 
the offer will be reduced as the intermediary  acting with the consent of the issuer will 
be able to use the initial pros pectus produced by th e issuer as long as  it is valid and 
will not have to produce a new prospectus; consumer confidence will increase as a consequence of a more rational legal framework; finally, there will be more certainty for stakeholders if the legal framework for this type of offers is clarified in the Directive. 
This option requires some cooperation between  the issuer and the intermediary: the 
issuer should supplement its prospectus for th e subsequent offers at  the request of the 
intermediary. In case there is  no such cooperation, the intermediary should produce a 
new prospectus. In this case it could incor porate by reference the information already 
disclosed by the issuer in the initial pros pectus or in other pieces of regulated 
information in accordance with Article 11 of the Prospectus Directive. In any event the intermediary should be responsible fo r the accuracy of the information included 
in such prospectus and s hould keep it up-to-date.  
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status quo  0 0 0 0 0 
Delete last sentence in 
3.2 PD - -- 0 - 0 
Clarify that 
intermediaries can use 
the valid prospectus of the issuer if ++ ++ ++ ++ + 
 
EN 26   EN updated 
For reasons of investor protection, consum er confidence, reduction of administrative 
burden, certainty and effectiveness, the preferred option is to amend the Prospectus Directive in order to clarify that Member States shall no t require another prospectus 
in any such subsequent resale of securitie s or final placement of securities through 
financial intermediaries as long as a valid pr ospectus is available in accordance with 
Article 9 and the issuer or the person responsible for drawing up such prospectus consents to its use.  
7.1.2.  Policy options in relation to  the divergent definitions  for qualified investors and 
professional clients  
Option 1. No action at EU level:  this would imply that two different definitions 
would be maintained in the MiFID a nd the Prospectus Directive (the " baseline 
scenario "). As explained under section 3.1.2, it is  not effective to have different 
systems in the Prospectus Directive and in  MiFID for determining what persons can 
be treated as sophisticated investors. Ve ry often investors that could qualify under 
the Prospectus Directive are already categor ised by investment firms as professional 
clients in accordance with the MiFID requirements. Howe ver the firm cannot benefit 
from the exemption of Articl e 3.2(a) of the Prospectus Di rective since these investors 
are not registered in the national re gister of qualified investors.  
Option 2. Amend the Directive and align the definitions of qualified investors in 
Article 2.1(e)(i) and (ii) of the Prospect us Directive and of professional clients 
and eligible counterparties in MiFID:  the alignment of both definitions will have 
clear benefits for intermediaries and invest ors in terms of efficiency: firms will be 
able to invite their professional clients to participate in a private placement of 
securities without the need  of visiting and relying only on the limited information 
contained in the national register of qualified investors. As a consequence, 
professional investors will have access to  new investment opportunities without 
having to be listed in national registers.  
The fact that firms will not need to doubl e check whether their professional clients 
are or not also listed in the national re gisters will provide certainty to these 
companies and will help them to reduce the time spent organising a private placement and to reduce the administrative burden of the operation. In some countries, there is a fee charged for the consultation of the register.  
UK charges £25 (approx. €27) for a one-off copy, while a monthly copy costs £150 
(approx. €163) per year. Finland charges €0.16 per page exceeding 30 pages resulting from a request to the competent authority. Other Member  states apply a fee 
for the registration. Austria and Slovenia apply a fee of €200 and €80, respectively. 
In Poland a stamp duty of 10 PLN (approx. €2.17) is required. Romania charges a fee 
of 100 lei and 1000 lei (approx. € 23 and 23 4) respectively to natural and legal 
persons authorised under the competent authority: for entities not authorised by the competent authority the fee is 5,000 lei (approx. € 1,172). 
The alignment of the definitions would not  have impact in terms of investor 
protection or consumer confidence, as the underlying philosophy for both institutions is the same: both qualified investors and pr ofessional clients do not require the same 
 
EN 27   EN treatment as retail investors for the provisi on of investment services and the private 
placement of securities.  
The safeguards envisaged in MiFID for the client categorisation are adequate in 
terms of investor protection. In accordance to the rules laid down in the Section II of 
Annex II of the MiFID an investment firm c ould treat a client as professional only if 
an adequate assessment of the expertise,  experience and knowledge of the client, 
undertaken by the investment firm, gives reason able assurance, in light of the nature 
of the transactions or services envisaged, th at the client is capable of making his own 
investment decisions and unde rstanding the risks involved60. The firm has to comply 
with strict procedures to categ orise the client as sophisticated61. 
Option 3. In addition to the alignment proposed above, the system of central 
registers could be removed from the Prospectus Directive:  in the contributions to 
the public consultation some stakeholders wonder whether the national register of 
qualified investors should be removed from article 2.3 of the Prospectus Directive . 
In this regard, in accordance with the evidence provided by CESR members, the 
national registers of qualified investors en visaged in article 2.3 of the Prospectus 
Directive are not working effec tively in all EU countries.  
As indicated in Fi gure 1 in Annex V62, only 11 out of 27 Member States have 
established a register that currently has more than 2 names. Among these 11 Member 
States, two declare that the register has never been accessed for the purpose of 
private placements. One Member State declar es that it has not been accessed in the 
last two years, while another declares  that it is not accessed very often. The 
remaining Member States cannot provide info rmation in this regard, either because 
the registry is publicly available or becau se no statistics are produced. These include 
France, Germany and UK with 975 registered  qualified investors. The three Member 
States account for 74 percent of all registered  qualified investors in Europe; therefore 
in these Member States the regist ry may play an important role.  
Moreover, the data on the national register  are often not representative because 
sophisticated investors are reluctant to appear  in a public register for privacy reasons. 
If the register is removed, the competent authorities could save the administrative 
costs of its maintenance and, if applicable, investors wo uld save the cost of the 
registration fees and interm ediaries would save the co st of consultation fees.  
On the other hand, if the re gister is removed there wi ll be no room for private 
placements directly carried out by the i ssuer without the intervention of an 
intermediary. Issuers could use the register to offer directly their securities to qualified investors (nonetheless, in accord ance with the data provided by the CESR 
members, there is no evidence of such pract ice). The register of qualified investors 
ensures more transparency, and therefor e it is advisable to maintain it.  
                                                
 
60 Third paragraph of Section II.1 in Annex II of the MiFID.   
61 First, the client must state in writing to the investment firm that he or she wishes to be treated as a 
professional; second, the investment firm must give him or her a clear written warning of the 
protections and investor compensation rights he or she may lose; and third, the client must state in 
writing, in a separate document from the contract, that  he or she is aware of the consequences of being 
treated as professional. See Secti on II.2 in Annex II of the MiFID. 
62  See Annex V.  
 
EN 28   EN For reasons of reduction of administrative burden, certainty and effectiveness, the 
preferred option is to align th e definitions of qu alified investors set in Article 2.3 of 
the Prospectus Directive. Moreover, nationa l registers should be  kept because they 
play an important role for private placemen ts facilitating offeri ngs directly carried 
out by the issuer without the intervention of an intermediary. Issuers can use the 
register to offer directly thei r securities to registered qualified investors. This ensures 
additional transparency in the European secu rities markets offering an alternative to 
the broad use of private placements through financial intermediaries.  
7.1.3.  Policy options in relation to  the obligation of supplem enting a prospectus and the 
exercise of the right of withdrawal (Ar ticle 16 of the Prospectus Directive) 
Option 1. No action at the EU level:  this signifies that the uncertainty in relation to 
the time frame for the exercise of the right of withdrawal would remain, as explained 
in section 3.1.3 (the " baseline scenario "). 
Option 2. Harmonize the different periods of  time for the exercis e of the right of 
withdrawal:  the maximum harmonisation of th e time frame for the right of 
withdrawal will provide certainty to the issuers making cross border offers of 
securities, as there will not be different time frames depending on the national legislation of the countries i nvolved in the offer. However,  if this harmonisation were 
made at the lowest level, investors of c ountries where longer deadlines are currently 
applied would be less protected because th e time to withdraw their acceptances will 
be reduced compared to the current regime  and thus their confidence may decrease. 
The majority of responses to  the consultation agreed on the need for a common time 
frame for the exercise of this right. Within  this majority, a minority considered that, 
on the basis of a common time frame, it sh ould be up to the issuer to extend 
voluntarily its duration.  
Though this is very difficult to estimate in concrete figures, it could be sensibly 
argued that a common time fram e would reduce the cost of legal advices in case of 
cross-border offers, as there will not be any need to analyse in this regard the particularities of the nationa l legislation of the countries  involved in the offer. 
Option 3. Harmonize the different periods of  time with possibility for issuer to 
grant longer time: a common fixed time frame with the possibility for the issuer to 
extend the time frame for each particular o ffer would provide a flexible solution to 
issuers from countries with traditionally longer  time frames. This approach would 
merge effectiveness and efficiency with more investor protection and consumer 
confidence. Criteria 
Options Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status quo 0 0 0 0 0 
Align both definitions 
and keep the register 0 0 + + + 
Align both definitions 
and remove the 
register 0  0 + + + 
 
EN 29   EN Option 4. Harmonize the different period s of time at the settlement of the 
securities: some stakeholders insisted on the possi bility to limit the exercise of the 
right of withdrawal at  the settlement of the securities . Such an option would be very 
efficient for the issuer, but would reduce i nvestor protection: i nvestors might not be 
aware of the date of the se ttlement. Taking into account th at such a date might differ 
from one system of settlement to another,  this might not be the best option for 
increasing consumer confidence. Finally, th e benefits of this option in terms of 
reduction of administrative burden are not entirely clear. 
Moreover, some respondents pointed out that this is a good opportunity at least to 
clarify in the text of the Prospectus Dir ective that the registration document could be 
independently supplemented and that the time frame for the exercise of the right of 
withdrawal envisaged in Artic le 16.2 of the Prospectus Di rective should finish at the 
close of the offer and when the admission to trading begins.  
For reasons of investor protection, consum er confidence, reduction of administrative 
burden, certainty and effectiv eness, the preferred option is to harmonize the time 
frame for the exercise of the right of withdr awal and the issuer would be entitled to 
extend the period voluntarily.  
7.1.4.  Policy options in relation to the la ck of harmonised rules on liability 
Option 1. No action at EU level:  Rome I Regulation63 on the law applicable to 
contractual obligations is not applicable to the terms and conditions of an offer to the 
public. National systems of civil liability are not harmonised in the EU. National rules of civil liability are deeply embedded in the civil law of Member States. The 
harmonisation of the liability standards is a goal that exceeds the Prospectus Directive; it is not pertinent to ask for a limited harmonization of the civil liability 
                                                
 
63 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I). OJ L 177, 4.7.2008, p.6. See recital 28 and Article 
6.4(d).  Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep status 
quo 0 0 0 0 0 
Maximum 
harmonization 
of the time 
frame - - + ++ ++ 
Harmonize 
time frame and 
allow extension 
by the issuer + ++ + ++ +++ 
Harmonize 
time frame to 
the settlement 
of the securities -- -- 0 -- ++ 
 
EN 30   EN standards applicable just to prospectuses. Such a pr oposal could even create more 
disruptions and uncertainties when interac ting with other provisions of the national 
legal frameworks for liability. Such an in itiative should embrace a larger spectrum of 
legislation, notably fi nancial services law.  
Option 2. Harmonize the liability standards applicable to the prospectus: the 
harmonization of the rules on liability woul d certainly reduce the costs of producing 
a prospectus (at least those related to the legal advice) and enhance certainty in the securities market. Investor protection a nd consumer confidence could certainly be 
strengthened by the harmonization of the liability standards of the Prospectus 
Directive: more certainty would be added to  the current requirements of article 6 of 
the Prospectus Directive which already requi res that someone is responsible for the 
information given in the prospectus and that such a person or persons is clearly identified in the prospectus. Both obligati ons are already included in Article 6 of the 
Prospectus Directive.  
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the 
status quo of 
the liability 
standards in 
the PD 0 0 0 0 0 
Harmonize the 
liability 
standards  + + ++ + + 
The harmonisation of the liability standa rds is a goal that exceeds the Prospectus 
Directive. Therefore the pref erred option is to keep the status quo .  
7.1.5.  Analysis of the policy options in rela tion to the summary of the prospectus 
Option 1. No action at EU level: this would imply that the situation of the summary 
of the prospectus will remain unchanged as defined in section 3.1.5 (the " baseline 
scenario "). The current limitation of 2,500 wo rds and Annex I and IV of the 
Prospectus should not be read prescriptiv ely but as an indication for an optimum 
length for prospectuses. However, depe nding on the specific circumstances 
surrounding each issue, a meaningful summary could exceed such limit and/or contain fewer items than those in the Annexes.  
Option 2. Provide retail investors with appropriate information in an easily 
analyzable and comprehensible form in order to make invest ment decisions in 
full knowledge of facts:  the standardisation of the content of the summary will 
increase investor protection, consumer confid ence and certainty: fi rst, investors will 
receive a more useful piece of informati on to form their investment decision and, 
second, a summary inspired by the UCITS Key Investor Information
64 could allow 
the investor to compare the security with other investme nt products. For reasons of 
                                                 
64  For more information on the UCITS Key Investor Information concept, see 
http://ec.europa.eu/internal_market/investment/investor_information_en.htm .  
 
EN 31   EN effectiveness, issuers shoul d not be constrained by the limit of 2.500 words for the 
summary. The size of the summ ary should not be determined a priori , because the 
limitation prevents issuers from includi ng relevant information in a more 
comprehensible way. The summary should be  as short as possi ble but as long as 
necessary to enable issuers to convey m eaningful information to the investor. A 
logical consequence of having a more s ubstantial summary document would be to 
attach civil liability on the basis of th e summary not only if it is misleading, 
inaccurate or inconsistent, when read together with the other parts of the prospectus, but also if it does not provide key informa tion enabling investors to take informed 
investment decisions and to compare the se curities with other investment products. 
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Standardise 
the content of 
the summary ++ ++ 0 + ++ 
For reasons of investor protection, consumer  confidence, certaint y and effectiveness, 
the preferred option is the standardisation of the summary of the prospectus 
following the approach adopted by the Eu ropean Commission in its Communication 
on Packaged Retail Investment Products65. 
7.2. Analysis of the options related to situations of burdensome requirements 
imposed on companies raising funding in securities markets and to the 
intermediaries involved  
7.2.1.  Policy options for bringing forward a le vel playing field for Employee Shares 
Schemes  
Option 1. No action at EU level:  in this situation (the "baseline scenario" ) the 
competent authorities of the Member Stat es could use the possibilities provided for 
in the Directive and the implementing Regulation (the "improved policy 
implementation option" ): in accordance with Artic le 23.4 of the Prospectus 
Regulation, in those cases where one of  the information items required by the 
Regulation is not pertinent to the issuer, to the offer or to the securities to which the 
prospectus relates, that information may be omitted. Third country issuers or EU non listed issuers that have decided to launch employee shares schemes do not need to elaborate a fully fledged pros pectus. The prospectus for th ese types of offers could 
contain less amount of information. The reason ing is twofold: first, if the issuer is 
already admitted to trading in the securities  market of a third country, there is already 
public information about the company in the public domain; second, employees of a company are not comparable to the common investor in terms of their information 
needs. In these cases the issuer will fi nd easier (and cheaper) to produce a prospectus 
that is just focused on aspects that are es sential for the employees (like information 
                                                
