Opinion of the European Central Bank of 16 November 2001 at the request of the Council of the European Union on a proposal for a Directive of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading (COM(2001) 280 final) (CON/2001/36)
Date: 2001-11-16
Institutions: European Central Bank
Subjects: EU publication, European Central Bank, drafting of EU law, securities, takeover bid

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Official Journal of the European Communities

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EUROPEAN CENTRAL BANK

OPINION OF THE EUROPEAN CENTRAL BANK

of 16 November 2001

at the request of the Council of the European Union on a proposal for a Directive of the European
Parliament and of the Council on the prospectus to be published when securities are offered to
the public or admitted to trading (COM(2001) 280 final)

(CON/2001/36)

(2001/C 344/05)

1. On 5 July 2001 the European Central Bank (ECB) received
a request from the Council of the European Union for an
opinion on a proposal for a Directive of the European
Parliament and of the Council on the prospectus to be
published when securities are offered to the public or
(hereinafter
admitted to trading (COM(2001) 280 final)
referred to as the (cid:145)proposed Directive(cid:146)).

the

since

essential

integrity of

2. The ECB’s competence to deliver an opinion is based on
the first indent of Article 105(4), of the Treaty establishing
the European Community (hereinafter referred to as (cid:145)the
constitutes an
the proposed Directive
Treaty(cid:146)),
instrument
the
to ensure
Community financial markets and to enhance investor
confidence in those markets and contains provisions with
a bearing on the issuance of securities by the ECB. The
ECB also notes that Article 105(1) of the Treaty and Article
2 of the Statute of the European System of Central Banks
and of the European Central Bank state that the ESCB shall
support the general economic policies in the Community.
In accordance with the first sentence of Article 17.5 of the
Rules of Procedure of
this opinion has been
the ECB,
adopted by the Governing Council of the ECB.

3. The main objective of the proposed Directive is the intro-
duction of a single passport for issuers offering securities at
European Union level. It provides the possibility of offering
securities or admitting securities to trading on the basis of
a simple notification of the prospectus approved by the
home competent authority. In order to attain this objective,
the proposed Directive introduces the necessary harmon-
isation of the rules applicable to public offer and of the
information contained in a prospectus
thus ensuring
equivalent protection for investors at Community level.
introduced by the proposed
The disclosure standards
Directive
standards
are
regarding public offer of
securities and admission to
trading.

international

line with

in

4. The ECB generally welcomes and supports

the aims
pursued by the proposed Directive, as the ECB sees the
proposal as an effective means of advancing European
financial markets integration. The Eurosystem has a keen

impulses be

in the developments of

transmitted in a
the euro area by means of

financial markets. The
interest
achievement of the primary objective of the Eurosystem,
the maintenance of price stability, requires that monetary
policy
smooth way
integrated and
throughout
together
financial markets. Securities markets,
efficient
with the unsecured money market and the banking
sector, play a key role in this respect. The existence of
some degree of segmentation of financial markets in the
jurisdiction of a central bank is not an uncommon
phenomenon. However, obstacles to the integration of
securities markets in the euro area may slow down or
the transmission of monetary impulses to the
distort
economy.
that without
the Treaty states
prejudice to the objective of price stability, the Eurosystem
shall contribute to the achievement of the objectives of the
Community. A prominent objective of the Community is
to achieve balanced and sustainable development, by estab-
lishing a common market. In this respect, the introduction
of a single currency is proving to be a powerful triggering
leading towards easier access to borrowing and
event,
investment opportunities. Ultimately,
this will enhance
the capacity of
issuers to raise capital on an EU-wide
basis, by reducing the cost of financing and improving
resources
the allocation of
the efficiency of
throughout the euro area. Therefore, it is in the interest
of
the Eurosystem that obstacles to the integration of
securities markets do not thwart the full benefits of EMU.

In addition,

financial

liquid,

therefore

5. Generally, efficient and integrated securities markets can
facilitate economic growth and reduce the cost of raising
capital in the EU. In addition, European securities markets
attracting more
will become more
investments and also more issuers from third countries.
The proposed Directive, with the introduction of a single
passport for issuers, will improve market access for raising
capital in the EU and eliminate existing obstacles to cross-
the new
border offering of securities. On account of
language regime for multinational offerings and admissions
to trading costly translation will be significantly reduced.
Regulatory compliance will be simplified,
since host
the possibility of
Member States will be deprived of
requiring adherence to additional national rules. As a
consequence, raising capital should become easier and
cheaper for companies of all sizes. The introduction of
harmonised and enhanced disclosure standards in line
with international standards for public offer of securities

