EN    EN EN 
 
EN    EN  COMMISSION OF THE EUROPEAN COMMUNITIES  
Brussels, 23.9.2009 
SEC(2009) 1222 
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  
  
SUMMARY OF THE IMPACT ASSESSMENT   
{COM(2009) 491  final}  
{SEC(2009) 1223}  
 
EN 2   EN 1. PROBLEM DEFINITION  
There is evidence about some burdens and legal uncertainties that increase cost and 
create ineffectiveness hampering the pr ocess of fundraising for companies and 
financial intermediaries in the EU. These problems could be divi ded in two groups:  
1.1. Ineffectiveness derived from the lack of legal clarity 
1.1.1.  Obligations in case of placement of s ecurities through financ ial intermediaries 
(retail cascade): the lack of clarity in Article 3.2 of the Prospectus Directive seems 
to be causing problems for issuers in some  markets where securities are distributed 
by "retail cascade".   
1.1.2.  Divergent definitions for qualified investors and professional clients: the prospectus 
regime for qualified investors is different from the regime for professional clients set 
out in MiFID1.  
1.1.3.  Legal uncertainty in relation to the obligation of supplem enting a prospectus and the 
exercise of the right of withdrawal: Article 16 of the Prospectus Directive leaves 
room for divergent application in the Memb er States because the time frame for the 
exercise of the right of withdrawal is not harmonised and Memb er States have set 
different periods through national implementing legislation.   
1.1.4.  Lack of harmonised rules on liability: article 6.2 of the Prospectus Directive does not 
provide for a harmonised liability re gime under the Prospectus Directive.   
1.1.5.  Functioning of the summary of the prospectus: the primary aim of the Prospectus 
Directive to inform investors may actually  be hampered by the limitation imposed by 
recital 21. Moreover, there are significant inconsistencies in the form and the content 
of the summary disclosures for broadly comparable products.  
1.2. Situations of burdensome requirements im posed on companies raising capital in 
securities markets and to th e intermediaries involved  
1.2.1.  Divergent regime for Employee Shares Schemes: the exemption in Article 4.1(e) 
creates a less advantageous situation for employees of th ird country companies that 
do not have a listing on a regulated mark et within the EU , and EU non-listed 
companies or EU companies that have secu rities traded on EU "exchange-regulated" 
markets.   
1.2.2.  Overlap of transparency obligations: in its opinion of 18 September 2008 the High 
Level Group of Independent Stakeholders  on Administrative Burdens advised the 
European Commission to consider the suppr ession of Article 10 of the Prospectus 
                                                 
1 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 3   EN Directive because the Tr ansparency Directive2 has made the disclosure requirement 
for issuer with listed secu rities redundant, generating a duplication of the same 
requirement for issuers.   
1.2.3.  Restriction for the choice of home Memb er State for the issuers of debt: article 
2.1(m)(ii) imposes a restricti on on the choice of the home Me mber State for issues of 
non-equity securities.  
1.2.4.  Burdensome disclosure requirements in some cases 
1.2.4.1.  Rights issues: stakeholders have expressed concerns in relation to the obligation to 
publish a full prospectus for rights issues , notably because the cost for producing a 
full prospectus might not be justified.  
1.2.4.2.  Small quoted companies: concerns ha ve been expressed by some industry 
stakeholders that the disclosure requiremen ts linked to the issuance of a prospectus 
could be overly burdensome and costly for companies with smaller market capitalization. This is mostly related to  the exemption for offers with a total 
consideration below €2.5 million set in Articl e 1.2(h) of the Prospectus Directive. 
 
1.2.4.3.  Small credit institutions: the exemption in Article 1.2(j) was designed for the funding 
of small credit institutions. However, repr esentatives of small 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.  
1.2.5.  Burdensome disclosures for government guarantee schemes: in the context of the 
current financial crisis Member States have decided to guarantee th e 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 prospectus in relation to the State guarantor.   
1.2.6.  Printed form (paper form) of the prospectus: in its opinion of 18 September 2008 the 
High Level Group of Independe nt Stakeholders on Admini strative Burdens advised 
the European Commission to consider the suppression of the obl igation in Article 
14.2 for the person asking for the admission to trading or the financial intermediaries 
placing or selling the securi ties to deliver a paper copy of the prospectus free of 
charge, upon request of the investor to th e offeror, because according to a group of 
industry stakeholders the obligation woul d have no added value and the electronic 
provision of information would be su fficient for effective supervision.   
                                                 
2 Directive 2004/109/EC of the Eu ropean Parliament and of the Co uncil of 15 December 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 Transparency Directive entered into force on 20 January 2005, and was due to be 
transposed by all Member States by 20 January 2007.  
 