 
65  COM (2009) 204 of April 30, 2009.  
 
EN 32   EN on the number and nature of the securities and the reasons for and the details of the 
offer – see Articles 4.1(e) and 4.2(f) of the Prospectus Directive).66 
However, the common interpretation ag reed by the CESR members in January 
200967 on the short-form disclosure regime for offers to the employees in those cases 
where a prospectus is required has partially alleviated the situation of the European 
employees of companies listed in third countries. But, the solution is not fully satisfactory for various reasons: first, this interpretation was meant to be a temporal arrangement, pending the amendment of the Prospectus Directive that would provide 
a better solution in terms of  the legal certainty; second, th e CESR interpretation still 
requires the companies that benefit from the interpretation to publish a prospectus, 
which is still costly, and in case of em ployee share schemes a prospectus has not 
added value in terms of investor protecti on or consumer confidence: employees are 
better protected than investors because th ey could receive adequate information 
through the employee information document of article 4.1(e) and article 4.2(f) of the 
Directive (see CESR guidance on the contents of the employee information document
68); finally, the CESR interpretation cove rs only part of the companies (just 
non-EU listed companies)  and does not cover the European employees of non-listed 
companies and of companies listed in multilate ral trading facilities (these companies 
have to publish a full prospectus).  
Option 2. Amend the Directive and extend th e exemption in Article 4.1(e) to the 
employee share schemes launched by co mpanies that are listed in a non-
regulated market (third country and EU issuers):  introducing an exemption in the 
Prospectus Directive for employee share schemes launched by companies that are 
listed in a non-regulated market (third country and EU issuers)  would help to 
overcome the limitations described in the previous paragraph. However, employees 
from non-listed companies would be  excluded from this regime.  
Option 3. Amend the Directive and exte nd the exemption in Article 4.1.(e) 
including not only the employee share sche mes of companies that  are listed in a 
                                                 
66 This policy option is inspired by CESR's common interpretation set up in question number 71 of the 
frequently asked questions regarding prospectuses ("Employee Share Scheme Prospectuses: Short-form 
disclosure regime for offers to the employees in those cases where a prospectus is required"). CESR 
members agreed on a list of informat ion items that are not pertinent fo r an offer addressed to employees 
of third country listed issuers and issuers listed in a non-regulated market (the employer has to have 
securities already admitted to trading on a ma rket or by an affiliated undertaking).  
67 Frequently asked questions regarding Prospectuses: Common positions agreed by CESR Members 8th 
Updated Version - February 2009 (Ref. CESR/09-103). Question number 71. 
68 The CESR’s recommendations for the consistent implementation of the European Commission’s 
Regulation on Prospectuses nº 809/2004 (ref. CESR/05-054b), paragraphs 173 to 176. The CESR would expect the document referred to in articles 4.1.d and 4.2.e and 4.1.e and 4.2.f to include: a) the 
identification of the issuer and a indication of where additional information on the issuer can be found; 
b) an explanation of the reasons of the offer or admission to trading together with an indication of the specific provision of the Directive un der which the exemption applies; c)  details of the offer (key terms 
and conditions of the offer or admission to trading, which is likely to include information on the 
addressees of the offer, time frame of the offer, minimum and maximum amount of orders, information 
on where details of the price can be found, if not yet determined), including the nature of the offer (offer 
to issue or to sale securities), conditions upon which the securities will be issued or admitted to trading, 
price of the securities, if any. In relation to the num ber and nature of the securities involved in the offer 
or admission to trading, the CESR would expect this to include a summarised description of the rights 
attaching to the securities. 
 
EN 33   EN non-regulated market ("exchange-regulated " market or third country securities 
markets) as proposed in option above, but also encompass companies that are 
not listed: the introduction in the Prospectus Di rective of a wide exemption by 
which the employees are not discriminated on whether their company is listed or not 
could be considered an impr ovement in terms of effici ency (no only companies in 
third countries will benefit from the new regime but also EU non listed companies), 
certainty (the legal basis for the exemption will be included in a Directive, and no longer in a non-binding interp retation from CESR) and re duction of administrative 
burdens (companies launching employee share schemes will save the cost of producing a prospectus). This option is also  positive in terms of investor protection 
because employees will receiv e tailored information about the financial participation 
scheme in accordance with Article 4.1(e) of  the Prospectus Directive. In fact, 
employee share schemes are exempted from the obligation to publish a prospectus "provided that a document is made ava ilable containing information on the number 
and nature of the securities and the reasons for and details of the offer"
69.  
 Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Exempt ESS 
for third 
country listed 
issuers 0 0 + + + 
Exempt all 
kind of ESS 0 0 +++ + ++++ 
For reasons of certainty and reduction of administrative burdens and effectiveness, 
the preferred option is to amend the Prospect us Directive in a way that exempts from 
the obligation to publish a prospectus em ployee share schemes launched in the EU 
by any type of company. 
                                                 
69  The outline of the information that the issuer has to include in such a document is suggested in the 
CESR recommendation for the consistent implementation of the Prospectus Regulation (n° 809/2004). 
The CESR would expect the document referred to in articles 4.1.d and 4.2.e and 4.1.e and 4.2.f to include: a) the identification of the issuer and a indi cation of where additional information on the issuer 
can be found; b) an explanation of the reasons of the offer or admission to trading together with an 
indication of the specific provision of the Directive u nder which the exemption applies; c) details of the 
offer (key terms and conditions of the offer or admission to trading, which is likely to include 
information on the addressees of the offer, time frame of the offer, minimum and maximum amount of 
orders, information on where details of the price can be found, if not yet determined), including the 
nature of the offer (offer to issue or to sale s ecurities), conditions upon which the securities will be 
issued or admitted to trading, price of the securities,  if any. In relation to the number and nature of the 
securities involved in the offer or admission to trading, the CESR would expect this to include a 
summarised description of the rights attaching to the securities. See www.ces r.eu (ref. CESR/05-054b, 
paragraphs 173-176). 
 
EN 34   EN 7.2.2.  Policy options in relation to the duplication of transparency obligations (Article 10 
of the Prospectus Directive) 
Option 1. No action at EU level: this will keep in place the obligation stipulated in 
Article 10 of the Prospectus Directive with the consequences  explained in section 
3.2.2: issuers will keep on publishing annua lly a document with no added value in 
terms of transparency (the "baseline scenario" ). 
Option 2. Eliminate the obligation estab lished in Article 10 of the Directive: 
taking into account that the provisions of the Transparency Directive have made the 
requirement of Article 10 redundant, the de letion of article 10 of the Prospectus 
Directive will not have any negative impact in terms of investor protection or consumer confidence. On the contrary, as ESME suggests, such a change would be 
even more effective and would help to in crease consumer confidence as it would 
serve to remove from the public doma in outdated and therefore misleading 
information
70. 
The deletion of article 10 would imply a reduction of administrative burden for 
issuers. In accordance with the estimati ons provided by ESME members, the cost 
saved by EU issuers could amount to € 30 million71. 
Stakeholders participating in the public consultation have unanimously agreed on the 
benefits from the deletion of Article 10 of the Prospectus Direct ive. A number of the 
contributions have pointed out that th e deletion of article 10 would require 
adjustments in Articles 9.4 and 11.1 of the Pr ospectus Directive a nd 2.1.i (i) of the 
Transparency Directive, where there is a cross-refere nce to Article 10. 
                                                 
70 "The Annual Document does not contain current information, but a collection of historical information 
only. Therefore, the issuers only accept liability for correctly having co llected the required data, not for 
the correctness of the information at the time of publication of the document. This is reflected by the statement of the issuer normally contained in the Annual Document: Examples are "Information 
included or referenced in this annual document may be out of date." and "The information referred to 
below is not necessarily up to date as at the date of this annual information and the Company does not undertake any obligation to up-date any such information in the future." ESME paper "Position on 
Article 10 of the Prospectus Directive in relation to the Transparency Directive" , 4 June 2008. See 
http://ec.europa.eu/internal_market/securities/docs/esme
  
71  This figure is calculated based on the number of companies with listed shares (12,299), as provided by 
FESE monthly statistics, February 2009, and the estimated annual cost of meeting the obligation (€2,500). See section 3.2.2. Some companies may not have shares traded on a regulated market but only 
other securities, such as bonds. These companies should also be taken into account. However, the 
number of companies with listed shares is  the most reliable figure available.  Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the 
status quo of 
art. 10 of PD 0 0 0 0 0 
Delete art. 10 
of PD + + +++ 0 ++ 
 
EN 35   EN For reasons of investor protection, consum er confidence, reduction of administrative 
burden and effectiveness, the preferred opt ion is to delete article 10 from the 
Prospectus Directive. 
7.2.3.  Policy options in relation to the restricti on for the choice of home Member State for 
the issuers of non- equity securities 
Option 1. No action at EU level: this willkeep the threshold of 1.000 € for the 
determination of the home Member State for the issuers of non-equi ty securities (the 
"baseline scenario").  This situation has the consequences described in section 3.2.3: 
issuers of non-equity s ecurities below €1.000 and securities without denomination 
are excluded from the possi bility of choosing a home Member State, with the 
implications, notably for debt issu ance, explained in this section.  
Since the Prospectus Directive entered into force, issuers of securities mentioned in 
article 2.1(m)(ii) have been entitled to a ppoint – among those of the countries where 
the offer or the admission to trading is taking place – the competent authority in charge of the approval of the prospectus . This possibility has proven to be an 
efficient tool for issuers of debt  denominated above € 1.000 per unit. 
Option 2. Provide for the choice of the home Member State for issues of non-
equity securities below the €1000 threshold: the elimination of the €1.000 
threshold in article 2.1(m)(ii) will extend th is possibility to issuers of non-equity 
securities regardless of the denomination of  the offer . Such a change would have a 
positive impact in terms of efficiency in cross border offers for two reasons: first, the issuer will not have to depend on the denomination of the offer to choose the home Member State that better suits an offer in terms of commercial strategy; second, 
issuers of securities that are not denominate d (like structured secu rities) will be able 
to benefit from this possibility.  
The abolition of the threshol d has no impact in terms of  investor protection: the 
choice of home Member State does not mean less control or relaxed supervision. The 
prospectus will be in any event approved by the competent authority of an EU Member State. This competent authority will be responsible for the application of the 
European standards of investor protection stemming from the Prospectus Directive. 
 Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Delete the 1000 
€ threshold 0 0 + 0 ++ 
For reasons of reduction of administrative burden and eff ectiveness, the preferred 
option is to extend the possibi lity to choose home Member St ate to all the issuers of 
non-equity securities.  
 
EN 36   EN 7.2.4.  Policy options for facilitating the raise of  capital through the issuance of rights  
Option 1. No action at EU level:  the option of keeping the status quo  (the "baseline 
scenario")  would imply that the competent au thorities should apply individually 
Articles 8.2 of the Prospectus Directive and 23.4 of the Prospectus Regulation on a 
case by case basis (the "improved policy implementation option" ). In this case the 
competent authorities could pe rmit issuers to reduce the am ount of the information in 
the prospectus for right issues. This option is positive in terms of reducing 
administrative burden as the cost of produc ing a lighter prospectus would decrease 
(the cost of performing the due diligence would be less than in a case of a full 
prospectus). However, it would not favour ce rtainty as the decisi ons of the individual 
competent authorities would not  be necessarily consistent  in the 27 Member States. 
The lack of a harmonised approach in  this regard could hamper consumer 
confidence.  
Option 2. Share offerings to existing sha reholders by the way of a rights issue 
could be exempted from the prospectus requirement : the issuer would save the 
cost of producing a prospectus if there wa s a total exemption from the obligation to 
publish a prospectus in the case of rights issues. Stakeholders are already familiar 
with the company issuing the ri ghts (they have already take n in the past the decision 
to invest in this company). Taking into account the cost of producing a fully fledged 
prospectus, this might not be the most appr opriate way to inform shareholders about 
a right issue. Shareholders do not need the special protection provided for by a 
prospectus as they should be familiar with and confident in the company in which they have already invested. First, companies are required by company law to report 
to their shareholders
72; second, a traded company disclo ses information to the market 
on a continuing basis, so that the public and shareholders know the essential and 
fundamental information regarding the ne w shares. Issuers would find it easier to 
launch this type of offers. However, taking in to account that in some countries rights 
issues are not limited to existing share holders (and therefore new investors could 
participate in the offer), such exemption would significantly reduce information that 
the investors that are not shareholders  would receive. Investor protection and 
consumer confidence would therefore be diminished by such an option.  
Option 3. The principle of a "proportiona te" prospectus for right issues could 
be introduced:  the option of providing a reduced di sclosure regime for rights issues 
seems to provide more certainty to this ty pe of offers (as it would be a harmonised 
solution). Such a solution would improve the efficiency of cross border rights issues 
and would help to build consumer confidence,  as the content of the prospectus would 
be better tailored for this type of the offe r. A reduction of the amount of information 
to be included in the prospectus would help to reduce significantly the cost of 
publishing a prospectus by decrea sing due diligence costs.  
 Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 0 0 0 0 0 
                                                 
72 Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of 
certain rights of shareholders in listed companies. OJ L 184 , 14/07/2007 P. 0017 - 0024 
 
EN 37   EN quo 
Total 
exemption -- -- +++ - + 
Reduced 
disclosure 
requirements 0 + ++ + + 
For reasons of consumer c onfidence, reduction of admini strative burden, certainty 
and effectiveness, the preferred option is  to introduce the principle of a reduced 
disclosure regime for prospectuses for right s issues in the Directive; this regime 
should be supplemented through implementi ng measures, i.e. a modification in the 
implementing regulation.  
7.2.5.  Policy options for providi ng proportionate disclosure requirements for small quoted 
companies73 
Option 1. No action at EU level: by keeping the status quo the problems identified 
for companies with small market capitalization raising capital on financial markets will not be solved. Accordi ng to Article 8.2 of the Pros pectus Directive and 23.4 of 
the Prospectus Regulation, national compet ent authorities have  the power to omit 
certain information from prospectuses. Ho wever they can use it in a discretionary 
manner affecting the final aim of the Prospe tus Directive to create a level playing 
field for all issuers in the single market. It  could be argued that such option could be 
positive in terms of reducing administrative burden (the cost of producing a lighter prospectus would be more affordable than  producing a fully fledged prospectus). 
However, such option does not ensure suffi cient certainty given the possible different 
interpretations by the competent authorities in each single case.  
Option 2. Small quoted companies could be exempted from the obligation to 
publish a prospectus by raising the threshold  in Article 1(2)(h) of the Prospectus 
Directive: an exemption from the obligation to publish a prospectus by raising the 
threshold of €2,5 million in Article 1.2(h) of  the Prospectus Directive would reduce 
significantly the cost of raising capital for small quoted companies and therefore 
would provide these companies with a more effective way to raise capital. However, 
the impact of such a measure would be de trimental in terms of investor protection 
(investors would be deprived from the basic information that is needed for making an 
informed investment decision) and consum er confidence (some respondents of the 
public consultation argued that investing in small quoted companies is often more 
risky than investing in th e big well-known issuers). 
                                                
 
73 Figure 5 in Annex V shows that a specific treatment would be justified for small quoted companies in 
terms of disclosure requirements. It provides details on market capitalisation for companies listed in Cyprus, Finland, France, Germany, Greece, Italy and UK. The figures illustrate that 80 percent of the 
smallest firms only account for 4 percent of the market capitalisation. Specifically, the 4,559 listed 
companies with a market capitalisation of less than € 500 million have total market capitalisation of 
€421 bn. This is contrasted by the total of 5,721 listed companies with a market capitalisation of 
€10,166bn. The obligations that companies have to m eet are very similar irrespective of the size of the 
companies. Assuming that the capital typically raised  through an offer is proportional to the current 
market capitalisation it is clear that cost related to  the production of the prospectus attributes to a 
significantly larger increase in the funding costs for smaller companies than for larger companies. 
 
