Common Position (EC) No 25/2003 of 24 March 2003 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting 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 and amending Directive 2001/34/EC (Text with EEA relevance)
Date: 2003-03-24
Institutions: Council of the European Union
Subjects: approximation of laws, dissemination of information, financial institution, publication, securities, takeover bid

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Official Journal of the European Union

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COMMON POSITION (EC) No 25/2003

adopted by the Council on 24 March 2003

with a view to adopting Directive 2003/. . ./EC of the Parliament and of the Council of . . . on the
prospectus to be published when securities are offered to the public or admitted to trading and
amending Directive 2001/34/EC

(2003/C 125 E/02)

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 44 and 95 thereof,

(3)

Having regard to the proposal from the Commission (1),

to official

stock exchange

securities
information to be published on those
which codifies several Directives in the field of
securities.

listing and on
securities (7),
listed

For reasons of consistency, however, it is appropriate to
regroup the provisions of Directive 2001/34/EC which
stem from Directive 80/390/EEC together with Directive
89/298/EEC and
2001/34/EC
accordingly.

amend Directive

to

Having regard to the Opinion of the European Economic and
Social Committee (2),

Having regard to the Opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1) Council Directives 80/390/EEC of 17 March 1980 coor-
dinating the requirements for the drawing up, scrutiny and
distribution of the listing particulars to be published for
the admission of securities to official stock exchange
listing (5) and 89/298/EEC of 17 April 1989 coordinating
scrutiny and
the requirements
distribution of the prospectus to be published when trans-
ferable securities are offered to the public (6) were adopted
several years ago introducing a partial and complex
mutual
to
achieve the objective of the single passport provided for
by this Directive. Those Directives should be upgraded,
updated and grouped together into a single text.

recognition mechanism which is unable

the drawing up,

for

(2) Meanwhile, Directive 80/390/EEC was

integrated into
Directive 2001/34/EC of the European Parliament and of
the Council of 28 May 2001 on the admission of

(1) OJ C 240 E, 28.8.2001, p. 272 and OJ C 20 E, 28.1.2003, p. 122.
(2) OJ C 80, 3.4.2002, p. 52.
(3) OJ C 344, 6.12.2001, p. 4.
(4) Opinion of the European Parliament of 14 March 2002 (not yet
published in the Official Journal), Council Common Position of 24
March 2003 and Decision of the European Parliament of . . .
(5) OJ L 100, 17.4.1980, p. 1. Directive as last amended by Directive
of the European Parliament and of the Council 94/18/EC (OJ L 135,
31.5.1994, p. 1).

as

the

internal market

(4) This Directive constitutes an instrument essential to the
achievement of
in
timetable form in the Commission Communications ‘Risk
Capital Action Plan’ and ‘Implementing the framework for
facilitating the widest
financial market: Action Plan’
possible
a
to
Community-wide basis,
including for small and medium
sized enterprises (SMEs) and start-ups, by granting a single
passport to the issuer.

investment

set out

capital

access

on

(5) On 17 July 2000, the Council set up the Committee of
Wise Men on the regulation of European securities
markets.
In its initial report of 9 November 2000 the
Committee stresses the lack of an agreed definition of
public offer of securities, with the result that the same
operation is regarded as a private placement
in some
the current system
Member States and not
discourages
a
Community-wide basis and therefore from having real
liquid and integrated financial market.
access to a large,

in others;
from raising

capital

firms

on

(6)

four-level

In its final report of 15 February 2001 the Committee of
Wise Men proposed the introduction of new legislative
approach, namely
techniques based on a
coop-
framework principles,
eration and enforcement. Level 1, the Directive, should
‘framework’ principles
confine itself
while Level 2 should contain technical
implementing
measures to be adopted by the Commission with the
assistance of a committee.

implementing measures,

to broad general

(7) The Stockholm European Council of 23-24 March 2001
endorsed the final report of the Committee of Wise Men
and the proposed four-level approach to make the regu-
latory process for Community securities legislation more
efficient and transparent.

(6) OJ L 124, 5.5.1989, p. 8.

(7) OJ L 184, 6.7.2001, p. 1.

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(8) The resolution of the European Parliament of 5 February
2002 on the implementation of financial services legis-
lation also endorsed the Committee of Wise Men's final
report, on the basis of the solemn declaration made before
Parliament the same day by the Commission and the letter
of 2 October 2001 addressed by the Internal Market
Commissioner
Parliament's
Committee on Economic and Monetary Affairs with
regard to the safeguards for the European Parliament's
role in this process.

chairman

the

to

of

(9) According to the Stockholm European Council, Level 2
implementing measures should be used more frequently
to ensure that technical provisions can be kept up to
date with market and supervisory developments and
deadlines should be set for all stages of Level 2.