EN 4   EN 1.2.7.  Translation of the summary  of the prospectus:  in the same opinion the High Level 
Group advised to consider the suppression of the obligation to provide the translation 
of the summary in case of cross-border offers according to Article 19.3 because a group of stakeholders considers that this  requirement is unnecessary and advocates 
for the harmonisation of the language regime for the whole internal market.   
2. T
HE BASELINE SCENARIO , SUBSIDIARITY AND PROPORTIONALITY  
If no action is taken at EU level the pr oblems defined in section 1 will remain 
without a response. The European Commissi on considers that the solutions proposed 
respect the principle of subsidiarity and proportionality. On the one hand, taking into 
account that offers of securi ties could have cross border dimension in the EU this 
exercise will be better addressed in an EU legal text. On the other hand, all solutions 
brought forward aim at ensuring effective produ ct disclosure and i nvestor protection.  
3. OBJECTIVES  
The review of the Prospectus Directive ai ms at (i) increasing effectiveness in the 
prospectus regime; and (ii) reducing the burdens for EU companies when raising 
capital in the European securities markets.  
4. POLICY OPTIONS  
With the intention to meet  the objectives set out in the previous section, the 
Commission services have analys ed different policy options:  
4.1. Policy options for the increase of legal clar ity and effectiveness in the prospectus 
regime  
4.1.1.  Policy options in case of subsequent pl acements of securities through financial 
intermediaries (retail cascade): (i) no action at EU level; (ii) clarify that the further 
resale of the securities to retail investors through financ ial intermediaries following 
the initial issue does not qualify as a public offering of the initial issuer; (iii) amend 
Article 3.2 of the Prospectus Directive to clarify that whenever an intermediary 
offers securities to the public  the intermediary should put at the disposal of the public 
a valid prospectus.  
4.1.2.  Policy options in relation to  the divergent definitions  for qualified investors and 
professional clients: (i) no action at EU level; (ii) am end 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 counterpa rties in MiFID; (iii) in 
addition to the alignment proposed in option 2,  remove the system of central registers 
from the Prospectus Directive.   
4.1.3.  Policy options in relation to the obliga tion of supplementing a prospectus and the 
exercise of the right of withdrawal (Ar ticle 16 of the Prospectus Directive): (i) no 
action at EU level; (ii) harmonize the different periods of time for the exercise of the right of withdrawal; (iii) ha rmonize the different periods of time with possibility for 
 
EN 5   EN issuer to grant longer time; (iv) harmonize the different periods of time at the 
settlement of the securities.   
4.1.4.  Policy options in relation to the la ck of harmonised rules on liability: (i) no action at 
EU level; (ii) harmonize the liability st andards applicable to the prospectus.   
4.1.5.  Policy options in relation to the summary of the prospectus:  (i) no action at EU level; 
(ii) provide retail investors with appropriate information in an easily analyzable and 
comprehensible form in order to make i nvestment decisions in  full knowledge of 
facts.  
4.2. Situations of disproportionate or  burdensome requirements imposed to 
companies raising capital in securities  markets and to the intermediaries 
involved  
4.2.1.  Policy options for bringing forward a le vel playing field for Employee Shares 
Schemes: (i) no action at EU level; (ii) 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-regul ated market (third country and EU issuers); (iii) amend 
the Directive and extend the exemption in Ar ticle 4.1.(e) to companies that are listed 
in a non-regulated market and to  companies that  are not listed.   
4.2.2.  Policy options in relation to the overlapping of transparency obligations (Article 10 
of the Prospectus Directive): (i) no action at EU level; (ii) eliminate the obligation 
established in Article 10 of the Directive.   
4.2.3.  Policy options in relation to the restricti on for the choice of home Member State for 
the issuers of debt: (i) no action at EU level; (ii) pr ovide for the choice of the home 
Member State for issues of non-equity  securities below the €1000 threshold.   
4.2.4.  Policy options for facilitati ng the raise of capital th rough the issuance of rights:  (i) 
no action at EU level and let CESR memb ers agree on a short-form disclosure 
regime for rights issues; (ii) exempt rights  issues from the prospectus requirement; 
(iii) introduce a "proportionate " prospectus" for right issues.  
4.2.5.  Policy options for providing proportionate di sclosure requirements for small quoted 
companies: (i) no action at EU level; (ii) exempt small quoted companies from the 
obligation to publish a prospectus by raising the threshold in Article 1(2)(h) of the 
Directive; (iii) introduce a "proportionate " prospectus for small quoted companies.   
4.2.6.  Policy options for providing proportionate di sclosure requirements for small credit 
institutions:  (i) no action at EU level; (ii) exem pt small credit institutions from the 
obligation to publish a prospectus by raising the threshold in Article 1(2)(j) of the 
Directive; (iii) introduce a "p roportionate" prospectus for small credit institutions.  
4.2.7.  
Policy options in relation to the prospect us disclosures in case of government 
guarantee schemes should be rationalised: (i) no action at EU level; (ii) exempt 
issuers of securities guarant eed by the government of a Member State from the 
obligation to provide information about the guarantor in the prospectus; (iii) exempt 
issuers of securities guarant eed by the government of a Member State from the 
obligation to provide informa tion about the guarantor and al so about the guarantee in 
the prospectus.  
 