EN 38   EN Option 3. The principle of a "proport ionate" prospectus for small quoted 
companies could be introduced:  the option of providing a reduced disclosure 
regime to small quoted companies combin es the positive effects of reducing the 
administrative burden of these companies w ith a more effective system for raising 
capital. Investor protection will not be harm ed because investors would be able to 
base their investment decisions on tailored information about these companies. Such 
a proportionate solution could also favour th e general consumer confidence, as the 
market would approve a disclosure regime that better reflects the reality of these 
companies. 
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Exemption by 
raising the 
threshold  -- -- ++ 0 + 
Reduced 
disclosure requirements 0 + + + + 
For reasons of consumer c onfidence, reduction of admini strative burden, certainty 
and effectiveness the preferred option is to introduce the principle of a reduced disclosure regime for prospectuses of co mpanies with reduced market capitalization 
in the Directive; this regime should be supplemented through implementing 
measures, i.e. a modification in  the implementing regulation. 
7.2.6.  Policy options for providing proportionate di sclosure requiremen ts for small credit 
institutions 
The analysis in the previous point applies also to the policy options related to the 
credit entities and the offer of the secur ities mentioned in Article 1.2(j) of the 
Prospectus Directive
74.  
Option 1. No action at EU level: t baseline scenario would imply that the situation 
would remain unchanged as described in section 3.2.4.3: Competent authorities could 
be expected to use the powers referred to in Articles 8.2 of the Prospectus Directive 
and 23.4 of the Prospectus Re gulation. Like in the previous case , on one hand, such 
option could imply a reduction of the admi nistrative burden; on the other hand, it 
would not be effective in terms of cons umer confidence given the uncertainty 
deriving from the different interpretations by the competent authorities of each single 
case.  
Option 2. Small credit institutions coul d be exempted from  the obligation to 
publish a prospectus by raising the threshold  in Article 1(2)(j) of the Prospectus 
Directive:  a total exemption from the obligation to publish a prospectus could be 
                                                 
74 The comparison in Figure 6 in Annex V between an offer of €50 and an offer of €500 million might 
help to illustrate the problem: the impact of the additional costs for the prospectus in the offer of €50 
million (0.3%) is considerably higher than in the offer of €500 million (0.03%).  
 
EN 39   EN implemented by raising the threshold of €50 million in Article 1.2(j) of the 
Prospectus Directive. On the one hand, su ch a change would reduce the cost of 
raising funds for these entities (because  they would not have to produce a 
prospectus). On the other hand, the impact of  such a measure woul d be detrimental in 
terms of investor protection and consumer confidence.  
Option 3. The principle of a "proport ionate" prospectus for small credit 
institutions could be introduced:  the option of providing a reduced disclosure 
regime to small credit institutions for the type  of offers mentioned in Article 1.2(j) of 
the Prospectus Directive, at or above the threshold therein, has th e positive effect of 
reducing the administrative burden of th ese companies and provides for a more 
efficient system for raising funds. Invest or protection will not be harmed because 
investors would be able to base their i nvestment decisions on tailored information 
about the offers of securities described in Article 1.2(j) of the Prospectus Directive. 
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Exemption by 
raising the 
threshold -- -- ++ 0 + 
Reduced 
disclosure 
requirements 0 + + + + 
For reasons of consumer c onfidence, reduction of admini strative burden, certainty 
and effectiveness the preferred option is to introduce the principle of a reduced disclosure regime only for offers of secur ities described in Article 1.2(j) of the 
Prospectus Directive at or a bove the threshold ther ein. Below this threshold, offers of 
securities described in Arti cle 1.2(j) of the Prospectus Directive remain outside the 
scope of the Directive. This regime should be supplemented through implementing measures, i.e. a modification in  the implementing regulation.  
7.2.7.  Policy options in relation to the prospect us disclosures in case of government 
guarantee schemes  
Option 1. No action at EU level:  the option of keeping the status quo  (the "baseline 
scenario")  in relation to information that has to be included in a prospectus in case 
of an offer of securities guaranteed by a Member State has similar implications in 
terms of certainty and consumer confid ence as in the prev ious two points. 
Option 2. Issuers of securities guarant eed by the government of a Member State 
could be exempted from the obligatio n to provide information about the 
guarantor in the prospectus: s ources like Eurostat provid e to the public sufficient 
data on government revenue, government  expenditure, government deficit, 
transactions in assets, trans actions in liabilities, other economic flows, and balance 
 
EN 40   EN sheets75. Therefore the option of waiving issu ers from the obligation of including 
information about the State guarantor w ould reduce the administrative burden for 
these issuers (at least it should have a pos itive impact in rela tion to the cost of 
performing the due diligence).  
Option 3. The same policy option could be extended to cover the information 
not only about the guarantor, but also about the guarantee: , information on the 
guarantee (scope, conditions, etc.) is a ke y element of an investment decision. 
Availability of this type of information will improve certainty  in the securities 
markets. Therefore, while the issuer c ould omit the information on the State as 
guarantor, information on the guarantee should  be at least include d in the prospectus 
for reasons of certainty in the securities markets.  
 
 Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Exclude 
information 
only on 
guarantor  0 0 + + + 
Exclude 
information on 
guarantor and 
guarantee -- -- ++ + + 
For reasons of reduction of administrative burden, certainty and effectiveness, the 
preferred option is to amend the Prospectus Di rective and clarify that  in case an offer 
of securities is guaranteed by a Member State, there is no need to include in the 
prospectus the information on the guara ntor State (though it should contain 
information about the guarantee).  
7.2.8.  Policy options in re lation to the printe d form (paper copy) of the prospectus 
Option 1. No action at EU level:  the option of keeping th e status quo would imply 
that, in the situations where the prospectus has been publis hed in electronic form, the 
persons obliged to deliver the prospectus would have to provide a paper copy if 
requested to do so by the investor (the "baseline scenario" ).  
Option 2. Abolish the obligation to de liver a paper copy of the prospectus: the 
option of abolishing this obligation would be positive in terms of reducing the 
administrative burden for the person obliged to handle the prospect us to the investor 
(be it the offeror, the person asking for the admission to trading or the financial intermediaries placing or selling the securities). However, it will reduce notably the level of investor protection because of the existing digital divide, namely in cases where the investor has no access to internet . The abolition of this obligation would 
                                                
 
75 See http://ec.europa.eu/eurostat/ 
 
EN 41   EN have a negative impact in the confidence of the consumers because it would create 
discrimination between investors depending on whether they have internet access or 
not. 
 Investor 
protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the 
status quo 0 0 0 0 0 
Abolish the 
paper copy 
obligation -- -- ++ 0 0 
For reasons of investor prot ection and consumer confidence the preferred option is to 
maintain the obligation of providing a copy paper of the prospectus in the case 
described in Article 14.7 of the Prospectus Directive. 
7.2.9.  Policy options in relation to the transla tion of the summary of the prospectus 
Option 1. No action at EU level:  the option of keeping th e status quo would imply 
that the issuer or the pers on responsible for drawing up th e prospectus would have to 
provide the translations of the summary of the prospectus into the languages of the 
Member States included in the scope of th e cross-border offer or admission to trading 
(the "baseline scenario" ). 
Option 2. Abolish the obligation to tran slate the summary of the prospectus: the 
option of abolishing this obligation would reduce the administrative burden for this 
type of offers, because the person respons ible for drawing up the prospectus could 
save the cost of the translations. Howe ver, this solution would be seriously 
detrimental for investor protection. In accord ance with Article 5.2 of the Prospectus 
Directive, the summary of the prospectus reflects the essential characteristics and 
risks associated with the issuer, any guarant or and the securities. In cases where the 
prospectus is "passported" to countries wh ere the investors do not speak the language 
in which the prospectus is drawn up it is e ssential that investors receive at least the 
summary of the prospectus in a language that they can understand. The option of 
abolishing this obligation would undermine consumer confidence because it would 
be contrary to the main objective of the Pr ospectus Directive: to provide investors 
with information necessary to enable them to make an informed investment decision 
(Article 5 of the Prospectus Directive). 
 Investor protection Consumer 
confidence Reduction of 
administrative 
burden Certainty Effectiveness 
Keep the status 
quo 0 0 0 0 0 
Abolish the 
translation of 
the summary  -- -- ++ 0 0 
 
EN 42   EN For reasons of investor prot ection and consumer confidence the preferred option is to 
maintain the obligation of translating the summary of the prospectus as required by 
Article 18.1 of the Prospectus Directive. 
8. ANALYSIS OF IMPACTS  
8.1. Impact on stakeholders 
The following table shows the impact of the changes comprising the preferred policy 
options in relation to th e main stakeholders.  
    Impact on 
stakeholders 
Scenario Investors Companies 
raising capital Financial 
intermediaries Supervisors Other stakeholders 
Clarification of 
the retail cascade 
regime Investors to benefit 
from the fact that a 
prospectus will be 
required in case of 
subsequent offers of 
securities through 
financial 
intermediaries (in 
case the offer is not 
exempted in 
accordance with the 
PD).  No impact Intermediaries 
acting in 
association with 
the issuer will 
benefit from the 
fact that they will 
not have to draw 
up a new 
prospectus for the 
subsequent offers 
as they could rely 
on the existing 
prospectus of the 
issuer, if updated. Supervisors 
will have a 
common and 
clear legal 
framework for 
dealing with 
retail cascade 
issues.  
Alignment of 
qualified 
investors and 
professional 
clients Investors that are 
considered 
professional clients 
under MiFID will 
benefit from the 
treatment of 
qualified investors 
under the Prospectus 
Directive. They will 
have more 
investment 
opportunities as they 
will have easier 
access to private 
placements. Companies 
raising capital 
through private 
placements will 
benefit from a 
wider spectrum 
of potential 
investors. Financial 
intermediaries 
will be able to 
prepare private 
placements in a 
more effective 
manner as they 
will be entitled to 
use their list of 
professional 
clients for the 
purposes of 
private 
placements.  A reduction of 
the use of the 
registers of 
qualified 
investors is 
expected. 
Supervisors 
may devote less 
resources to the 
maintenance of 
such registers  
 
EN 43   EN     Impact on 
stakeholders 
Scenario Investors Companies 
raising capital Financial 
intermediaries Supervisors Other stakeholders 
Harmonisation of 
the time frame for 
the right of 
withdrawal Investors will benefit 
from the clarity of 
having a common 
time frame in the EU 
for the exercise of 
the right of 
withdrawal 
governing a cross 
border offer. 
Investors from 
countries where 
currently longer 
deadlines are applied 
would be less 
protected and their 
confidence could 
decrease. However, 
this risk is mitigated 
by the fact that the 
issuer or offeror will 
be entitled to extend 
the deadline in 
accordance with 
national consumer 
protection traditions  Issuers will be 
able to set the 
period. 
Therefore they 
will have 
certainty at 
every moment 
on when the 
right of 
withdrawal 
could be 
exercised, 
regardless the 
Member State 
where the 
investors are 
based. Financial 
intermediaries 
acting as offeror 
will have the 
same benefits as 
the issuers.  Supervisors 
will find easier 
to supervise 
whether the 
right of 
withdrawal ahs 
been respected, 
as there will be 
only one period 
governing each 
offer.  
Exemption for 
employee shares 
schemes Employees will be 
protected by 
receiving tailored 
information for the 
type of offer 
according to the 
document provided 
in article 4.1 (e). Companies will 
save the cost of 
producing a 
prospectus 
when offering a 
financial 
participation to 
their employees No impact Supervisors 
will not have to 
devote 
resources to 
approve 
prospectusses 
for this type of 
offers. EU employees 
As a consequence 
of the exemption, 
some companies are 
likely to be 
encouraged to offer 
financial 
participation to 
their employees. 
These schemes are 
notably addressed 
to non-executives 
employees. 
Therefore many EU 
workers will benefit 
from these type of 
schemes. 
Standardized 
summary A standardized 
summary will 
enhance investor 
protection and consumer 
confidence. 
Moreover, investors 
will be will be able 
to compare with 
other products and 
make more efficient 
investment decisions.  No impact No impact No impact  
 
EN 44   EN     Impact on 
stakeholders 
Scenario Investors Companies 
raising capital Financial 
intermediaries Supervisors Other stakeholders 
Deletion of 
Article 10 No impact. Investors 
have already access 
to the regulated 
information in 
accordance to the 
Transparency 
Directive Companies will 
save the cost of 
producing the 
annual 
document 
referred in 
Article 10 No impact  Supervisors 
will not need to 
devote 
resources to 
oversight the 
fulfilment by 
the issuers of 
the requirement 
in Article 10  
Permit the choice 
of home Member 
State to all non-
equity offers No impact. Investors 
will be protected 
because all the EU 
competent authorities 
apply the same 
standards of investor 
protection when 
approving 
prospectuses. Issuers will be 
able to arrange 
cross-border 
offers 
according to the 
strategy that 
better suits their 
needs. 
Issuers of 
securities that 
are not 
denominated 
(like structured securities) will 
benefit from the 
possibility to 
choose the 
competent 
authority. No impact No impact   
Proportionate 
prospectus for 
rights issues Investors will benefit 
from the fact that the 
prospectus will be 
tailored for rights 
issues. The fact that 
the cost for such a 
prospectus decreases 
will permit more 
public offers of 
rights.  Companies will 
find more 
attractive and 
easier to raise 
capital via 
rights issues as 
a consequence 
of the reduction 
of the cost of 
producing a 
rights 
prospectus. 
 No impact No impact Shareholders  
The fact that the 
cost for such a 
prospectus 
decreases will 
permit more public 
offers of rights. 
Issuers may be less 
inclined to 
circumvent the 
costs of making a 
public offer of 
rights by using the 
exemptions of the 
Directive to carry 
out private 
placements (where 
shareholders are as a consequence 
excluded from the 
increase of capital 
and their share of 
capital diluted)  
 
EN 45   EN     Impact on 
stakeholders 
Scenario Investors Companies 
raising capital Financial 
intermediaries Supervisors Other stakeholders 
Proportionate 
prospectus for 
small quoted 
companies/credit 
institutions. Small quoted 
companies will be 
encouraged to raise 
capital in the 
securities markets. 
Investors will benefit 
from the wider range 
of investment 
opportunities. 
Investors would also 
receive a tailored 
prospectus in case 
they want to invest in 
small quoted 
companies Small quoted 
companies can 
be expected to 
have better 
access to 
finance. The 
cost of 
producing a 
prospectus will 
be balanced 
with the 
benefits of 
going public. No impact No impact SMEs 
The special 
treatment for small 
quoted companies 
can be expected to 
facilitate SME the 
fundraising in the 
securities markets 
Proportionate prospectus for 
offers of 
securities 
mentioned in Art. 
1.2(j) (small 
credit institutions)  Small credit 
institutions will be 
encouraged to raise 
capital in the 
securities markets. 
Investors will benefit 
from the wider range of investment 
opportunities. 
Investors would also 
receive a tailored 
prospectus in case 
they want to invest in 
these securities Small credit 
institutions can 
be expected to 
have better 
access to 
finance. The 
cost of producing a 
prospectus will 
be balanced 
with the 
benefits of 
going public. No impact No impact   
No need to 
include 
information about 
the State 
guarantor No impact. There is 
already sufficient 
information about 
the States available 
to the public. The cost of 
producing the 
prospectus will 
be reduced and 
therefore it will 
be less costly to 
raise capital for 
this type of 
offers. No impact Supervisors 
will no need to 
examine that 
part of the 
prospectus.  
8.2. Other impacts 
8.2.1.  Impacts on the environment, employment and third countries 
It is not expected that the changes in the Prospectus Directive ar e going to have any 
direct impact on the natural environment or on the gender policy of the EU or on 
third countries. Environmental benefits may increase by repealing the obligation to provide on investors' request printed versi on of the prospectus. However this will be 
detrimental to investors' protection.  
The extension of the employee share scheme exemption is likely to have a positive 
impact in terms the social and employment policy of the EU. As explained in section 
3.2.1, under the existing regime companies ar e penalised if they offer financial 
participation schemes to common employees, because they have to produce a costly 
prospectus; this is not the case for offers addressed to employees with executive level 
 