(13) The grant

to the issuer of a single passport, valid
throughout the Community, and the application of the
country of origin principle require the identification of
the home Member State as
the one best placed to
regulate the issuer for the purposes of this Directive.

(14) One of

the objectives of

investors and their

this Directive is to protect
investors. It is therefore appropriate to take account of
the different requirements for protection of the various
categories of
level of expertise.
Disclosure provided by the prospectus is not required
for offers limited to qualified investors. In contrast, any
resale to the public or public trading through admission to
trading on a regulated market requires the publication of a
prospectus.

(10) The aim of this Directive and its implementing measures is
in
to ensure investor protection and market efficiency,
accordance with high regulatory standards adopted in
the relevant international fora.

(15) Issuers, offerors or persons asking for the admission to
trading on a regulated market of securities which are
exempted from the obligation to publish a prospectus
will benefit from the single passport if they comply with
this Directive.

(11) Non-equity securities issued by a Member State or by one
of a Member State's regional or local authorities, by public
international bodies of which one or more Member States
are members, by the European Central Bank or by the
central banks of the Member States are not covered by
this Directive and thus remain unaffected by this Directive;
the abovementioned issuers of
such securities may,
they so choose, draw up a prospectus in
however,
accordance with this Directive.

if

securities

is only valid for

(12) Full coverage of equity and non-equity securities offered to
the public or admitted to trading on regulated markets as
defined by Council Directive 93/22/EEC of 10 May 1993
on investment services in the securities field (1), and not
only securities which have been admitted to the official
lists of stock exchanges, is also needed to ensure investor
protection. The wide definition of
in this
Directive, which includes warrants and covered warrants
and certificates,
this Directive and
consequently in no way affects the various definitions of
financial instruments used in national legislation for other
purposes, such as taxation. Some of the securities defined
in this Directive entitle the holder to acquire transferable
securities or to receive a cash amount through a cash
settlement determined by reference to other instruments,
notably transferable securities, currencies, interest rates or
yields,
indices or measures.
Depositary receipts and convertible notes, e.g. securities
convertible at the option of the investor, fall within the
definition of non-equity securities set out in this Directive.

commodities or other

(1) OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive
2000/64/EC of the European Parliament and of the Council (OJ L
290, 17.11.2000, p. 27).

(16) The provision of

full

information concerning securities
and issuers of those securities promotes, together with
the protection of
rules on the conduct of business,
investors. Moreover,
an
effective means of increasing confidence in securities and
thus of contributing to the proper functioning and devel-
opment of securities markets. The appropriate way to
make this information available is to publish a prospectus.

such information provides

(17) Investment in securities, like any other form of investment,
involves risk. Safeguards for the protection of the interests
of actual and potential
investors are required in all
Member States in order to enable them to make an
informed assessment of such risks and thus to take
investment decisions in full knowledge of the facts.

(18) Such information, which needs to be sufficient and as
objective as possible as regards the financial circumstances
of the issuer and the rights attaching to the securities,
should be provided in an easily analysable and compre-
hensible
information
contained in the prospectus should provide equivalent
investor protection at Community level.

form. Harmonisation

the

of

(19) Information is a key factor

in investor protection; a
summary conveying the essential characteristics of, and
risks associated with, the issuer, any guarantor and the
should be included in the prospectus. To
securities
the summary
ensure easy access to this information,
and
should be written in non-technical
language
normally
in the
language in which the prospectus was originally drawn up.

exceed 2 500 words

should not

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(20) Best practices have been adopted at international level in
order to allow cross-border offers of equities to be made
using a single set of disclosure standards established by the
International Organisation of Securities Commissions
(IOSCO); the IOSCO disclosure standards (1) will upgrade
information available for the markets and investors and at
the same time will simplify the procedure for Community
issuers wishing to raise capital
in third countries. The
Directive also calls for tailored disclosure standards to be
adopted for other types of securities and issuers.

(26) It is necessary for the annual information to be provided
by issuers whose securities are admitted to trading on a
regulated market
to be appropriately monitored by
in accordance with their obligations
Member States
law
under the provisions of Community and national
concerning the regulation of securities, issuers of securities
and securities markets.

(21) Fast-track procedures for issuers admitted to trading on a
regulated market and frequently raising capital on these
markets require the introduction at Community level of
a new format of prospectuses for offering programmes or
mortgage bonds and a new registration document system.
Issuers may choose not to use those formats and therefore
to draft the prospectus as a single document.