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regards

in particular as

the need for an efficient

and admission to trading is likely to increase investor
confidence,
investing on an
EU-wide basis. However, a high level of disclosure has to
be balanced against
issuance
process, with costs proportional to the size of the issuing
company and the type of security issued. Standardised,
easily available and regularly updated information will
improve and widen the basis for well-founded decision
making by investors. The positive implications of
the
proposed Directive for both issuers and investors will
enhance the ability of the financial markets to fulfil their
function of efficient capital allocation, as they become
more liquid and efficient. Moreover, the ECB holds the
view that
issuer disclosure will
favour selection by investors of new investment projects
and reduce information asymmetry,
leading in turn to
greater market liquidity. The ECB also notes that the above-
mentioned benefits are in principle a consequence of any
enhancement in corporate disclosure. In this respect, the
ECB notes that the Lisbon European Council urged that
steps be taken to enhance the quality and the compara-
bility of corporate disclosure for listed companies, and that
the Commission has already launched a number of new
initiatives, which aim to build a new EU regime on
disclosure requirements.

the enhancement of

6. The ECB welcomes

the proposed introduction of a
harmonised definition of public offer, which will avoid
different interpretations of Community rules and ensure
the same level of investor protection throughout the EU.
The ECB notes that Article 3(2) of the proposed Directive
defines offers to which the obligation of publishing a
prospectus does not apply as offers either to qualified
investors for their account, or to a restricted circle of
persons, or concerning securities which can be acquired
only for a consideration of at
least EUR 150 000 per
investor. In this respect, the ECB welcomes the fact that
clarification and adaptation of the exemptions are under
comitology procedure in order to ensure the necessary
degree of flexibility. In addition, the ECB notes that the
definition of qualified investors should also include the
ECB and the central banks of the Member States.

and

effective

transparent,

7. The ECB welcomes the use of the comitology procedure in
the proposed Directive, as recommended by the Committee
of Wise Men. Following the endorsement by the resolution
of the Stockholm European Council of March 2001, the
new approach aims to make the European Union securities
legislation more
allowing
adequate and timely response to dynamic market devel-
the
the ECB holds the view that
opments. Generally,
the comitology procedure to securities
application of
market regulation should take account of
the advisory
role that the Treaty confers on the ECB, by allowing for
the ECB’s views in the regulatory
the incorporation of
process. More
the proposed
Directive, the ECB notes that for the sake of clarity as to
the application of the procedure it may be advisable either
to restate in Article 22(2) the articles subject to the comi-
to assemble all
tology procedure or, as a minimum,

specifically,

regards

as

implementing measures
procedure in one single article.

subject

to

the

comitology

8. The ECB notes that Article 6(2) of the proposed Directive
refers to the work of the International Organisation of
Securities Commissions (IOSCO), by stating that
rules
concerning the
included in the
information to be
prospectus, adopted by the Commission under comitology
procedure, shall be in accordance with the information
requirements set out by IOSCO, where it is possible and
appropriate. The ECB welcomes
the aim of bringing
European securities
legislation in line with IOSCO
standards. The adoption of internationally accepted prin-
ciples such as those enacted by IOSCO would lead to
convergence of international financial systems towards a
more harmonised securities disclosure regime. The ECB
the proposed Directive
also notes that Article 18(1) of
stipulates
a
the approval by a Member
necessary requirement
State of a prospectus drawn up for an offer or admission
to trading in a third country.

conformity with IOSCO standards

for

as

the (cid:145)sector(cid:146) of

such as ESA95. This applies

9. In addition, the ECB holds the view that greater clarity
could be obtained regarding the coverage of the Directive
reference was made to existing international and
if
European standards
in
the term (cid:145)securities(cid:146) and
particular to the definition of
the identification of
the issuer. While
the proposed Directive defines the term
Article 2 of
(cid:145)securities(cid:146),
further elaboration is needed to obtain a
common definition of securities that takes into account
debt and equity securities. A possible starting point could
be the definitions used in ESA95. Finally, the ECB notes
that the proposed Directive shall apply to issuers except
inter alia Member States and certain international organi-
sations. Greater clarity would be desirable as to which
economic entities are within the scope of the proposed
fall
Directive or conversely,
outside its scope. Again, the ESA95 definitions could be
a good reference point.

to define which entities

10. The ECB welcomes the exclusion from the scope of the
proposed Directive of securities issued by the ECB. In this
respect the ECB wants to underline that this exclusion is
vital for the unhampered conduct of the single monetary
policy of the Eurosystem. The single monetary policy relies
on a number of different instruments, inter alia ECB debt
certificates, which might be issued with the aim of
adjusting the
the Eurosystem
structural position of
vis-(cid:224)-vis the financial sector so as to create (or enlarge) a
liquidity shortage in the market, in accordance with section
3.3 of the general documentation on Eurosystem monetary

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and procedures, November 2000
policy instruments
(Annex 1 to Guideline ECB/2000/7 of 31 August 2000
on monetary policy instruments and procedures of
the
Eurosystem) (1). As the formulation and the implemen-
tation of the Eurosystem monetary policy lies within the
exclusive competence of the ECB’s decision-making bodies,
as laid down by the Treaty, the use of the instruments
task should be as smooth and
that
necessary to fulfil
as
and operational obstacles
unhampered by
legal
trans-
the necessary degree of
possible. Consequently,
parency of
the conditions applicable to the securities
issued by the Eurosystem will be ensured by the publi-
cation of the applicable legal documentation (the afore-
mentioned Guideline ECB/2000/7 as well as the respective
legal documentation of the national central banks). Any
additional
requirements might compromise the
necessity of the Eurosystem to react quickly and flexibly
to financial market developments. In the light of the above-
the proposed
mentioned considerations, Article 1 of
Directive should also exclude the national central banks
from the scope of the Directive.