EN 46   EN and directors, because in this case the company can use the exemption of Article 
3.2(b) of the Prospectus Directive76. The change proposed by the European 
Commission will eliminate this discrimination for the ordinary employees and it is expected that many EU workers will benefit fr om this type of schemes in the future. 
The benefits of financial participation ar e highlighted in the Communication from the 
Commission on a framework for the promoti on of employee financial participation
77. 
The flexibility provided by the extension of  the home Member St ate choice for all 
offers of non-equity securities (deletion of  €1.000 threshold in Article 2.1.m (ii) of 
the Prospectus Directive) will make EU markets more attractive for third country 
issuers offering non-denominated non-equity se curities or non-equity securities with 
a denomination per unit below €1.000 threshold. Under the current regime, the determination of the home Member State for the issuers offering such securities is governed by a rigid system set out in Article 2.1.(m) (iii)
78. Apart from that, no major 
impact on third countries is expected fr om the changes proposed by the European 
Commission. 
8.2.2.  Impacts on small and medium size enterprises  
The short form disclosure regime described in section 7.2.5 could have a positive 
impact for those small and medium size en terprises (SMEs) searching to finance 
their business in the securities markets. The cost of producing a prospectus will be 
reduced for these SMEs. In a similar way, th e short form disclosure regime described 
in section 7.2.6 will facilitate th e raise of capital for small credit institutions. Easier 
access to funding will enhance the develo pment of the small entities and will 
promote the emergence of new local and re gional actors competing in the financial 
markets. 
Non-quoted SMEs willing to launch fina ncial participation schemes with their 
employees will also benefit from the extension of the employee share schemes exemption described in section 7.2.1. The es timation of reduction in administrative 
burden of both measures is de tailed in the next section. 
The rest of the changes suggested by the European Commission are not likely to 
have any direct impact on SME. 
                                                
 
76 Offers of securities addressed to less than 100 natu ral or legal persons per Member State are exempted 
from the obligation to publish a prospectus. 
77 'The main reasons for enterprises to introduce financ ial participation are to en courage employees to take 
a greater interest in the success of the company, to cr eate a feeling of belong ing to the company and 
sharing common goals, and to encourage a greater a lignment of employees’ interests with those of the 
shareholders. Financial participation is also an importa nt instrument for recruiting and retaining staff. In 
addition, it improves the motivation of employees, enhances their loyalty and long-term commitment, 
increases productivity, and improves competitiveness and profitability. Finally, financial participation 
can also be an important instrument for raising capital, in particular in the case of start-up firms'. 
Communication from the Commission on a framework for the promotion of employee financial 
participation. COM(2002) 364, page 6. 
78 The home Member State for third country issuers of fering equity securities and non-equity securities 
with a denomination below €1.000 is the one where the securities are offered for the first time after the 
entry into force of the Prospectus Directive. 
 
EN 47   EN 8.3. Estimation of reduction in administrative burden 
This table shows the identifiable reductions  of administrative burdens on an annual 
basis. The methodology for calculating the administrative burden can be found in 
Annex VI79.  
 
Obligation  Wage costs 
reduction per occurrence  Overhead 
by occurrence 
(25% of 
wage costs) Frequency  Administrative 
burden by occurrence Number of 
companies affected by 
the changes TOTAL admin burden 
Deletion of 
Article 10 of the 
Prospectus 
Directive, to avoid duplication 
of transparency 
requirement € 2,000 € 500 1 € 2,500 12,000 € 30,000,000 
Exemption of all 
kinds of Employee Shares 
Schemes 
launched in the EU from the obligation to 
publish a 
prospectus € 392,000 € 98,000 1 € 490,000 37 € 18,130,000 
Reduction of 
disclosure requirements for 
rights offers € 186,400 € 46,600 1 €233,000 343 € 79,919,000 
 
Reduction of 
disclosure 
requirements for small quoted 
companies € 39,200 € 9,800 
 0.5 € 24,500 7056 
 € 172,872,000 
 
Exclude 
information on 
guarantor in case of government 
guarantee 
schemes € 23,200 € 5,800 
 1 € 29,000 28 € 812,000 
Total € € 301,733,000 
 
                                                 
79 For the purpose estimating the reduction of admini strative burdens for the preferred policy options, 
different elements in the calculations are provided. Th e wage cost is the estimated direct average wage 
cost of performing the relevant tasks. In addition an overhead of 25% is added to the calculation of the 
reduction of the administrative bur den. In cases where only the total cost of relevant tasks have been 
obtained an identical proportionate distribution between the wage cost and the overhead has been 
assumed and used for the calculation presented in the table in section 8.3. The frequency refers to the 
number of times per year the task is undertaken by the firms included in the calculation. The number of 
companies refers to the number of entities that are assumed to benefit from the reduction in the 
administrative burden in a given year.  
 
EN 48   EN  
The identifiable reduction of administrati ve burdens from the preferred options 
amounts to approximately € 302 million  on an annual basis .  
8.4. Summary of the final outcome 
In view of the conclusions reached in this impact assessment, the European 
Commission considers appropr iate to present a proposal  amending the Prospectus 
Directive80. The proposal should aim at solving th e problems identified in this impact 
assessment:  
– Article 3.2 of the Prospectus Directiv e should be amended to clarify that 
intermediaries should not be obliged to  produce a new prospectus for each 
subsequent offer as long as they have the possibility to use the initial prospectus 
of the issuer (with the condition that  such a prospectus is valid).  
– The definition of qualified investor in Article 2.1(e) should be modified to 
encompass the persons that are consid ered professional clients under MiFID. 
– The time frame for the exercise of the ri ght of withdrawal in Article 16.2 of the 
Prospectus Directive should be harmonised in all EU Me mber States; nevertheless 
issuers should have th e possibility to expand the time frame voluntarily. 
– The content of the summary of the prospect us should be standardised in line with 
the packaged retail investme nt products approach to be set up in spring by the 
European Commission. The limit of 2.500 word s should be deleted from recital 21 
of the Prospectus Directive. 
– All employees in the EU should have the same opportunities of financial 
participation. The exemption for employee shares schemes should be extended accordingly in Article 4.1(e) of  the Prospectus Directive. 
– The disclosure requirements of Article 10 of the Prospectus Directive should be 
abolished. 
– Issuers of non-equity should choose th e home Member State regardless of the 
denomination per unit of the offer. Th e threshold of €1.000 should be deleted 
from Article 2.1(m) of the Prospectus Directive. 
– The raise of capital thr ough the issuance of rights should be subject to 
proportionate disclosure requirements, li kewise the raise of capital of small 
quoted companies and small credit institu tions. Article 5 of the Prospectus 
Directive should reflect this principle and the European Commission should be 
empowered to put in place implementing legislation specifying the disclosure 
requirements in this regard. 
                                                
 
80 For further additional minor changes see Annex IX.  
 
EN 49   EN – Article 1.3 of the Prospectus  Directive should clarify th at issuers of securities 
guaranteed by a Member State are not ob liged to include in the prospectus 
information about the State guarantor.  
9. MONITORING AND EVALUATION  
The Commission is the guardian of the Tr eaty and therefore will monitor how 
Member States have implemented the cha nges of the Prospectus Directive. Where 
needed, the Commission services will offer assistance to Member States for the implementation of the legislative changes in the form of transposition workshops 
with all the Member States or bilateral mee tings at the request of  any of them. When 
necessary, the Commission will pursue the pr ocedure set out in Article 226 of the 
Treaty in case any Member State fails to respect its duties concerning the 
implementation and application of Community Law.  
The evaluation of the consequences of th e application of the legislative measure 
could take place three years after the entry in to force of the legislative measure in the 
form of a Commission report to the C ouncil and the European Parliament. The 
Commission will be monitoring the application of the Prospectus Directive, as amended, through CESR, ESME and an extensive and continuous dialogue with all 
major stakeholders, including market par ticipants (issuers, intermediaries and 
investors), and consumers. It may also us e of the findings of studies carries out by 
stakeholders. The assessment will be carried  out along the followi ng criteria: investor 
protection, consumer confiden ce, effectiveness, market efficiency, legal certainty, 
administrative burdens. The main elements that would be used during the evaluation 
would be the following:  
– investor satisfaction with the functioning of  the prospectus, in particular with the 
summary of the prospectus. 
– evolution of the functioning of the pros pectus for the placement of securities 
through financial intermed iaries in the EU;  
– evolution of the functioning and number of  qualified investors and issuers/offerors 
using the national register of qualified investors;  
– times that issuers choose a home Member State different than the one where they 
have their registered office for offers of  non-equity securities with a denomination 
below €1.000;  
– number of employee share schemes launched in the EU;  
– evolution of rights issues in the EU;  
– number of small quoted companie s raising capital in the EU;  
– number of credit institutions offering the securities mentioned in Article 1.2.(j) of 
the Prospectus Directive;  
– evolution of the private placements versus public offers.  
 
EN 50   EN ANNEX I  
1. CESR Report  
Based on the findings presented in the report, it seems that most market participants 
are satisfied with the new European legisl ation on prospectuses. Although they have 
highlighted a few obstacles in the practical application of the pass port, they consider 
that the passport mechanism envisaged in th e Prospectus Directive is working much 
better than the previous mutual recognition pr ocess and has lead to an increase in the 
number of pan-European offers. Neverthe less, they have also identified certain 
provisions in the Prospectus Directive a nd Prospectus Regulati on that are causing 
some practical difficulties.  
The report identifies those aspects where CESR  considers there is a need to further 
assess whether legislative action would be necessary. Among others, concerns have 
been raised in respect to the limited scope of the exemption of publishing a 
prospectus for offers or admissions to trad ing on regulated mark ets of securities to 
employees; the lack of specific regulation in relation to the registration document 
(passport, supplements, etc.); the need  to assess the usefulness of the annual 
document to be published in accordance with Article 10 of the PD; the circumstances 
when a supplement should be published (linked to the withdrawal right granted for 
investors in such cases); a nd the interpretation of the “re-sale” provisions in Article 
3.2 of the PD.  
2. ESME Report  
Based on the findings presented in the report,  ESME is convinced that the Prospectus 
Directive should be amended in  order to facilitate the achievement of the following 
objectives:  
– to promote retail investors and employees with an access to the full range of 
investment opportunities;  
– to promote market efficiency in public offerings, trading a nd listing securities 
within a single European capital market;  
– to increase the use of a prospectus by inve stors for effectively analyzing prospects 
and risks of a security prior to the investment decision;  
– to disburden issuers from requirements th at provide no significant added value in 
information to investors;  
– to achieve a better balance in some re spects of the allocation of risk between 
issuers and investors;  
– to reflect changes in the structure of in ternational securities markets since the time 
when the Directive was negotiated in 2001 to 2003;  
– to strengthen harmonization by achieving a common understanding of the rules by 
the national competent authorities.  
 
EN 51   EN 3. CSES Study 
The study suggests that any review of the prospectus regime should focus on 
reducing the cost burdens of specific require ments that are particularly burdensome 
and that only marginal changes should be made to the Prospectus Directive. The 
most important issues for change that were identified were the abolition of Article 10 
and clarifications to the de finition of a “public offer”  to reduce legal uncertainty 
surrounding the retail cascade.  
 
EN 52   EN ANNEX II – OUTCOME OF THE CONSULTATION  
The majority of the contributors welcom ed the changes suggested by the European 
Commission. The outcome of the consultation could be summarised as follows: 
– Respondents are very keen about the abolitio n of the annual documen t required in Article 
10 and the €1.000 threshold set Article 2.1.(m )(ii) of the Prospectus Directive.  
– The proposal concerning employees share sche mes is generally supported, with a clear 
preference for a wide exemption (i.e. exempt all offers of securiti es to employees). A 
minority suggests that the exemption should only be granted to third country companies that are listed in a market whose disclosure requirements are similar to those required in a 
regulated market in the EU. 
– The suggestion for the alignment of the defini tions of qualified inve stors and professional 
clients is generally welcomed, with some minor technical comments. There is no consensus among stakeholders on whether the national register of qualified investor 
mentioned in Article 2.3 of the Prospectus  Directive has to be  suppressed or not. 
– The majority of respondents favour the harmonisa tion of the time frame for the exercise of 
the right of withdrawal in two days, t hough there is no common position on whether the 
issuer should be entitled to extend the peri od for the exercise of such a right.  
– The majority of respondents are in favour of  exempting issuers from the obligation to 
provide information about the State guarantor. However, some respondents made clear that 
the prospectus should contain the information about the guarantee. 
– There were different approaches in relation to  the issue of the retail cascade. A number of 
respondents agree with the suggestion of the dele tion of the last sentence in Article 3.2 of 
the Prospectus Directive. Some others cons ider that such deletion would create more 
uncertainty and advocate for a clarification of the functioning of the prospectus in relation 
to the placement of securities th rough financial intermediaries.  
– Divergent views have been expressed concerni ng rights issues. A si gnificant number of 
respondents are against the total exemption. There is some support for a short form 
disclosure regime for rights issues. A minority expressed disagreement with a special 
treatment for rights issues. 
– There are divergent views concerning the trea tment of small quoted companies. A number 
of respondents are in favour of raising the th reshold of 2,5 Million € of Article 1.2(h) of 
the Prospectus Directive. Others are sympathe tic with the idea of a short form disclosure 
regime for the prospectus of the small quoted  companies. Finally, some others point out 
that the small quoted companies imply higher risk and therefore should produce a full 
prospectus in case they want to raise capital in the securities markets.  
– There is agreement on the need of improve ment in relation to the summary of the 
prospectus. Stakeholders pr ovided different ideas about how it could be improved. 
– Some respondents took the opportun ity to raise other issues th at were not included in the 
consultation. 
 
EN 53   EN  
ANNEX III – SUMMARY OF DISCUSSIONS AND LIST OF PARTICIPANTS IN THE MEETING HELD 
IN BRUSSELS ON 12 MARCH 2009  ON THE CONSULTATION OF THE PROSPECTUS DIRECTIVE  
DG MARKT services held a meeting with a numbe r of stakeholders associations on 12 March 
2009. The aim of the meeting was to have an ex change of views on the Prospectus Directive 
review. The meeting was attended by representativ es from issuers, intermediaries, investors 
and consumers (see list attached). 
 
1. Investor protection and market efficiency: wh at elements of the Prospectus Directive 
would you improve in order to enhance inve stor protection and ma rket efficiency?  
 
– Stakeholders expressed general support to the initiative of the Commission.  
– A number of participants signalled that th ere are still differ ences in the way 
the directive has been implemented and applied by Member States. 
 
2. Measures to facilitate the raising of capital: 
• Do you see benefits in the proposed alignmen t of the definition of  professional clients 
in MiFID and qualified investors in the Pr ospectus Directive (Paragraph 3.1 of the 
background document)?  
 
– Participants supported the alignment of both definitions. 
 
• Do you see any benefit in th e proposed suppression of the threshold of 1000€ for the 
free determination of the Home Member State for issues of non-equity securities 
(Paragraph 3.6 of the background document)?  
 
– The majority of the participants supported the Commission proposal. The 
change proposed by the Commission allows  issuers to choose the competent 
authority that is more familiar with th e product and extends the choice of home 
Member State to derivative securiti es (which are not denominated).  
 
• Do you consider that the deletion of Article 10 of the Prospectus Directive will help to 
reduce administrative burdens in the Eu ropean Union (Paragraph 3.4 of the 
background document)? 
 
– There was unanimous support for the deleti on of Article 10 of the Prospectus 
Directive. 
 
• Will the proposed harmonisation of the time fr ame for the exercise of the right of 
withdrawal (Paragraph 3.5 of the background document) facilita te cross-border offers?  
 