(22) The content of a base prospectus should,

in particular,
take into account the need for flexibility in relation to
the information to be provided about the securities.

(23) Omission of sensitive information to be included in a
prospectus
should be allowed through a derogation
granted by the competent authority in certain circum-
stances in order to avoid detrimental situations for an
issuer.

(24) A clear time limit should be set for the validity of a
prospectus in order to avoid outdated information.

issuers should, at least annually,

(25) Investors should be protected by ensuring publication of
reliable information. The issuers whose securities are
admitted to trading on a regulated market are subject to
an ongoing disclosure obligation but are not required to
publish updated information regularly. Further to this obli-
gation,
list all relevant
information published or made available to the public
over the preceding twelve months, including information
provided to the various reporting requirements laid down
in other Community legislation. This should make it
possible to ensure the publication of consistent and
easily understandable information on a regular basis. To
avoid excessive burdens for certain issuers,
issuers of
non-equity securities with high minimum denomination
should not be required to meet this obligation.

(1) International Disclosure Standards for cross-border offering and
initial listings by foreign issuers, Part I, International Organisation
of Securities Commissions, September 1998.

a

in

prospectus — provided

(27) The opportunity of allowing issuers to incorporate by
reference documents containing the information to be
disclosed
the
documents incorporated by reference have been previously
filed with or accepted by the competent authority —
should facilitate the procedure of drawing up a prospectus
and lower the costs for the issuers without endangering
investor protection.

that

(28) Differences regarding the efficiency, methods and timing
of the checking of the information given in a prospectus
not only make it more difficult for undertakings to raise
capital or to obtain admission to trading on a regulated
market in more than one Member State but also hinder
the acquisition by investors established in one Member
State of securities offered by an issuer established in
another Member State or admitted to trading in another
Member State. These differences should be eliminated by
harmonising the rules and regulations in order to achieve
an adequate degree of equivalence of
the safeguards
required in each Member State to ensure the provision
information which is sufficient and as objective as
of
possible for actual or potential securities holders.

(29) To facilitate circulation of the various documents making
up the prospectus, the use of electronic communication
facilities such as Internet should be encouraged. The
prospectus should always be delivered in paper form
free of charge to investors on request.

(30) The prospectus

should be

filed with the

relevant
competent authority and be made available to the public
by the issuer,
the person asking for
admission to trading on a regulated market, subject to
European Union provisions relating to data protection.

the offeror or

(31) It

is also necessary,

to avoid loopholes in
in order
Community legislation which would undermine public
confidence and therefore prejudice the proper functioning
of financial markets, to harmonise advertisements.

(32) Any new matter liable to influence the assessment of the
investment, arising after the publication of the prospectus
but before the closing of the offer or the start of trading
on a regulated market, should be properly evaluated by
investors and therefore requires the approval and dissemi-
nation of a supplement to the prospectus.

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(33) The obligation for an issuer to translate the full prospectus
into all the relevant official languages discourages cross-
border offers or multiple trading. To facilitate cross-border
offers, where the prospectus is drawn up in a language
that is customary in the sphere of international finance,
the host or home Member State should only be entitled to
require a summary in its official language(s).

(34) The competent authority of the host Member State should
be entitled to receive a certificate from the competent
authority of the home Member State which states that
the prospectus has been drawn up in accordance with
this Directive.
In order to ensure that the purposes of
it is also necessary
this Directive will be fully achieved,
to include within its scope securities issued by issuers
governed by the laws of third countries.

and

should be

overlapping

a Member State

(35) A variety of competent authorities in Member States,
having different responsibilities, may create unnecessary
costs
responsibilities without
of
providing any additional benefit. In each Member State
one single competent authority should be designated to
approve prospectuses and to assume responsibility for
supervising compliance with this Directive. Under strict
conditions,
allowed to
designate more than one competent authority but only
one will assume the duties for international cooperation.
Such an authority or authorities should be established as
an administrative authority and in such a form that their
independence from economic actors is guaranteed and
interest are avoided. The designation of a
conflicts of
competent authority for prospectus approval should not
exclude cooperation between that authority and other
entities, with a view to guaranteeing efficient scrutiny
and approval of prospectuses in the interest of issuers,
investors, markets participants and markets alike. Any
delegation of tasks relating to the obligations provided
for in this Directive and in its implementing measures
should,
Internet of
approved prospectuses, end five years after the entry
into force of this Directive.

for publication on the

except

(36) A common minimum set of powers for the competent
authorities will guarantee the effectiveness of their super-
vision. The flow of information to the markets required by
Directive 2001/34/EC should be ensured and action
against breaches should be taken by competent authorities.