EN 6   EN 4.2.8.  Policy options in re lation to the printed form (paper copy) of the prospectus: (i) no 
action at EU level; (ii) abolish the obligati on to deliver a printed form (paper copy) 
of the prospectus.  
4.2.9.  Policy options in relation to the translation of the summary of the prospectus:  (i) no 
action at EU level; (ii) abolish the obl igation to translate the summary of the 
prospectus.   
5. ASSESSMENT AND COMPARISON OF THE OPTIONS  
The different policy options are tested ag ainst the criteria of investor protection, 
consumer confidence, effectiveness, clarity  and reduction of admi nistrative burden. 
In view of the conclusions reached in  the impact assessment, the European 
Commission considers appropr iate to present a proposal  amending the Prospectus 
Directive in order to addr ess the following issues:  
– Retail cascade: for reasons of investor protectio n, consumer confidence, reduction 
of administrative burden, certainty and e ffectiveness the preferred option is to 
amend Article 3.2 of the Prospe ctus Directive 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 in accordance with Article 9).  
– Definition of qualified investor/professional client:  for reasons of reduction of 
administrative burden, certainty and eff ectiveness, the definition of qualified 
investor in Article 2.1(e) should be modi fied to encompass the persons that are 
considered professional clients under MiFID.  
– Exercise of the ri ght of withdrawal:  for reasons of investor  protection, consumer 
confidence, reduction of administrative burden, certainty and effectiveness, the 
time frame for the exercise of the right  of withdrawal in  Article 16.2 of the 
Prospectus Directive should be harmonised in all EU Me mber States; nevertheless 
issuers should have the possibility to expand the time frame voluntarily.  
– Lack of harmonised rules on liability:  the harmonisation of the liability standards 
is a goal that exceeds the Prospectus Directive. The preferred option is to keep the status quo . 
– Summary of the prospectus: for reasons of investor  protection, consumer 
confidence, certainty and effectiveness,  the content of the summary of the 
prospectus should be standardised following the approach adopted by the 
European Commission in its Communica tion on Packaged Retail Investment 
Products.  
– Employee shares schemes:  for reasons of effectiveness,  certainty and reduction of 
administrative burdens, the exemption for employee shares schemes in Article 4.1(e) of the Prospectus Di rective should be extended to  employees of companies 
listed in markets other than EU regulated markets and non-listed companies.  
– Duplication of transparency obligations: for reasons of investor protection, 
consumer confidence, reduction of administrative burden and effectiveness, the 
 
EN 7   EN disclosure requirements of Article 10 of  the Prospectus Di rective should be 
abolished.  
– Choice of home Member State for th e issuers of non-e quity securities:  for reasons 
of reduction of administrative burden and effectiveness, issuers of non-equity 
should be entitled to choose a home Member  State regardless of the denomination 
per unit of the offer. The threshold of  €1.000 should be deleted from Article 
2.1(m) of the Prospectus Directive.  
– Rights issues:  for reasons of consumer confiden ce, reduction of administrative 
burden, certainty and effectiveness, the preferred option is to introduce the 
principle of a reduced disclosure regime for prospectuses for rights issues in the 
Directive; this regime should be supplemented through implementing measures, i.e. a modification in the implementing regulation.  
– Small quoted companies and small credit institutions: for reasons of consumer 
confidence, reduction of administrative burden, certainty and effectiveness, the 
raise of capital of small quoted companie s and small credit institutions should be 
subject to "proportionate" disclosure requ irements. 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.  
– Government Guarantee Schemes:  for reasons of reducti on of administrative 
burden, certainty and effectiv eness, Article 1.3 of the Pr ospectus Directive should 
clarify that issuers of secu rities guaranteed by a Member State are not obliged to 
include in the prospectus information a bout the State guarantor (though it should 
contain information about the guarantee).  
6. 
IMPACTS OF THE PREFERRED OPTIONS  
The impact assessment shows that the pref erred options will have positive impacts 
for investors, companies raising capital, financial intermediaries, employees and small and medium size enterprises. The identifiable reduction of administrative burdens from the preferred options amounts to approximately € 302 million on an 
annual basis.  
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 € 392,000 € 98,000 1 € 490,000 37 € 18,130,000 
 
EN 8   EN launched in the 
EU from the obligation to 
publish a 
prospectus 
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 
7. MONITORING AND EVALUATION  
The Commission is the guardian of the Treaty and therefore will monitor how 
Member States have implemented the changes of the Prospectus Directive. The 
evaluation of the consequences of the app lication of the legisl ative measure could 
take place three years after the entry into fo rce of the legislative measure in the form 
of a Commission report to the Counc il and the European Parliament.