EN 54   EN  
Participants expressed various views: 
– support of the Commission approach to harm onise this deadline to two days; 
– harmonisation of the deadline – however a longer period than two days should 
be envisaged; 
– harmonisation of the deadline but possibl e extension by the issuer or the 
Member State; 
– the right of withdrawal should not be permitted after the settlement of the 
security; 
– positive events should not trigger the right of withdrawal. 
 
3. Measures to reduce the cost of raising capital: 
• How small quoted companies will be affect ed by the two alternat ive proposals of the 
European Commission (Paragraph 4.3 of the background document)? Which solution 
will be more effective in reducing administrative burdens and raising capital? Do you have any other suggestion?  
 
– General support for a proportionate disclosure regime; another alternative 
suggested: the threshold of €2.5 million in Article 1.2(h) of the Prospectus 
Directive should be raised to €10 million. 
 
• Do you think the proposal on the rights issues (Paragraph 4.5 of the background 
document) will reduce administrative burdens  and facilitate business by boosting the 
raise of capital?  
 
Various views expressed: 
– a total exemption for rights issues from the prospectus requirements would not 
be acceptable; 
– rights issues should be exempted from th e obligation to publish a prospectus in 
case the offer is addressed to existing shareholders; 
–  a short form disclosure regime ("mini-p rospectus") could be requested in case 
of increase of capital not reserved in exclusive to shareholders. 
 
4. Measures to clarify liability: 
• With reference to the distribution by "ret ail cascade", do you see any improvement in 
terms of legal certainty and business f acilitation coming from the clarification 
proposed by the European Commission (Par agraph 3.2 of the background document)? 
Do you see any negative unintended conseque nce? Do you have any other suggestion?  
 
– The majority of the participants opposed th e deletion of last sentence in Article 
3.2 of the Prospectus Directive as proposed by the Commission. 
– Some participants suggested an exemption from the obligation to publish a 
prospectus for the subsequent offers of intermediaries that are not acting in 
 
EN 55   EN concert with the issuer. Moreover it was suggested that issuers should not be 
obliged (and therefore held liable) for updating the prospectus for these subsequent offers. 
 
• In your view, what should be the priorities for a harmonized liability regime under the 
Prospectus Directive (Paragraph 4.7 of the background document)?  
 
– Some participants called for th e harmonisation of the rule s of conflicts of law. 
It was mentioned that the lack of harm onised rules on liabil ity produces high 
cost for issuers and financial intermediaries. 
 
5. Measures to enhance in vestor protection:  
• How would you improve the effectiveness of the Prospectus and its summary in terms 
of investor protection and completeness and accuracy of information? Would the "Key 
Investor Information approach" be a suitable alternative for the summary of the prospectus (Paragraph 4.1 of  the background document)?  
 
– All participants agreed that the summary  is not functioning effectively and it 
does not provide suitable information to retail investors.  
– The "Key Investor Information approach"  (KII) was considered useful for 
various financial products but not fo r equity. However, some participants 
warned that KII approach should not be applied as such to  the securities 
covered by the Prospectus Directive. 
 
• Do you envisage any negative effects in th e exemption of issuers from providing 
additional information in cases where Member  States act as guara ntors (Paragraph 4.4 
of the background document)?  
 
– It was suggested that in these cases the prospectus should include a warning 
inviting the investors to look at the creditworthiness of the Member State guarantor. 
 
6. Measures to promote level playing field in  employee financial participation: Do you 
consider pertinent to create  a level playing field for non- listed companies and companies 
listed in a non-regulated market and widen consequently the scope of the Employee 
Shares Schemes  exemption to cover these companie s (Paragraph 3.3 of the background 
document)?  
 
– All participants expressed general satisfaction with  the proposal by the 
Commission in relation to this issue. 
 
7. Any other issue.  
 
EN 56   EN Some of the participants ra ised other technical issues not included in the 
consultation: 
– The threshold in 1.2(j) should be ra ised from €50 million to €500 million. 
– Issuers should be able to passport and supplement the registration document 
of the prospectus. 
– It should be clarified how to supplement information contained in the final 
terms. 
– The validity of the base prospectus sh ould be extended form 12 to 24 months. 
– The summary of the prospectus should include information about the rating of 
the securities.  
 
List of participants 
Name  First Name  Company  
Burn Lachlan ICMA 
Büscher Patrick European Savings Banks Group 
Byrne Daryl FESE 
Charlton Lorraine SIFMA - EPMD 
Content Jean-Michel International Asso ciation for Financial Participation 
Cooper Janet Linklaters 
Dariosecq Sylvie Association Fr ançaise des Marchés Financiers 
Ewing Ruari ICMA 
Fischer zu 
Cramburg Ralf Eusipa 
Fiedler Larissa European Fund and Asset Management Association 
Gugliotta Gianluigi European Foru m of Securities Associations 
Hemetsberger Walburga EAPB 
Inel Burçak FESE 
Jalbert Kate Quoted Companies Alliance 
Kohl Ulrike European Savings Banks Group - MS 
Marras Graziella European Fund and Asset Management Association 
Maysey Andy IMA 
Meeus Luc Baker & McKenzie 
 
EN 57   EN Misasi Luca European Forum of Securities Associations 
Neundoerfer Nikolaus 
Dominik Eusipa 
Piller Lee CESR 
Pina Da Silva Paulo EuropeanIssuers 
Prache Guillaume FAIDER 
Preuße Thomas VÖB 
Priester Robert EBF's Banking Supervision 
Ruari Ewing ICMA 
Spatola Paola EuropeanIssuers 
Stonefield Greg White & Case 
Verplancke Marnix KBC Securities 
Warken François Arendt & Medernach 
 
 
EN 58   EN ANNEX IV – ASSESSMENT OF THE PROSPECTUS DIRECTIVE  
1. BACKGROUND  
The Prospectus Directive was adopted in November 2003 in the context of the 
Financial Services Action Plan proposed  by the European Commission in May 
199981. The Directive lays down the rules governing the pr ospectus to be made 
available to the public in case a public offer or an admission to trading of transferable 
securities in a regulated market takes place in the EU. The prospectus contains 
information about the offer, the issuer a nd the securities, and has to be approved by 
the competent authority of a Member State before the launch of the offer or the 
admission to trading of the securities. Partic ular aspects of the Prospectus Directive 
are developed in the Prospectus Regulation82. Two major principles inspire the 
Prospectus Directive which applies sin ce 2005: investor protection and market 
efficiency. One of the major achievements of the Prospectus Directive is the introduction of a "passporting mechan ism": the prospectus approved by the 
competent authority of one Member State (t he "home Member State") is valid for the 
entire Community without addi tional scrutiny by the author ities of the other Member 
State (the "host Member States"). This is considered to be a major achievement in 
terms of integration of the securities markets in the EU.  
10. G
ENERAL ASSESSMENT OF THE PROSPECTUS DIRECTIVE  
All inputs referred to under section 2 of th e impact assessment are positive in their 
general assessment of the overall  effect of the Prospectus Directive. In particular the 
Directive has introduced a ne w mechanism for notification;  created a harmonised and 
coherent structure of disc losure requirements (able to  take into account the 
specificity of various financial instrument s as a result of a sy stem of different 
building blocks and schedules) and set in place a simplified language regime.  
The prospectus regime appears to have ma de it easier to offer securities and admit 
them to trading, either in one country or in several countries at the same time. The 
survey conducted by CSES, as part of its  study, shows that a large majority of 
respondents are satisfied with the way the prospectus regime works. Many interviewees mentioned that, after some  initial difficulties, both regulators and 
market participants are gaining experience of the prospectus regime. Most of the 
early problems have been overcome, progressively generating better quality prospectuses and reducing the average approval time
83. Similarly, the cost of 
compliance decreased once participants had become used to the regime.  
                                                 
81 Communication of the Commission "Financial Services: Implementing the framework for financial 
markets. Action Plan" COM(1999)232, 11.05.99 
82 Commission Regulation No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the 
European Parliament and of the Council as regards information contained in prospectuses as well as the 
format, incorporation by reference and publication of such prospectuses and dissemination of advertisements. OJ L149/1, 30.4.2004, p. 1-187 
83 This is confirmed by data on IPOs in the EU. According to the Pricewat erhouseCoopers IPO Watch 
Europe Survey, the third quarter of 2005 saw a significant drop in terms of value and number of IPOs, 
 
EN 59   EN The principal concerns expressed focused on the lack of uniform implementation in 
Member States and the divergent supervisory practices.   
10.1. Investor protection  
One of the principal objectives of the Pr ospectus Directive is  investor protection84. 
This entails the need to ensure that comp lete and accurate information is provided 
concerning the issuer and the relevant fina ncial instruments so that investors can 
make appropriate and informed investment decisions. To achieve this objective, the Directive and its Implementing Regulation take into consideration, among other 
elements, the nature of the investors, notably the needs of retail investors.  
On the one hand, Article 5 of the Directive prescribes th e overriding standard that 
each prospectus should attain: a prospectus  is required to contain all information 
necessary to assess the assets and liabilities, financial position, profits and losses and prospects of the issuer and any guarantor, a nd the rights attaching to the securities. 
That information must be presented in a form that is easily analysable and 
comprehensible. The minimum content of a prospectus is further specified by the 
Implementing Regulation and is intended to reflect the nature of the issue and the 
securities, including information on whet her they are traditionally aimed at the 
wholesale or the retail market. The Prospe ctus Regulation takes close account of the 
standards approved by the International Organisation of Securities Commissions 
(IOSCO)
85.  
On the other hand, the requirement for a summary as an integral part of the 
prospectus86 for "retail" securities was intende d to ensure that the content of a 
prospectus is more easily accessible to retail investors87. This provision aims at 
striking a balance between the provisi on of comprehensive information and 
accessibility to non-professionals, as well as at counterbalancing the increasing trend 
to add detailed pieces of information in the prospectus as a way of shielding issuers from potential civil liability in relation to incomplete or inaccurate disclosure.  
In a survey conducted by CSES
88 on investor protection under the prospectus regime 
(Figure 7), the majority of respondents cons idered that the Pros pectus Directive has 
had a significant positive impact  on the quality of informatio n available to investors. 
However, due to the length and complexity  of prospectuses, concerns have been 
                                                                                                                                                         
which is mainly attributed to the fresh implementa tion of the Prospectus Directive. Both value and 
volume of IPOs increased in th e following quarters, suggesting ceteris paribus a progressive adaptation 
of the market to the new disclosure regime for issues. 
84 Recital 10 of the Prospectus Directive: "The aim of  this Directive and its implementing measures is to 
ensure investor protection and mark et efficiency, in accordance with high regulatory standards adopted 
in the relevant international fora." See also recitals 16, 18, 19 and 21. 
85 The members of the International Organization of  Securities Commissions (IOSCO) are generally the 
supervisory authorities of the countrie s that are parties to the organisation. The IOSCO counts a total of 
191 members, of whom 109 are ordinary, 11 associate and 71affiliate. They meet regularly to cooperate 
in promoting high standards of regulation; to exchange information on their respective experiences; to 
establish standards and effective surveillance of in ternational securities transactions; and to provide 
mutual assistance to promote the integrity of the markets through rigorous application of the standards 
and effective enforcem ent against offences. 
86 Article 5 (2) of the Prospectus Directive. 
87 With this in view, recital 21 limits the summary to 2 500 words.  
88 CSES Study, page 52.  
 
EN 60   EN raised by market participants that the pr imary aim of informing investors may not 
actually be achieved.  
 
Fig. 7. Impact on the quality of information available to investors 
Quality of information for 
investors 
Options Number of 
respondents Percentage 
Positive Impact 47 58.0 
No Impact 29 35.8 
Negative Impact 4 4.9 
DK/No response 1 1.2 
Total 81 100.0 
 Source: CSES study  
Furthermore, the CSES survey89 shows that, unlike institutional investors, small 
retail investors do not on av erage make use of prospect uses for their investment 
decisions. However, the survey shows also th at the prospectus has an important role 
to play as a legal document for investors and for issuers (62.9%). On the one hand, the CSES study points out that there are long and complex prospectuses because 
there are no limits to the overall length of the documents (other than the summary) and there are potentially very severe sanctions if information are omitted. On the other hand, the legal function of prospect uses indicates that most issuers would 
probably produce a prospectus even in the absence of mandatory disclosure 
requirements because the benefits in terms of legal protection outweigh the costs of 
drafting the document.  
In addition, issuers (especially small and medium-sized companies) may be subject 
to disproportionate costs and burdens that are not justified by the aim of effective 
investor protection
90.  
10.2. Market efficiency 
Recital 10 of the Prospectus Directive clearly indicates that the Directive is also 
aimed at ensuring market efficiency. From the viewpoint of issuers, this can be 
translated into a reduction of costs and other administrative bur dens when raising 
capital across the EU. The passport regime has facilitated cross-border offers and 
listings delivering a real benefit to issu ers: the Directive has generated a legal 
framework for cross-border transactions in European capital markets that goes well beyond the previous mutual recognition system established by its predecessor
91. Data 
collected in the last three years on the number of passports  sent and received show a 
steady increase in the number of pan-Eur opean offers, especially for debt issues92. In 
particular, the wide circulation of passports  received across Member States seems to 
                                                 
89 CSES Study, page 51.  
90  This issue is described and analysed more in detail in section 3.2.4 of this impact assessment.  
91 Directive 89/298/EEC of 17 April 1989 coordinating the requirements for the drawing up, scrutiny and 
distribution of the prospectus to be published when transferable securities are offered to the public. 
92 See Annex VIII.  
 