(37) For the purposes of carrying out their duties, cooperation
between competent authorities of the Member States is
required.

(38) Technical guidance and implementing measures for the
rules laid down in this Directive may from time to time
be necessary to take into account developments on
financial markets. The Commission should accordingly
be
implementing measures,
provided that these do not modify the essential elements
of this Directive and provided that the Commission acts in
accordance with the principles set out in this Directive,
after consulting the European Securities Committee estab-

empowered

adopt

to

lished by Commission Decision 2001/528/EC of 6 June
2001 establishing the European Securities Committee (1).

(39) In exercising its implementing powers in accordance with
the

the Commission should respect

this Directive,
following principles:

— the need to ensure confidence in financial markets
among small
investors and small and medium-sized
enterprises (SMEs) by promoting high standards of
transparency in financial markets,

— the need to provide investors with a wide range of
competing investment opportunities and a level of
disclosure and protection tailored to their circum-
stances,

— the need to ensure that independent regulatory auth-
orities enforce the rules consistently, especially as
regards the fight against white-collar crime,

— the need for a high level of transparency and consul-
tation with all market participants and with the
European Parliament and the Council,

— the need to encourage innovation in financial markets

if they are to be dynamic and efficient,

— the need to ensure systemic stability of the financial
system by close and reactive monitoring of financial
innovation,

— the importance of reducing the cost of, and increasing

access to, capital,

— the need to balance, on a long-term basis, the costs
and benefits to market participants (including SMEs
and small investors) of any implementing measures,

— the need to foster the international competitiveness of
the Community's financial markets without prejudice
to a much-needed extension of
international coop-
eration,

— the need to achieve a level playing field for all market
participants by establishing Community legislation
every time it is appropriate,

— the need to respect differences in national financial
markets where these do not unduly impinge on the
coherence of the single market,

(1) OJ L 191, 13.7.2001, p. 45.

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— the need to ensure coherence with other Community
legislation in this area, as imbalances in information
and a lack of
the
operation of
all harm
consumers and small investors.

transparency may jeopardise

the markets

and above

from the

(40) The European Parliament should be given a period of
three months
transmission of draft
implementing measures to allow it to examine them and
to give its opinion. However, in urgent and duly justified
cases, this period may be shortened. If, within that period,
a resolution is passed by the European Parliament, the
Commission should re-examine the draft measures.

first

(41) Member States should lay down a system of sanctions for
breaches of the national provisions adopted pursuant to
this Directive and should take all the measures necessary
to ensure that these sanctions are applied. The sanctions
thus provided for should be effective, proportional and
dissuasive.

the exercise of
procedures
conferred on the Commission (1).

for

implementing powers

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

GENERAL PROVISIONS

Article 1

Purpose and scope

this Directive

The purpose of

1.
to harmonise
requirements for the drawing up, approval and distribution
of the prospectus to be published when securities are offered
to the public or admitted to trading on a regulated market
situated or operating within a Member State.

is

2.

This Directive shall not apply to:

(42) Provision should be made for the right of judicial review
of decisions taken by Member States' competent auth-
orities in respect of the application of this Directive.

(a) units issued by collective investment undertakings other

than the closed-end type,

(43) In accordance with the principle of proportionality, it is
necessary and appropriate for the achievement of the basic
objective of ensuring the completion of a single securities
market to lay down rules on a single passport for issuers.
This Directive does not go beyond what is necessary in
order to achieve the objectives pursued in accordance with
the third paragraph of Article 5 of the Treaty.

(44) The

the Commission of

assessment made by

the
application of this Directive should focus in particular
on the process of approval of prospectuses by the
competent authorities of the Member States, and more
generally on the
the home-country
application of
investor
principle, and whether or not problems of
protection and market efficiency might result from this
application;
the Commission should also examine the
functioning of Article 10.

(45) For future developments of this Directive, consideration
should be given to the matter of deciding which
approval mechanism should be
adopted to further
enhance the uniform application of Community legislation
on prospectuses, including the possible establishment of a
European Securities Unit.