formal

13. The ECB notes that Article 19 requires each Member State
to designate the administrative authority competent
to
carry out the duties introduced by the proposed Directive,
listing the powers given to the competent authority. In the
explanatory memorandum the Commission refers to the
need to ensure the independence of the competent auth-
orities, avoiding possible conflicts of
interest. The ECB
notes that the avoidance of conflicts of interest will gain
importance as more and more exchanges are transformed
remain
into for-profit entities while these exchanges
entrusted with listing and certain (cid:145)public functions(cid:146) such
as the formal approval of prospectuses. Consequently,
there is a need to find appropriate regulatory means to
address and solve potential conflicts of interest resulting
from the changing nature of the exchanges.

that

capital

it must be taken into account

11. The ECB notes that it appears desirable to clarify in the
proposed Directive the regime applicable to public offers of
debt securities issued by credit institutions. As regards such
intermediaries,
the
from the public by issuing debt
raising of
instruments falls within their institutional activities, and
that they are subject to public supervision and to specific
transparency requirements in order to protect savings.
Therefore, it could be considered retaining the provision
existing in the current Directive, which allows Member
States to exempt credit institutions from the obligation to
publish a prospectus when the latter are issuing debt
securities or other
to
debt securities in a continuous or repeated manner.

transferable securities equivalent

12. The ECB supports

the

the

that

requirement

importance of

issue
prospectus shall be available in an electronic format to
the general public on the websites of
the competent
national authorities. The information should be made
available to any holder or potential holder immediately
on request. In this context the ECB wants to emphasise
ensuring timely publication and
the
updates, and would therefore propose introducing a
for publishing the prospectus
minimum time
frame
issued. Regarding the detailed
before the security is
technical
the
rules
proposed Directive, the ECB would suggest that they be
extended to the reporting of the prospectuses (in addition
to publication and availability).

referred to in Article 12(7) of

(1) OJ L 310, 11.12.2000, p. 1.

in the field of

14. The ECB holds the view that the proposed Directive might
envisage a broader scope for supervisory cooperation. The
proposed Directive refers solely to cooperation between the
(cid:145)competent authority(cid:146) of the home and the host Member
States
supervision as defined by the
proposed Directive, and in particular, it does not foresee
the possibility or obligation of cooperation between the
competent authorities in the field of supervision under
the proposed Directive and the competent authorities in
the field of supervision of regulated entities (credit insti-
tutions, insurance undertakings, and investment firms and
perhaps also collective asset management firms). The ECB
suggests that the usefulness be considered of a provision
foreseeing the possibility or even obligation of close coop-
eration between supervisors
the
proposed Directive and supervisors of regulated entities.
Both functions may benefit
from cooperation and
exchange of
information between the respective super-
visory authorities. Regulated entities may simultaneously
(cid:145)person
be involved both as (cid:145)issuer(cid:146)
(cid:145)the
and as
making the offer(cid:146)
the public offer
financial
procedures(cid:146)
in these
(see Article 21(1)). Transactions
capacities with indications hinting at misconduct may
give rise to reputational risk or question the adequacy of
management procedures of an institution under super-
vision by a competent authority.

institution in charge of

(see Article 2(1)(e)),

in the meaning of

(see Article 2(1)(d)),

it

institution in charge of

15. The ECB notes that, while it is generally understood that at
least some regulated financial entities may act as (cid:145)the
financial
the public offer
procedures(cid:146)
is less clear how this wording, used in
Article 21 of the proposed Directive, fits with the defi-
nitions used for
service in the sectoral
directives. The ECB suggests that it be considered using
harmonised definitions to the widest extent possible.
In
this respect
it might be clarified with regard to the
proposed Directive whether (cid:145)underwriting(cid:146) is encompassed

this kind of

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in the definition of such an offer,

by an (cid:145)offer of securities to the public(cid:146). While the proposed
Directive includes (cid:145)placing of securities through financial
intermediaries(cid:146)
the
Investment Services Directive (93/22/EEC) (1) in paragraph
its Annex introduces a distinction
4 of Section A of
between (cid:145)underwriting(cid:146) and (cid:145)the placing of such issues(cid:146).
Directive
Furthermore,
codified
(2000/12/EC) (2) refers in paragraph 8 of Annex I
to
(cid:145)participation in securities issues and the provision of
services related to such issues(cid:146) when listing the activities
that are subject to mutual recognition. Thus, the ECB sees
benefits in a clearer identification and further harmon-
isation of what constitutes an offer and the placing of

Banking

the

securities in the proposed Directive, also in the light of
the current review of the Investment Services Directive.

16. This opinion shall be published in the Official Journal of the

European Communities.

Done at Frankfurt am Main on 16 November 2001.

The President of the ECB

Willem F. DUISENBERG

(1) OJ L 141, 11.6.1993, p. 27.
(2) OJ L 126, 26.5.2000, p. 1.