EN 61   EN indicate that the passporting system succeed ed in opening capital markets to a wider 
range of European countries compared to the previous system93.  
The language regime, which allows a prospect us drafted in a "la nguage customary in 
the sphere of internationa l finance" to be used across Europe and requires a 
translation only for the summary, is also considered as an improvement that has 
considerably reduced costs for issuers inte rested in accessing a wider pool of capital. 
According to the CSES survey, translation costs are no longer a significant issue in the preparation of prospectuses, alt hough there were initial problems in the 
introduction of the language regime
94.  
There is evidence that the introduction of the prospectus  regime has increased the 
preparation costs of prospectuses to a cer tain extent, although much depends on the 
original prospectus legislation applicable in the Member States before the entry into force of the Directive. Nevertheless, they tend to decrease over time as a result of specialisation and economies of scale. On th e whole, the evidence gathered seems to 
indicate that cost considerat ions are a substantial issue only for a minority of market 
participants, mainly small and medium-s ized issuers, which raise capital less 
frequently and for smaller amounts.  
The costs associated with the elaboration of a prospectus are part of the direct costs 
of a capital issue. The CSES study found that  there were no significant differences in 
regulatory requirements and compliance costs that would motivate issuers to choose 
one venue over another in Eu rope. Additional costs of pr eparing a prospectus vary 
from issue to issue depending on the work that has already been done.  
Costs include both in-house costs incurred by the issuer as a result of time spent 
preparing the document and d ealing with administrative questions, and the fees of 
auditors and accountants, legal and financia l advisers, regulatory  fees, translation 
fees, etc. all varying from issue to issue.  The greatest expenses are accountancy and 
auditing fees: pro-forma financial stat ements, forward-looking statements and 
historical financial information, all to be approved by auditors, constitute the most significant cost.  
The CSES study provided the following estimates  of the total costs of prospectuses, 
by type of prospectus (Fig. 8).  
Fig. 8. Total costs of prospe ctus by type of prospectus 
 Average amount 
(€ thousand)  Average amount 
(€ thousand) 
Equity Prospectus  Base Prospectus 
(continuous issue)  
Legal Costs 339 Legal Costs 73 
Accounting Costs 409 Accounting Costs 17 
Administrative Costs 62 Administrative Costs 10 
Translation 16 Translation 8 
Other costs 39 Other costs 32 
                                                 
93 See Annex VIII.  
94 See CSES report, chapter 5.  
 
EN 62   EN Publication Costs(i.e.  
electronic publication) 47 Publication Costs(i.e. 
electronic publication) 4 
Total 912 Total 145 
Non-Equity Prospectus  Supplemental 
Questionnaire   
Legal Costs 33 Legal Costs 11 
Accounting Costs 11 Accounting Costs 0 
Administrative Costs 4 Administrative Costs 6 
Translation 6 Translation 2 
Other costs 3 Other costs 0 
Publication Costs (i.e. 
 electronic publication) 6 Publication Costs (i.e. 
electronic publication) 0 
Total 63 Total 19 
Source : CSES survey 
In addition, it should be taken into account that the co sts are different for an initial 
public offering and for a rights issue. A member of ESME provided us with an 
estimation of costs and tasks involved in the preparation of a prosp ectus for an initial 
public offering in Germany. This cost estimate can be considered a reasonable approximation of the average cost ac ross all EEA member states. (Fig. 9)
95.  
Fig. 9 Estimation of costs and tasks involved in the pre paration of a prospectus for an IPO in Germany and other 
EEA member countries.  
Party Task Cost (in euro) 
External 
auditors Due Diligence (financial and tax) by external auditors on behalf of the 
lead manager 75,000 to 125,000 
Transaction 
counsel Preparation of prospectus including relevant legal opinions (except for 
the prospectus the transaction counsel takes care of legal due diligence, 
legal and disclosure opinions which could not really separated from the 
prospectus work. The full cost for the transaction counsel could range from 350,000 to 450,000 euro). If the underwriters ask for their own 
counsels additional cost should be 150,000 to 200,000 euro (all 
inclusive, including prospectus) 200,000 to 300,000 
“Publication” Printing, distribution, publication 40,000 to 60,000 
Lead 
Manager Normally the preparation of a prosp ectus lasts for about three to four 
months with three to five prospectus meetings with the representatives 
of the lead manager, the transac tions counsels and the issuer. In 
addition, the lead manager has to take into account for at least 80 hours 
per person of reading, analyzing and commenting the various versions 
of the prospectus drafts as well as the contacting of the authorities. Normally the prospectus team of the lead manager consists of two to 
three people with an average daily rate of 1,500 euro.  50,000 to 75,000 
Issuer The preparation of a prospectus comprises senior management, officers 
from the financial and the investor relation departments. It comprises internal sessions of preparing and coordinating the material for the 
transaction counsels, the prospect us sessions, the proof reading, 
commenting and amending of the various drafts. In most cases 100,000 to 150,000 
                                                 
95 Data provided by the member of ESME Dr. Wolfgang Gerhardt in his reply to a questionnaire sent by 
Commission services for the impact assess ment of the Prospectus Directive.  
 
EN 63   EN coordination and final proof reading is done by a senior level. The time 
request for this task could be at least the double of the time for the lead 
manager.  
Auditors of the issuer Comfort letter for the financial statements to the banks. In most cases 
the auditors of the issuer are involved in the preparation and checking 
of prospectus material by the issuer. 25,000 to 50,000 
Insurance For the comfort letter. The insurance premium is calculated on the 
volume to be placed. The premium per 1 million euro varies from 5,000 to 7,000 euro. As the amount of coverage varies from issue to issue no 
figure is included in the table. An amount of 500,000 euro, however, 
has frequently been obse rved in the market.  
Sum Except for insurance of comfort letter 490,000 to 760,000 
Source: Dr. Wolfgang Gerhardt, member of ESME 
 
10.3. Costs of compliance, administrative  costs and administrative burden 
A precise figure for the overall costs of compliance  at EU level with the Prospectus 
Directive is not available, as  the figures above only refer to compliance cost elements 
(costs of publishing different types of pros pectus; number of prospectuses approved). 
Data is not available however on the br eakdown of prospectuses into different 
categories for which costs are different. 
Currently there is no expert estimate to delineate administrative costs  (business as 
usual costs) and administrative burden (those burdens that would not be incurred in 
the absence of legislation). It is reasona ble assumption that a large part of the 
compliance costs are business as usual costs. 
The impacts of the options examined in th is impact assessment however belong to 
the sphere of reducing administrative burden , as it is expected that firms are not 
likely to maintain those practices for which currently existing legal obligations will be eliminated. 
There is therefore wide-ra nging consensus among market  participants  that any 
review of the Prospectus regime should focus on reducing the burdens of specific 
requirements that are particularly bur densome and which would only require 
marginal changes to the Directive
96.  
10.4. Range of investment opportunities 
Recital 41 of the Prospectus Directive expressly states th at the disclosure regime 
under the Directive should respect "the need  to provide investors with a wide range 
of competing investment opportunities", as  well as "the importance of reducing the 
cost of, and increasing access to, capital". St atistical data gathered suggest that the 
passporting of prospectuses between Me mber States has increased since the 
Prospectus Directive came into force (see number of passports sent in Annex VIII). 
This is likely to have extended the c hoice of investments available as well.  
                                                 
96  See the CSES study, page 50.  
 
EN 64   EN The graphic below (Fig. 10) shows that af ter the implementation of the Prospectus 
Directive (1 July 2005) th e number of prospectuses approved increased until the 
second half of 2007, where the trend turned down, reflect ing the market sentiment 
created after the burst of  the subprime crisis.  
Prospectuses Approved (Trend)
13802115
18462236 22892955
238128352761
2415
169019731951
1285
0500100015002000250030003500
Q3
2005Q4
2005 Q1
2006Q2
2006Q3
2006Q4
2006Q1
2007Q2
2007Q3
2007Q4
2007Q1
2008Q2
2008Q3
2008Q4
2008
3.5  years in quarters 
Fig.10. Prospectuses approved from 1 July 2005 to 31 December 2008. Source: CESR data. 
 
 
EN 65   EN ANNEX V – FIGURES  
FIGURE 1 – NUMBER OF QUALIFIED INVESTORS REGISTERED PER MEMBER STATE  
Member 
State Number of 
qualified 
investors 
registered  Member 
State Number of 
qualified 
investors 
registered  Member 
State Number of 
qualified 
investors 
registered 
Austria 0  Germany 204  Netherlands 23 
Belgium 26  Greece 1  Norway 31 
Bulgaria 44  Hungary 1  Poland 15 
Cyprus 0  Iceland 139  Portugal No register 
Czech Rep. 0  Ireland 0  Romania 1 
Denmark 0  Italy No register  Slovenia 60 
Estonia 0  Latvia 1  Spain No register 
Finland 2  Lithuania 0  Sweden No register 
France 526  Luxembourg 11  UK 245 
Source: Questionnaires sent via CESR to co mpetent authorities of the Member States 
Figure 2 – Number of days for the exercise  of the right of withdrawal after the 
supplement of a prospectus per Member State  
 Member 
State Number of 
days for 
withdrawal  Member State Number of 
days for 
withdrawal  Member 
State Number of 
days for 
withdrawal 
Austria 2  Iceland 2  Slovenia 2 
Belgium 2  Ireland 2  Spain 2 
Bulgaria 2  Italy 2  UK 2 
Czech Rep. 2  Latvia 2  Cyprus 3 
Denmark 2  Luxembourg 2  Greece 3 
Estonia 2  Netherlands 2  Romania 3 
Finland 2  Norway 2  Lithuania 5 
France 2  Poland 2  Sweden 5 
Germany 2  Portugal 2  Hungary 15 
Source: Questionnaires sent via CESR to co mpetent authorities of the Member States 
 
EN 66   EN Figure 3 – Number of prospectuses approved for purpose of ESS  
Figure 3  
Member State Non-EU listed Non-RM in EU EU non-listed Other/ 
Not specified  
Belgium 24 0 7 NA 
France 59 0 0 NA 
Germany 11 1 0 NA 
Netherlands 2 0 1 NA 
Sweden - - - 5 
UK - - - approx. 4 
Source: Questionnaire sent via CESR to competent authorities  
Figure 4 – Number of rights issues in the EU  
Year Rights issues in EU  
2006 309 
2007 399 
2008 320 
Source: Thomson Reuters 
Figure 5 – Market capitalization for companies listed in Cyprus, Finland, France, 
Germany, Greece, Italy and UK  
Market 
capitalisation, m€  Number 
of companies Total market 
cap. m€ Turnover 
m€ 
 0 - 10 1,193  6,498  15,750  
10 - 50 1,492  49,350  45,089  
50 - 100 726 54,509  49,038  
100 - 200 570 80,318  102,577  
200 - 300 284 71,496  55,423  
300 - 400 172 61,787  55,571  
400 - 500 122 97,134  41,064  
500 - 600 98 102,047  31,592  
600 - 700 86 55,822  47,445  
700 - 800 74 55,009  64,212  
800 - 900 47 43,596  34,995  
900 - 1,000 29 25,652  45,172  
1,000 - 3,000 343 711,934  607,682  
3,000 - 10,000 198 1,294,725  1,028,579  
> 10,000 139 7,418,885  4,723,321  
Not available 148 37,112  0 
Total 5,721  10,165,872  6,947,510  
 Source: MiddleNext, Paris 
Figure 6 – Comparison between the cost of an  offer of €50 million and an offer of €500 
million  
 Offer of €50 million Offer of €500 million 
Minimum fixed costs of prospectus 
(lawyer, consultant, internal) 100,000 € 100,000 € 
 
EN 67   EN Minimum running expenses 
(publication, supplements, internal 
like permanent monitoring) 50,000 € 50,000 € 
Additional costs for prospectus per 
year 150,000 € 150,000 € 
Increase in the funding cost in 
relation to the capital raised 0.3 % 0.03 % 
Source: European Association of Co-operative Banks 
 
EN 68   EN ANNEX VI – ESTIMATION OF REDUCTION IN ADMINISTRATIVE BURDEN  
The preferred options presented in section 7 are likely to reduce considerably the 
administrative burden in some areas97. In most cases it is possi ble to provide a reasonable 
estimate of the reduction of the administrative  burdens. However, in some cases no data are 
available to provide such an estimate and inst ead a qualitative description of the impact is 
provided. Although disclosing information towards investors is considered as necessary to 
raise capital, and firms would have  to provide some information to  their investors even in the 
absence of regulation (i.e . it is business as usual, an admi nistrative cost), there are certain 
provisions in the Prospectus Directive that we re identified as posing additional disclosure 
requirements that firms will almost certainly not maintain without the regulatory obligation 
(administrative burdens). Here only this latter  aspect, administrative burden is discussed. Not 
all of the measures addressed above in this imp act assessment relate to an administrative 
burden and those are consequently ex cluded from the following analysis. 
The quantification of the admi nistrative burden reduction in th is Impact Assessment is done 
in line with the EU Standard Cost Model. For the purpose estimating the reduction of administrative burdens for the preferred policy options, as provided in section 8.3, different 
elements in the calculations are provided. The wage cost is the estimated direct average wage 
cost of performing the relevant tasks. In addition an overhead of 25% is added to the 
calculation of the reduction of the administrative burde n. In cases where only the total cost of 
relevant tasks have been obtained the an iden tical proportionate distri bution between the wage 
cost and the overhead has been assumed and used for the calculation presented in the table in section 8.3. The frequency refers the number of times per year the task is undertaken by the 
firms included in the calculation. The number of companies refers to the number of entities 
that are assumed to benefit from the reduction in the administrative burden in a given year.    
Amend the Prospectus Directive to clarify th at the intermediary could use the initial 
prospectus if it is still va lid and updated (retail cascade) 
The policy option to clarify that the intermediary coul d use the initial pros pectus if it is still 
valid and updated will reduce the administrativ e burden in relation to retail cascades. The 
impact will depend on the amount of times a ne w prospectus will not be produced and on the 
saved associated costs. The way retail cascades work and the obligations of intermediaries 
participating in a retail cascade vary consider ably among Member States. Five Member States 
have pointed out that retail ca scades do not occur in their juri sdiction while it is common 
practice in other Member States. Consequently the reduction of the administrative burden will 
vary among Member States. The cost of producing a non-equity prospectus is estimated to an 
average of € 63,000 in the CSES study. 
                                                
 
97 As it was referred to above, there is no expert estimate available on what is the administrative burden 
part of compliance costs. The impacts of the optio ns examined in this impact assessment however 
belong to the sphere of reducing administrative burden , as it is expected that  firms are not likely to 
maintain those practices for which currently existing legal obligations will be eliminated. 
 
EN 69   EN Align definitions of qualified investors/prof essional clients and keep the register of 
qualified investors 
The alignment of the definitions of qualified investors and professional clients is likely to 
reduce to some extent the administrative burdens. First, in some cases intermediaries will save 
the costs of access to the national registers. Seco nd, a number of clients may decide not to use 
the register and instead rely on their classification as a prof essional client. Third, competent 
authorities may benefit from the reduction of the administrative burdens to maintain such 
registers. The reduction of the ad ministrative burdens is likely to  be larger in those countries 
where the registers are actively used.  
Deletion of Article 10 of the Prospectus Directive, to avoid  duplication of transparency 
requirement  
The deletion of Article 10 of the Prospectus Di rective would clearly reduce the administrative 
burden for issuers with securities admitted to trading on a regulated market. The number of companies with listed shares is  estimated to at l east 12,000 and a reasonab le estimate of the 
average cost of complying with such  obligation on an a nnual basis is €2,500
98. This implies a 
possible annual reduction of ad ministrative burden of €30 million. 
Exemption of all kinds of Employee Share s Schemes launched in the EU from the 
obligation to publish a prospectus 
An exemption of Employee Shares Schemes from the obligation to public  a prospectus will 
clearly reduce the administrative burden for companies wishing to enter into such arrangements. The number of prospectuses from 2006 to 2008 that could have come under 
such an exemption was at least 111 (37 on aver age on a yearly basis). Using the lower range 
of the estimate for the cost of producing a prospectus (€ 490.000) the total reduction in 
administrative costs is estimated to be € 490.000 saved in 37 cases annually, i.e. € 18.13 
million.  
Reduction of disclosure requi rements for rights offers 
A reduction of the disclosure requirements in re lation to rights offers is likely to provide a 
significant reduction of the administrative bur den for companies issuing rights. The number 
of offers in the EU in the period 2006 to 2008 across Europe was 1028, averaging 343 per 
year. Based on an analysis of the elements that  should not necessarily be disclosed in right 
issues, it is estimated that the reduction of the costs compared to producing a regular 
prospectus (that would otherwise cost  € 490,000) would be approximately € 233,000
99. The 
                                                 
98  The cost estimate of € 2,500 to 5,000 was provided for Germany, but it is comparable for all EEA 
member countries. . The lower end of the range (€ 2,500) is used in the estimation in an attempt to take 
into account that the reduction in administrative cost s will take place in high-cost as well as low-cost 
countries.  
99  Figure 9 presents a breakdown of the cost of producing a prospectus. The estimation provided assumes 
that the costs related to external auditors are reduc ed by 100%, transaction counsel is reduced by 30%, 
publication is reduced by 20%, lead manager is reduced by 50%, issuer is reduced by 50% and auditors 
of issuer is reduced by 100%. Thes e figure are broad estimates based on indications of elements to be 
excluded in 'A Report to the Chancellor of the Exchequer: by the Rights Issues Review Group', 
published November 2008, as well as on general considerations. The actual reduction of costs would 
depend on, among other things, the legal advice from the CESR in the event that this policy option was 
implemented. 
 