(46) This Directive

and
the
observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union.

fundamental

respects

rights

(b) non-equity securities issued by a Member State or by one
of a Member State's regional or local authorities, by public
international bodies of which one or more Member States
are members, by the European Central Bank or by the
central banks of the Member States,

(c) shares in the capital of central banks of the Member States,

(d) securities unconditionally and irrevocably guaranteed by a
Member State or by one of a Member State's regional or
local authorities,

(e) securities

status or
issued by associations with legal
non-profit-making bodies, recognised by a Member State,
with a view to their obtaining the means necessary to
achieve their non-profit-making objectives,

(f) non-equity securities issued in a continuous or repeated
manner by credit institutions 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;

(iii) materialise reception of repayable deposits;

(47) The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the

(iv) are covered by a deposit guarantee scheme under
Directive 94/19/EC, of the European Parliament and
of the Council of 30 May 1994 on deposit-guarantee
schemes (2),

(1) OJ L 184, 17.7.1999, p. 23.

(2) OJ L 135, 31.5.1994, p. 5.

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(g) non-fungible shares of capital whose main purpose is to
provide the holder with a right to occupy an apartment, or
other form of immovable property or a part thereof and
where the shares cannot be sold on without this right
being given up,

(h) securities included in an offer where the total consideration
of the offer is less than EUR 2 500 000, which limit shall
be calculated over a period of twelve months,

(i)

‘bostadsobligationer’ issued repeatedly by credit institutions
in Sweden whose main purpose is to grant mortgage loans,
provided that

(i) the ‘bostadsobligationer’ issued are of the same series;

(ii) the ‘bostadsobligationer’ are issued on tap during a

specified issuing period;

(b)

transferable
‘equity securities’ means shares and other
securities equivalent to shares in companies, as well as
any other type of transferable securities giving the right
to acquire any of the aforementioned securities as a conse-
quence of their being converted or the rights conferred by
them being exercised, provided that securities of the latter
type are issued by the issuer of the underlying shares or by
an entity belonging to the group of the said issuer,

(c)

‘non-equity securities’ means all securities that are not
equity securities,

(d)

‘offer of securities to the public’ means a communication
to persons in any form and by any means, presenting
sufficient information on the terms of the offer and the
securities to be offered, so as to enable an investor to
decide to purchase or subscribe to these securities. This
definition shall also be applicable to the placing of
securities through financial intermediaries,

(iii) the terms and conditions of the ‘bostadsobligationer’

are not changed during the issuing period; and

(e)

‘qualified investors’ mean:

(iv) the sums deriving from the issue of

the said ‘bo-
stadsobligationer’,
in accordance with the articles of
association of the issuer, are placed in assets which
provide sufficient coverage for the liability deriving
from securities,

(j) 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 twelve months, provided that
these securities:

(i) are not subordinated, convertible or exchangeable;

investment

(i) legal entities which are authorised or regulated to
operate in the financial markets, including: credit insti-
other
firms,
tutions,
or
authorised
insurance companies,
institutions,
regulated financial
collective investment schemes and their management
companies, pension funds and their management
companies, commodity dealers, as well as entities
not
regulated whose corporate
purpose is solely to invest in securities;

so authorised or

(ii) national and regional governments, central banks,
institutions such as
the European
Fund,
the European Investment Bank and

international and supranational
the
Central Bank,
other similar international organisations;

International Monetary

(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.

(iii) other legal entities which do not meet two of the

three criteria set out in paragraph (f);

Notwithstanding paragraph 2(b), (d), (h), (i) and (j), an
3.
issuer, an offeror or a person asking for admission to trading
on a regulated market shall be entitled to draw up a prospectus
in accordance with this Directive when securities are offered to
the public or admitted to trading.

Article 2

Definitions

For the purposes of this Directive, the following defi-

1.
nitions shall apply:

(a)

‘securities’ means transferable securities as defined by
Article 1(4) of Directive 93/22/EEC with the exception
of money market instruments as defined by Article 1(5)
of Directive 93/22/EEC having a maturity of less than 12
months. For these instruments national legislation may be
applicable,

(f)

(iv) certain natural persons: subject to mutual recognition,
a Member State may choose to authorise natural
persons who are resident in the Member State and
who expressly ask to be considered as qualified
investors if these persons meet at least two of the
criteria set out in paragraph 2;

(v) certain SMEs: subject to mutual recognition, a Member
State may choose to authorise SMEs which have their
registered office in that Member State and who
expressly ask to be considered as qualified investors,

‘small and medium-sized enterprises’ means companies,
last annual or consolidated
which, according to their
accounts, meet at
the following three
criteria: an average number of employees during the
financial year of less than 250, a total balance sheet not
exceeding EUR 43 000 000 and an annual net turnover
not exceeding EUR 50 000 000,

two of

least

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(g)

institution’ means an undertaking as defined by
‘credit
Article 1(1)(a) of Directive 2000/12/EC of the European
Parliament and of the Council of 20 March 2000 relating
to the taking up and pursuit of the business of credit
institutions (1),