EN 70   EN calculation is based on an es timated reduction of the various  costs elements provided in 
Figure 8100. Based on these figures the administrativ e costs saved should be € 233,000 in an 
average of 343 cases annually in the EU , i.e. in the magnitude of € 80 million.  
Reduction of disclosure requirements for small quoted companies 
Reducing disclosure requirements for small quoted companies is li kely to provide a 
significant reduction of the administrative burden for small quoted companies wishing to raise 
capital. Based on an analysis of the elements that should not necessarily be disclosed, it is 
estimated that the reduction of the costs compar ed to producing a regular prospectus would lie 
in the range of 10 to 20 percent101. A conservative estimate of th e reduction of administrative 
costs for small quoted companies would be € 49,000. Small quoted companies may be defined 
as companies with a market capitalisation of less than € 500 million. In addition, a company 
would, in order to get a reduction of the admini strative burden, need to issue more than € 2.5 
million a year. For the purpose of estimating th e number of companies which would benefit 
from reduced disclosure requirement we may ex clude companies with a market capitalisation 
below € 10 million, assuming that generally comp anies with a higher market capitalisation 
raise capital exceeding the € 2.5 million threshold. Figure 5 provides the number of companies with a market capita lisation between € 10 and 500 m illion as well as the total 
number of companies in a subset of Member States. Based on these assumption 58.8% of the 
companies may benefit from the reduced disclo sure requirements. Although data set in Figure 
5 only cover a limited number of Member Stat es it is reasonable to assume that the 
distribution of market capitalisa tion is representative and 58.8% of all quoted companies will 
benefit from reduced disclosure  requirements. As mentioned in section 3.2.4.2 the number of 
companies listed on a regulated  market exceeds 12,000. In additi on it is reasonable to assume 
that new capital is raised once every two y ears. In other words the reduction of the 
administrative burden is approximated € 49,000 saved bi-annually by 7056 companies, or 
approximately € 173 million. 
Exclude information on guarantor in ca se of government guarantee schemes  
Securities for which the government would pr ovide a guarantee woul d typically be bonds. 
According to the CSES study the cost of produc ing a non-equity prospectus is significantly 
lower than for an equity prospectus. The CS ES estimate the total cost of a non-equity 
prospectus to €63,000
102. In the case of a guarantor of the security a significant amount of 
information needs to be provided. The cost of providing this information in the case of a 
government guarantor can be estimated by cons idering the various cost elements of a non-
equity prospectus. The cost is estimated to approximately €29,000103, which can consequently 
be saved by excluding information on the guara ntor in case of a government guarantee. The 
                                                 
100  See Annex IV.  
101  The estimate is based on general considerations on the composition of a prospectus. However, there are 
considerable uncertainties in relation to this estimate  and the advice from the CESR would be needed to 
provide more reliable figures. 
102  The costs presented in the CSES study are distributed as follows: 33,000 for legal costs, 11,000 for 
accounting costs, 4,000 for administ rative costs, 12,000 for translatio n and publication and 3,000 for 
other costs. 
103  The estimate is based on a reduction in the cost of producing the prospectus by 30% for legal costs, 
100% for accounting costs, 50% for administrative cost s, 80% reduction for translation and publication 
and 50% reduction for other costs. 
 
EN 71   EN total number of prospectuses involving a government guarantor is estimated to 85104 during 
the last 3 years (28 on average on a yearly ba sis). Based on these figures the annual reduction 
of the administrative burden is estimated to € 812,000.  
                                                 
104  Information provided by Germany, Ireland, Italy, Luxembourg, Poland, Portugal and Spain indicates 
that a total of 49 prospectuses have been approved in those countries within the last 3 years. 17365 prospectuses were approved in these Members States during the last three years,  compared to a total of 
30112. Extrapolating the number of prospectuses involving a government guarantee provides us with 
the very rough estimate of 85. 
 
EN 72   EN ANNEX VII  – POLICY OPTIONS  
With the intention to meet the objectives set out in the previous section, the Commission 
services have analysed differe nt policy options. The first sec tion reflects the most relevant 
policy options that have been c onsidered in relation to the increase of effectiveness in the 
prospectus regime. The second se ction contains the list of po licy options that have been 
analysed in relation to the situations of unjustified burdensome requirements imposed to 
companies raising funding in securities mark ets and to the intermediaries involved.  
1. POLICY OPTIONS FOR THE INCREASE OF LEGAL CLARITY AND EFFECTIVENESS IN 
THE PROSPECTUS REGIME .  
10.5. Policy options in case of subsequent plac ements of securities through financial 
intermediaries (retail cascade).  
(1) Option 1 – No action at EU level.  This would leave scope for the industry 
and supervisors to apply the common interpretation adopted by the CESR 
members105. (For an overview of how the s ituation may evolve without EU 
level action, please see section 7.1.1 describing the "baseline scenario").  
(2) Option 2 – Clarify that the further resale of the securities to retail 
investors through financial intermediari es following the initial issue does 
not qualify as a public offering of the initial issuer106. In this case the 
further resale of the securities is a lmost beyond the control of the issuer. The 
issuer therefore should not be responsibl e for publishing a prospectus in cases 
where the initial pub lic offering is exempt, or re main responsible for updating 
the prospectus when the initial offers of the cascade have closed. This could 
be achieved by deleting the final sentence  in Article 3(2) of the Prospectus 
Directive.  
(3) Option 3 – Amend Article 3( 2) of the Prospectus Di rective to clarify that 
whenever an intermediary offers securities to the public (i.e., makes a non-exempted offer) the intermediary should put at the disposal of the 
public a valid prospectus.  A valid prospectus, drawn up by the issuer or the 
offeror and available to the public in the final placement of securities through 
financial intermediaries or in any s ubsequent resale of securities, shall 
provide sufficient information for inve stors to make informed investment 
decisions. Therefore, financial interm ediaries placing or subsequently 
reselling the securities s hould be entitled to rely upon the initial prospectus 
published by the issuer or the offeror as long as this is valid and duly supplemented in accordance with Article  9 and the issuer or the offeror 
responsible for drawing up such  prospectus consents to its use. In this case no 
other prospectus should be required. Ho wever, in case th e issuer or the 
offeror responsible for drawing up such in itial prospectus does not consent to 
                                                
 
105 See question number 56 "Retail cascade offers " of the frequently asked questions regarding 
prospectuses at www.cesr.eu . (Document reference CESR/09-103). 
106 This option was suggested by ESME. See ESME report on the Prospectus Directive, September 2007, 
p. 15. 
 
EN 73   EN its use, the financial intermediary  should be required to publish a new 
prospectus. The financial intermediary could use the initia l prospectus by 
incorporating the relevant parts by re ference into its new prospectus.  
10.6. Policy option in relation to the divergen t definitions for qualified investors and 
professional clients  
(1) Option 1 – No action at EU level.  
(9) Option 2 – Amend the Directive and align the definitions of qualified 
investors in Article 2.1(e)(i) and (ii)  of the Prospectus Directive and of 
professional clients and eligible counterparties in MiFID.  This alignment 
would reduce complexity and cost for investment firms in the event of a 
private placement: the firm will be able  to define the persons to whom the 
placement is to be addressed relying on its own list of professional clients.  
This policy option could be implemen ted by extending the definition of 
qualified investors in article  2.1(e)(i) and (ii) of the Prospectus Directive to 
include the definitions of professional clients and eligible counterparties as 
defined in Annex II of MiFID.  
(10) Option 3 – In addition to the alignm ent proposed in option 2, the system 
of central registers could be remov ed from the Prospectus Directive.  The 
system of central registers has met lim ited interest in the Member States 
because private investors are concerne d by the dissemination of information 
regarding their wealth a nd experience. This policy could be implemented by 
deleting Article 2.1(e)(iv) and (v), Article  2.2 and Article 2.3 of the Directive.  
10.7. Policy options in relation to the obligation of supplementing a prospectus and 
the exercise of the right of withdrawal (Article 16 of the Prospectus Directive) 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Harmonize the different peri ods of time for the exercise of the 
right of withdrawal. This policy option could be  implemented by setting a 
common period of time in all Member Stat es for the exercise of the right of 
withdrawal under Article 16.  
(11) Option 3 – Harmonize the different p eriods of time with possibility for 
issuer to grant longer time.  This option would amend Article 16 of the 
Prospectus Directive by setting a co mmon period of time in all Member 
States for the exercise of the right of withdrawal after the publication of the prospectus supplement and by allowing th e issuer to grant a longer time limit 
for the exercise of such right of withdrawal.  
(12) Option 4 – Harmonize the different peri ods of time at the settlement of 
the securities.  This policy option would amend Article 16 of the Prospectus 
Directive by setting a common period of  time in all Member States but 
subject to the settlement of the secu rities. The time limit for withdrawal of 
investors' acceptances after the publica tion of the prospectus supplement in 
all Member States will expire at the se ttlement of the securities. The aim of 
this additional limit is to limit the risks of the issuer when offering securities.  
 
EN 74   EN 10.8. Policy options in relation to the lack  of harmonised rules on liability 
(1) Option 1 – No action at EU level.  
(2) Option 2 – Harmonize the liabilit y standards applicable to the 
prospectus.  One policy option is to harm onize the liability standards 
applicable to the prospectus in order to avoid liability arbitrage and provide 
issuers with legal certainty in cross-bo rder offerings This policy option could 
be implemented by defining common liabili ty standards in Article 6 of the 
Prospectus Directive.  
10.9. Policy options in relation to th e summary of the prospectus  
(1) Option 1 – No action at EU level.  This policy option w ould imply that the 
current limitation of 2,500 words and A nnex I and IV of the Prospectus 
would be maintained.  
(2) Option 2 – Provide retail investors wi th appropriate information in an 
easily analyzable and comprehensible form in order to make investment 
decisions in full knowledge of facts.  This policy option could be 
implemented by deleting the limitation of  2,500 words in recital 21 of the 
Prospectus Directive and all indicative  items for the summary in Annexes I 
and IV of the Directive, and by devel oping new standards in the Prospectus 
Regulation on the basis of the Key Inve stor Information approach under the 
UCITS IV Directive. This policy opti on should follow the approach adopted 
by the European Commission in its Co mmunication on Packaged Retail 
Investment Products. A logical conse quence of having a more substantial 
summary document would be to attach civil liability on the basis of the 
summary not only if it is misleading, in accurate or inconsistent, when read 
together with the other parts of the pros pectus, but also if it does not provide 
key information enabling investors to ta ke informed investment decisions and 
to compare the securities with other investment products. 
11. SITUATIONS OF DISPROPORTIONATE OR BURDENSOME REQUIREMENTS IMPOSED TO 
COMPANIES RAISING CAPITAL IN SECURITIES MARKETS AND TO THE INTERMEDIARIES INVOLVED
.  
11.1. Policy options for bringing forward a level playing field for Employee Shares 
Schemes  
(1) Option 1 – No action at EU level.  
(2) Option 2 – Amend the Directive and extend the exemption in Article 
4.1(e) to the employee share schemes launched by companies that are 
listed in a non-regulated market  (third country and EU issuers).  Taking 
into account that the securities of th ese companies are negotiated in a trading 
venue, there is already information on th ese companies availa ble in the public 
 
EN 75   EN domain107. The cost of producing a prospectus for this type of offers is not 
justified. This policy option could be implemented by deleting in Article 4.1(e) of the Prospectus Dir ective the word "regulated". 
(3) Option 3 – Amend the Directive and extend the exemption in Article 
4.1.(e) including not only the employ ee share schemes of companies that 
are listed in a non-regulated market  ("exchange-regulated" market or 
third country securities markets) as  proposed in option 2, but also 
encompass companies that are not listed . Even if the securities of the issuer 
are not negotiated in a trad ing venue, the employees s hould not be treated as 
common investors in terms of their info rmation needs; they already work for 
the company and therefore are more familiar with its assets, liabilities, financial position, profit, losses and prospects (Artic le 5 of the Prospectus 
Directive) than the outside investor
108. This policy option could be 
implemented by deleting the sentence "which has securities already admitted to trading on a regulated market" from  Article 4.1(e) of the Prospectus 
Directive. 
11.2. Policy options in relation to the overlapping  of transparency ob ligations (Article 
10 of the Prospectus Directive)  
(1) Option 1 – No action at EU level. Maintain the disclosure requirement under 
Article 10 of the Prospectus Directive which provides annually and at glance 
investors with a historical overview on all available information published 
according to various laws.  
(2) Option 2 – Eliminate the obligation established in Article 10 of the 
Directive. This policy option implies the abolition of the requirement for 
issuers whose securities are admitted to trading on a regulated market to provide and file with the competent authorities a document containing or 
referring to all information they ha ve published or made public in the 
previous twelve months according to their obligations with regard to companies and securities legislation at European community or national levels and third country levels. This  policy option could be implemented by 
deleting Article 10 of th e Prospectus Directive
109.  
                                                 
107 The high standards of tr ansparency laid down in the Transparency and Market Abuse Directives are not 
compulsory for issuers traded in non-regulated mark ets. However, issuers as king for the admission to 
trading in an "exchange regulated" market have to comply with the internal rules on disclosure 
requirements set up by the market operator aiming at achieving the flow of sufficient and adequate 
information for the functioning of the market. 
108 This policy option is inspired by the suggestions included in the report from ESME. See pages 17 and 
18 and the Annex of the report 
109  As a consequence of the proposed amendment, Article 11 of the Prospectus Directive needs also to be 
amended, inasmuch as it makes reference to Article 10 , and the reference to Article 10(1) in Article 9(4) 
needs to be replaced by Article 16(1).  
 
EN 76   EN 11.3. Policy options in relation to the restricti on for the choice of home Member State 
for the issuers of debt  
(1) Option 1 – No action at EU level.  Maintain the €1000 threshold below 
which issuers of non-equity securitie s cannot choose thei r home Members 
State and the competent authority that  is to approve their prospectus.  
(13) Option 2 – Provide for the choice of the home Member State for issues of 
non-equity securities below the €1000 threshold. This policy option could 
be implemented by deleting the €1000 threshold and amending Article 
2(1)(m)(ii) of the Prospectus Directive.  
11.4. Policy options for facilitating the raise of capital through the issuance of rights 
(1) Option 1 – No action at EU level.  Within the current framework of the 
Prospectus Directive competent authorit ies have the possibility to limit the 
disclosure requirements in a prospectus for rights issues: in accordance with Article 8.2 of the Prospectus  Directive, the competent authorities are entitled 
to authorise the omission of information from the prospectus when it is of minor importance. Second, in accordance with Article 23.4 of the Prospectus Regulation, the information that is not  pertinent to the offer to which the 
prospectus relates could be omitted. Ta king into account that the offer of 
rights is addressed to existing shar eholders, there is no need for the 
prospectus to contain all the information that is required in case of an initial public offering. The issuer planning a ri ghts issue could decide with its 
competent authority which of the information items required by the Prospectus Regulation can be omitted from the prospectus. A coordinated 
approach among supervisors could be  enhanced by CESR guidelines. 
(2) Option 2 – Share offerings to existing shareholders by the way of a rights 
issue could be exempted from  the prospectus requirement . This type of 
offers could be covered by including a new exemption in Article 4. The document currently required for shares offered free of charge in Articles 
4.1(d) and 4.2(e) of the Pr ospectus Directive should al so be adequate in such 
cases.
110 
(3) Option 3 – The prospectus disclosure requirements for right issues could 
be reduced:  existing shareholders already have  access to a range of financial 
and other information about the issu er from the periodic and episodic 
statements and disclosures made in accordance with the Transparency and 
Market Abuse Directives111. If the prospectus disclo sure obligation is reduced 
the processes for the preparation and approval of the prospectus would speed up and the issuer will have to face less costs.  
This policy option could be achieve d by introducing in the Prospectus 
Directive the principle of a reduced di sclosure regime for prospectus for 
rights issues and the possibi lity for the European Commission to put in place 
                                                
 
110 This policy option is inspired by the suggestions  included in ESME report. See pages 16 and 17. 
111 Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider 
dealing and market manipulation (market abuse) OJ L 96, 12.4.2003, p. 16–25.  
 
EN 77   EN a special "proportionate" regime for rights issues through implementing 
legislation. The implementing Regulation could be amended subsequently in 
order to establish a "proportionate" disclosure regime and define the 
information items to be included in  the prospectus for a rights issue.112  
11.5. Policy options for providing proportion ate disclosure requirements for small 
quoted companies  
(1) Option 1 – No action at EU level. The amount of information of the 
prospectus could be reduced by virtue  of Articles 8.2 of the Prospectus 
Directive and 23.4 of the Prospectus Regul ation. The disclosure requirements 
that have to be included in a prospectus for small quoted companies could be 
reduced (i) if the competent authoritie s authorise the omission of information 
from the prospectus when it is of mi nor importance (Artic le 8.2 Prospectus 
Directive) and (ii) by omitting the informa tion that is not pertinent to the offer 
to which the prospectus relates (Article  23.4 of the Prospectus Regulation). In 
this case there is no need to change the Directive or the Regulation. It will be less costly for small quoted companie s to produce a reduced prospectus.  
(2) Option 2 – Small quoted companies could be exempted from the 
obligation to publish a prospectus by raising the threshold in Article 
1(2)(h) of the Prospectus Directive.  Increasing the threshold for the 
exempted offers could facilitate fundra ising for these companies. This could 
be achieved by raising the €2.5 million th reshold in Article 1.2(h) of the 
Prospectus Directive. 
(3) Option 3 – The principle of a "proportionate" prospectus for small 
quoted companies could be introduced.  This policy option could be 
achieved by introducing in the Prospectus Directive the principle of a reduced 
disclosure regime for prospectus for small quoted companies and the 
possibility for the European Commi ssion to put in place a special 
"proportionate" regime for small quot ed companies through implementing 
legislation. The implementing Regulation could be amended subsequently in 
order to establish a "proportionate" disclosure regime and define the 
information items to be included in the prospectus for small quoted companies.  
11.6. Policy options for providing proportion ate disclosure requirements for small 
credit institutions 
(1) Option 1 – No action at EU level. Like in the previous two cases,  the 
amount of information of the prospectus  for offers above the limit of €50 
million could be reduced by the competen t authorities by virtue of Articles 
8.2 of the Prospectus Directive and 23.4 of the Prospectus Regulation.  
                                                
 
112 This policy option is inspired by the suggestion in cluded in the Report to the Chancellor of Exchequer 
by the Rights Issue Review Group, published in the UK by the FSA and HM Treasury in November 
2008. The Annex E of the document contains a very detailed analysis of the information items that 
could be omitted in a rights issue prospectus. 
 
EN 78   EN (2) Option 2 – Small credit institutio ns could be exempted from the 
obligation to publish a prospectus by raising the threshold in Article 
1(2)(j) of the Prospectus Directive..  Increasing the threshold for the 
exempted offers could facilitate fundra ising for these companies. This could 
be achieved by raising the €50 million threshold in Article 1.2(j) of the 
Prospectus Directive. 
(3) Option 3 – The principle of a "proportionate" prospectus for small 
quoted companies could be introduced. This policy option could be 
achieved by introducing in the Prospectus Directive the principle of a reduced 
disclosure regime for prospectus fo r small credit institutions and the 
possibility for the European Commi ssion to put in place a special 
"proportionate" regime for small credit  institutions th rough implementing 
legislation. The implementing Regulation could be amended subsequently in 
order to establish a "proportionate" disclosure regime and define the 
information items to be included in the prospectus for small credit institutions. 
11.7. Policy options in relation to the prospect us disclosures in case of government 
guarantee schemes should be rationalised 
(1) Option 1 – No action at EU level. The amount of information of the 
prospectus related to securities guara nteed by a Member State could be 
reduced by virtue of Article s 8.2 of the Prospectus Directive and 23.4 of the 
Prospectus Regulation: as described in the first policy option of the points 
related to the rights is sues, the small quoted companies and small credit 
institutions, the information about the State guarantor requ ired in Annex XVI 
of the Prospectus Regulation could be re duced if it is considered not pertinent 
or of minor importance.
113  
(2) Option 2 – Issuers of securities gu aranteed by the government of a 
Member State could be exempted from the obligation to provide 
information about the guarantor in the prospectus. This option could be 
implemented by including at the end of Article 1.3 of the Prospectus Directive a specific derogation for Memb er States and possibly for regional 
and local authorities.  
(3) Option 3 – The same policy option  could be extended to cover the 
information not only about the guaran tor, but also about the guarantee.  
In this case, this option could be im plemented by (i) including at the end of 
Article 1.3 of the Prospectus Di rective a specific derogation . 
                                                
 
113 This policy option is inspired in the common interpretation provided by CESR in the question number 
70 of the frequently asked questions regarding pr ospectuses: "Disclosure requirements for securities 
which are unconditionally and irrevocably guaranteed by  a Member State or by one of a Member State's 
regional or local authorities" (See CESR Q&A on Prospectus in www.cesr.eu )  
 
EN 79   EN 11.8. Policy options in relation to the printed form (paper copy) of the prospectus  
(1) Option 1 – No action at EU level. Maintain the obligation of delivering a 
paper copy of the prospectus free of char ge if the prospectus is published in 
electronic form and in case is requested by the investor.  
(2) Option 2  – Abolish the obligation to deliver a paper copy of the 
prospectus.  This option could be implemented by deleting paragraph 7 of 
Article 14 of the Prospectus Directive.  
11.9. Policy options in relation to the translat ion of the summary of the prospectus 
(1) Option 1 – No action at EU level. Maintain the obligation of providing a 
translation of the summary of the prosp ectus together with the notification of 
the approval of the prospectus.  
(2) Option 2  – Abolish the obligation to tr anslate the summary of the 
prospectus.  This option could be implemented by deleting the second 
sentence in Article 18.1 of the Prospectus Directive.  
 
EN 80   EN ANNEX VIII  – NUMBER OF PROSPECTUSES APPROVED AND PASSPORTS SENT – SOURCE : CESR  DATA  
Prospectuses 
Approved  Q3 
2005 Q4 
2005  Q1 
2006 Q2 
2006 Q3 
2006 Q4 
2006 Q1 
2007 Q2 
2007 Q3 
2007 Q4 
2007 Q1 
2008 Q2 
2008 Total 
first 
year  Total 
second 
year Total 
third 
year 
AUSTRIA 8 25 12 26 19 23 17 18 21 14 5 16 71 77 56 
BELGIUM 43 37 29 46 18 35 44 39 31 31 12 16 155 136 90 
BULGARIA 0 0 0 0 0 0 17 16 19 27 35 20 0 33 101 
CYPRUS 1 4 2 4 4 2 5 1 5 2 4 6 11 12 17 
CZECH REPUBLIC 16 25 6 7 4 6 5 5 6 8 3 0 54 20 17 
DENMARK 3 12 11 17 8 24 24 24 20 20 15 17 43 80 72 
ESTONIA 1 2 0 3 3 1 1 5 4 0 0 2 6 10 6 
FINLAND 6 14 12 22 4 9 11 20 7 16 4 16 54 44 43 
FRANCE 42 93 70 91 60 99 67 74 46 81 30 38 296 300 195 
GERMANY 142 159 141 238 231 175 160 194 205 141 116 151 680 760 613 
GREECE 2 8 3 7 2 3 7 9 10 13 6 2 20 21 31 
HUNGARY 3 12 7 16 15 21 21 24 18 14 17 20 38 81 69 
ICELAND 11 39 8 35 6 17 9 29 10 51 19 39 93 61 119 
IRELAND 265 523 469 536 718 739 640 821 842 494 344 381 1793 2918 2061 
ITALY 21 22 10 35 265 483 186 220 437 318 168 132 88 1154 1055 
LATVIA 3 0 5 2 4 6 5 5 2 1 2 2 10 20 7 
LITHUANIA 0 0 0 0 12 3 10 8 1 2 4 6 0 33 13 
LUXEMBOURG 134 359 332 409 368 433 465 479 450 429 448 421 1234 1745 1748 
MALTA N/A  N/A N/A N/A N/A N/A N/A N/A N/A N/A 0 2 0 0 2 
NETHERLANDS 77 68 64 76 66 70 50 55 66 52 16 31 285 241 165 
NORWAY 51 60 68 42 44 62 76 94 50 69 47 61 221 276 207 
POLAND 4 4 13 16 17 38 34 32 41 23 44 19 37 121 127 
PORTUGAL 12 12 16 10 2 16 7 6 4 8 0 17 50 31 29 
ROMANIA 0 0 0 0 1 7 1 4 1 7 6 3 0 13 17 
SLOVAKIA 5 13 10 5 2 7 5 7 7 14 6 15 33 21 42 
SLOVENIA 4 9 6 4 5 5 7 2 7 11 6 7 23 19 31 
SPAIN 35 94 74 89 88 131 120 120 82 107 55 68 292 459 312 
SWEDEN 68 99 55 78 47 81 63 67 37 60 37 61 300 258 195 
UK 423 422 423 422 276 459 324 457 332 402 241 328 1690 1516 1357 
TOTAL 1380 2115 1846 2236 2289 2955 2381 2835 2761 2415 1690 1951 7577 10460 8817 
 
EN 81   EN  
Passports Sent  Q3 
2005 Q4 
2005 Q1 
2006Q2 
2006Q3 
2006Q4 
2006Q1 
2007Q2 
2007Q3 
2007 Q4 
2007Q1 
2008Q2 
2008 Total 
first 
year Total 
second 
year Total 
third 
year 
AUSTRIA 5 11 13 23 27 14 24 23 29 8 4 22 52 88 63 
BELGIUM 6 7 3 7 3 6 4 4 2 7 1 4 23 17 14 
BULGARIA - - - - - - 0 0 0 0 1 0 - 0 1 
CYPRUS 0 1 1 1 1 1 0 0 0 0 0 2 3 2 2 
CZECH REPUBLIC 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 
DENMARK 0 1 0 1 1 0 1 0 0 2 2 0 2 2 4 
ESTONIA 1 0 0 1 0 0 0 1 2 0 0 0 2 1 2 
FINLAND 0 1 1 0 - - 1 1 1 1 0 0 2 2 2 
FRANCE 1 15 12 8 5 9 7 11 8 14 8 13 36 32 43 
GERMANY 46 60 107 118 109 103 86 113 197 150 70 87 331 411 504 
GREECE 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 
HUNGARY 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 
ICELAND 0 0 0 2 1 1 0 3 0 1 0 2 2 5 3 
IRELAND 20 14 19 23 55 67 76 75 63 65 57 37 76 273 222 
ITALY 1 0 0 1 0 0 1 0 0 0 0 0 2 1 0 
LATVIA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 
LITHUANIA - - - - 0 0 1 1 0 1 0 0 - 2 1 
LUXEMBOURG 45 78 92 103 86 86 121 152 108 132 137 138 318 445 515 
MALTA N/A N/A  N/A N/A N/A N/A N/A N/A N/A N/A 0 0 0 0 0 
NETHERLANDS N/A N/A N/A N/A 29 25 20 21 56 32 6 15 N/A 95 109 
NORWAY 0 0 1 1 0 0 0 5 4 6 5 5 2 5 20 
POLAND 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 
PORTUGAL 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 
ROMANIA - - - - 0 0 0 0 0 0 0 0 - 0 0 
SLOVAKIA 0 0 0 1 0 0 0 0 0 0 0 2 1 0 2 
SLOVENIA 0 0 0 0 0 0 0 0 0 0 1 4 0 0 5 
SPAIN 0 0 1 2 0 0 0 1 1 2 1 1 3 1 5 
SWEDEN 0 3 1 5 3 2 4 9 4 10 8 4 9 18 26 
UK 45 71 76 93 111 134 159 175 116 131 164 170 285 579 581 
TOTAL 170 262 327 391 431 449 505 595 591 562 465 507 1150 1980 2125 
 
EN 82   EN ANNEX IX – ADDITIONAL MINOR CHANGES  
In addition, the European Commission will incl ude some minor technical suggestions that 
were suggested by stakeholders during the cons ultation for the review  of the Prospectus 
Directive and for which no major impacts are expected:  
– Article 1.2 (h) and (j) and Article 3.1 (e) – Threshold of maximum offering amounts: the 
Prospectus Directive is not clear as to wh ether the maximum offering amounts set out in 
Article 1.2 (h) and (j) and Article 3.1 (e) s hould be computed on a EEA-wide basis or on a 
country-by-country basis. This legislative ambi guity has lead to varying interpretations of 
the relevant thresholds in the different Member  States that restrict availability of the 
exemptions. As clarified in the common positions agreed by the CESR114, these thresholds 
should be calculated on an EEA-wide basis, thus  Article 1.2 (h) and (j ) and Article 3.1 (e) 
would be amended accordingly.  
– Article 9.1, 9.2 and 9.3 – Validity of the pros pectus, base prospectus and registration 
document: a number of stakeholders considered that the validity period of 12 months of the 
prospectus, base prospectus an d registration document in Artic le 9.1, 9.2 and 9.3 should be 
extended to 24 months, as the regular appr oval process imposes some administrative 
burden for issuers. Provided th ey are supplemented in accord ance with Article 16, this 
amendment will not impair investor protection, but enhance administrative burden 
reduction for issuers.  
– Article 9 (4) – Supplement to the regist ration document: a numbe r of stakeholders 
considered that the registration document, wh ich contains information on the issuer, should 
be supplemented in accordance with Article 16 and no longer updated in accordance with 
Article 10.1 or by the securities note, which instead contains information on the securities. 
Article 9.4 should be amended inasmuch it make s reference to Article 10 (to be deleted). 
Accordingly the first sentence of Article 12.2 should also be deleted.  
– Article 16 – Supplements to the prospectus: re spondents to the consultation claim that the 
current wording of Article 16.1 of the Prospectus  Directive is not sufficiently clear as to 
when the requirements to publish a supplement to the prospectus ends in cases where the securities are to be admitted to trading on a regulated market. In part icular, it is unclear 
how the two alternatives "start of trading of the securities on a regulat ed market" and "final 
closing of the offer to the public" relate to  each other and whethe r the requirement to 
publish a prospectus ends with the start of trading of the s ecurities on a regulated market 
irrespective of whether the offer to the public has closed. In order to  avoid any uncertainty, 
Article 16.1 should be amended as follows: "Every  significant new factor, material mistake 
or inaccuracy relating to the information included in the prospectus which is capable of affecting the assessment of the securities a nd which arises or is noted between the time 
when the prospectus is approve d and the earlier of the final closing of the offer to the 
public or, as the case may be, the time when tr ading on a regulated market begins, shall be 
mentioned in a supplement to the prospectus."  
                                                
 
114 See question number 26 "Way of calculation of limit of 2.500.000 EUR set in Ar ticle 1.2.h) Directive" 
of the frequently asked questions regarding prospectuses at www.cesr.eu . (Document reference 
CESR/09-103). 
 
EN 83   EN – Article 18 – Notification of the a pproval of the prospectus to the issuer: in accordance with 
Article 18 of the Prospectus Directive the co mpetent authority of the home Member State 
shall provide to the host competent authorities the certificate of approval attesting that the prospectus has been drawn up in accordance w ith the Prospectus Directive. In practice, 
uncertainty has arisen as to whether and when  a notification has actua lly been effected. To 
avoid confusion, the notificati on procedure of Article 18 of  the Prospectus Directive 
should be amended so that the competent auth ority of the home Memb er State provides the 
certificate to the issuer in addition to the host competent authorities.  This will reduce costs 
and risks for the issuers who will have cert ainty that they have  not inadvertently 
contravened the law by offering securities to  the public in a Member State where the 
passport is not yet effective due to an oversight  or error on the part of competent authority 
of the home Member State.