(h)

‘issuer’ means a legal entity which issues or proposes to
issue securities,

(i)

(j)

(k)

(l)

‘person making an offer’ (or ‘offeror’) means a legal entity
or individual which offers securities to the public,

‘regulated market’ means a market as defined by Article
1(13) of Directive 93/22/EEC,

the
‘offering programme’ means an issuer's plan for
including warrants in
issuance of non-equity securities,
any form, having a similar
in a
continuous or repeated manner during a specified issuing
period,

type and/or class,

‘securities issued in a continuous or repeated manner’
means issues on tap with at least two separate issues of
securities of a similar type and/or class over a period of
twelve months,

(m) ‘home Member State’ means:

(i) for all Community issuers of securities which are not
mentioned in (ii), the Member State where the issuer
has its registered office;

(ii) for any issues of non-equity securities whose denomi-
nation per unit amounts to at least EUR 5 000, and
for any issues of non-equity securities giving the right
to acquire any transferable securities or to receive a
their being
cash amount, as a consequence of
converted or the rights conferred by them being
exercised, provided that the issuer of the non-equity
securities is not the issuer of the underlying securities
the latter
or an entity belonging to the group of
issuer,
the Member State where the issuer has its
registered office, or where the securities were or are
to be admitted to trading on a regulated market or
where the securities are offered to the public, at the
choice of the issuer, the offeror or the person asking
for admission, as the case may be;

(iii) for all

issuers of securities incorporated in a third
the
country, which are not mentioned in (ii),
Member State where the securities are intended to
be offered to the public for the first time after the
date of entry into force of this Directive or where the
first application for admission to trading on a
the
is made, at
regulated market
issuer, the offeror or the person asking for admission,

the choice of

(1) OJ L 126, 26.5.2000, p. 1. Directive as last amended by Directive

2000/28/EC (OJ L 275, 27.10.2000, p. 37).

as the case may be, subject to a subsequent election
by issuers incorporated in a third country if the home
Member State was not determined by their choice;

‘host Member State’ means the State where an offer to the
public is made or admission to trading is sought, when
different from the home Member State,

investment

‘collective
closed-end type’ means unit
companies:

undertaking

trusts

other

the
than
and investment

(i) the object of which is the collective investment of
capital provided by the public, and which operate on
the principle of risk spreading; and

(ii) the units of which are, at the holder's request, repur-
chased or redeemed, directly or indirectly, out of the
assets of these undertakings,

a

collective

‘units of
investment undertaking’ mean
securities issued by a collective investment undertaking
as representing the rights of the participants in such an
undertaking over its assets,

‘approval’ means the positive act at the outcome of the
scrutiny of the completeness of the prospectus by the
home Member State's competent authority including the
consistency of the information given and its comprehen-
sibility.

(n)

(o)

(p)

(q)

For the purposes of paragraph 1(e)(iv) the criteria are as

2.
follows:

(a) the investor has carried out transactions of a significant size
on securities markets at an average frequency of at least,
ten per quarter over the previous four quarters,

(b) the size of

the investor's

securities portfolio exceeds

EUR 0,5 million,

(c)

the investor works or has worked for at least one year in
the financial
in a professional position which
requires knowledge of securities investment.

sector

For

3.
following shall apply:

the purposes of paragraphs 1(e)(iv) and (v)

the

Each competent authority shall ensure that appropriate mech-
anisms are in place for a register of natural persons and SMEs
considered as qualified investors, taking into account the need
to ensure an adequate level of data protection. The register
shall be available to all issuers. Each natural person or SME
wishing to be considered as a qualified investor shall register
and each registered investor may decide to opt out at any
moment.

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27.5.2003

the Commission shall,

in Article 24(2), adopt

In order to take account of technical developments on
4.
financial markets and to ensure uniform application of this
in accordance with the
Directive,
procedure set out
implementing
measures concerning the definitions referred to in paragraph
1, including adjustment of the figures used for the definition of
SMEs, taking into account Community legislation and recom-
mendations as well as economic developments and disclosure
measures relating to the registration of
individual qualified
investors.

Article 3

Obligation to publish a prospectus

1. Member States shall not allow any offer of securities to be
made to the public within their territories without prior publi-
cation of a prospectus.

The obligation to publish a prospectus shall not apply to

2.
the following types of offer:

(a) an offer of securities addressed solely to qualified investors,

and/or;

(b) an offer of securities addressed to fewer than 100 natural
or legal persons per Member State, other than qualified
investors, and/or;

(c) an offer of securities addressed to investors who acquire
securities for a total consideration of at least EUR 50 000
per investor, for each separate offer, and/or;

(d) an offer of

securities whose denomination per unit

amounts to at least EUR 50 000, and/or;

Article 4

Exemptions from the obligation to publish a prospectus

1.
The obligation to publish a prospectus shall not apply to
offers of securities to the public of the following types of
securities:

(a) shares issued in substitution for shares of the same class
already issued, if the issuing of such new shares does not
involve any increase in the issued capital;

(b) securities offered in connection with a take-over by means
of an exchange offer, provided that a document is available
containing information which is regarded by the competent
authority as being equivalent to that of the prospectus,
taking into account the requirements of Community legis-
lation;

(c) securities offered, allotted or to be allotted in connection
is available
the
by
to that of the
requirements of

with a merger, provided that a document
information which
containing
competent authority as being equivalent
prospectus,
Community legislation;

taking into account

regarded

the

is

(d) shares offered, allotted or to be allotted free of charge to
existing shareholders, and dividends paid out in the form of
shares of the same class as the shares in respect of which
such dividends are paid, provided that a document is made
available containing information on the number and nature
of the shares and the reasons for and details of the offer;

(e) securities offered, allotted or to be allotted to existing or
former directors or employees by their employer which has
securities already admitted to trading on a regulated market
or by an affiliated undertaking, provided that a document is
made available containing information on the number and
nature of the securities and the reasons for and details of
the offer.

(e) an offer of securities with a total consideration of less than
EUR 100 000, which limit shall be calculated over a period
of twelve months.

2.
The obligation to publish a prospectus shall not apply to
the admission to trading on a regulated market of the following
types of securities:

resale of securities which were
However, any subsequent
previously the subject of one or more of the types of offer
mentioned in this paragraph shall be regarded as a separate
offer and the definition set out to in Article 2(1)(d) shall apply
for the purpose of deciding whether that resale is an offer of
securities to the public. The placement of securities through
financial
intermediaries shall be subject to publication of a
prospectus if none of the conditions (a) to (e) are met for
the final placement.

shall ensure that any admission of
3. Member States
securities
situated or
operating within their territories is subject to the publication
of a prospectus.

to trading on a regulated market

(a) shares representing, over a period of twelve months, less
than 10 per cent of the number of shares of the same class
already admitted to trading on the same regulated market;

(b) shares issued in substitution for shares of the same class
already admitted to trading on the same regulated market,
if the issuing of such shares does not involve any increase
in the issued capital;

(c) securities offered in connection with a take-over by means
of an exchange offer, provided that a document is available
containing information which is regarded by the competent
authority as being equivalent to that of the prospectus,
taking into account the requirements of Community legis-
lation;

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(d) securities offered, allotted or to be allotted in connection
is available
the
by
to that of the
requirements of

with a merger, provided that a document
containing
information which
competent authority as being equivalent
prospectus,
Community legislation;

taking into account

regarded

the

is

(e) shares offered, allotted or to be allotted free of charge to
existing shareholders, and dividends paid out in the form of
shares of the same class as the shares in respect of which
such dividends are paid, provided that the said shares are of
the same class as the shares already admitted to trading on
the same regulated market and that a document is made
available containing information on the number and nature
of the shares and the reasons for and details of the offer;

(f)

securities offered, allotted or to be allotted to existing or
former directors or employees by their employer or an
affiliated undertaking, provided that the said securities are
of the same class as the securities already admitted to
a
regulated market
trading on the
document
is made available containing information on
the number and nature of the securities and the reasons
for and detail of the offer;

and that

same

(g) shares resulting from the conversion or exchange of other
securities or from the exercise of the rights conferred by
other securities, provided that the said shares are of the
same class as the shares already admitted to trading on the
same regulated market;

(h) securities already admitted to trading on another regulated

market, on the following conditions:

(i) that these securities, or securities of the same class,
have been admitted to trading on that other regulated
market for more than 18 months;

(ii) that,

for securities first admitted to trading on a
regulated market after the date of entry into force of
this Directive, the admission to trading on that other
regulated market was associated with an approved
prospectus made available to the public in conformity
with Article 14;

(iii) that, except where (ii) applies,

first
admitted to listing after 30 June 1983,
listing
particulars were approved in accordance with the
requirements of Directive 80/390/EEC or Directive
2001/34/EC;

for securities

(v) that the person seeking the admission of a security to
trading on a regulated market under this exemption
makes a summary document available to the public in
a language accepted by the competent authority of the
regulated market where
State of
Member
admission is sought;

the

(vi) that the summary document referred to in (v) is made
available to the public in the Member State of the
regulated market where admission to trading is
sought in the manner set out in Article 14(2); and

(vii) that

the contents of

the summary document shall
comply with Article 5(2). Furthermore the document
shall state where the most recent prospectus can be
information
the
and where
obtained
published by the issuer pursuant
to his ongoing
disclosure obligations is available.

financial

3.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning paragraphs 1(b), 1(c), 2(c) and 2(d),
notably in relation to the meaning of equivalence.

the Commission shall,

CHAPTER II

DRAWING UP OF THE PROSPECTUS

Article 5

The prospectus

1. Without prejudice to Article 8(2), the prospectus shall
information which, according to the particular
contain all
the securities offered to the
nature of
the issuer and of
public or admitted to trading on a regulated market,
is
necessary to enable investors to make an informed assessment
of the assets and liabilities, financial position, profit and losses,
and prospects of the issuer and of any guarantor, and of the
rights attaching to such securities. This information shall be
presented in an easily analysable and comprehensible form.

2.
The prospectus shall contain information concerning the
issuer and the securities to be offered to the public or to be
admitted to trading on a regulated market. It shall also include
a summary. The summary shall,
in a brief manner and in
non-technical
language, convey the essential characteristics
and risks associated with the issuer, any guarantor and the
securities,
in the language in which the prospectus was
originally drawn up. The summary shall also contain a
warning that:

(iv) that the ongoing obligations for trading on that other

regulated market have been fulfilled;

(a)

it should be read as an introduction to the prospectus, and

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(b) any decision to invest in the securities should be based on
consideration of the prospectus as a whole by the investor,
and

(c) where a claim relating to the information contained in a
prospectus is brought before a court, the plaintiff investor
might, under the national legislation of the Member States,
have to bear the costs of translating the prospectus before
the legal proceedings are initiated, and

(d) no civil liability attaches to any person solely on the basis
of the summary, including any translation thereof, unless it
is misleading, inaccurate or inconsistent when read together
with the other parts of the prospectus.

Where the prospectus relates to the admission to trading on a
regulated market of non-equity securities having a denomi-
nation of at least EUR 50 000, there shall be no requirement
to provide a summary except when requested by a Member
State as provided for in Article 19(4).

Subject

3.
to paragraph 4 the issuer, offeror or person
asking for the admission to trading on a regulated market
may draw up the prospectus as a single document or
separate documents. A prospectus composed of
separate
documents shall divide the required information into a regis-
tration document, a securities note and a summary note. The
registration document shall contain the information relating to
the issuer. The securities note shall contain the information
concerning the securities offered to the public or
to be
admitted to trading on a regulated market.

4.
For the following types of securities, the prospectus shall
consist of a base prospectus containing all relevant information
concerning the issuer and the securities offered to the public or
to be admitted to trading on a regulated market:

(a) non-equity securities,

including warrants

in any form,

issued under an offering programme;

(b) non-equity securities issued in a continuous or repeated

manner by credit institutions,

(i) where the sums deriving from the issue of the said
legislation, are placed in
the
coverage
for
their maturity

securities, under national
assets which provide
liability deriving from securities until
date; and

sufficient

in the event of the insolvency of the related
(ii) where,
credit
the said sums are intended, as a
institution,
priority, to repay the capital and interest falling due,
without prejudice
to the provisions of Directive
2001/24/EC of the European Parliament and of the
Council of 4 April 2001 on the reorganisation and
winding up of credit institutions (1).

The information given in the base prospectus shall be
supplemented, if necessary, in accordance with Article 16
with updated information on the issuer and on the
securities to be offered to the public or to be admitted to
trading on a regulated market.

If the final terms of the offer are not included in either the
base prospectus or a supplement, the final terms shall be
provided to investors and filed with the competent
authority when each public offer is made as soon as prac-
ticable and if possible in advance of the beginning of the
offer. The provisions of Article 8(1)(a) shall be applicable in
any such case.

5.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning the format of the prospectus or base
prospectus and supplements.

the Commission shall,

Article 6

Responsibility attaching to the prospectus

its

1. Member States shall ensure that responsibility for the
least
information given in a prospectus attaches at
to the
issuer or
supervisory
administrative, management or
bodies, the offeror, the person asking for the admission to
trading on a regulated market or the guarantor, as the case
may be. The persons responsible shall be clearly identified in
the prospectus by their names and functions or, in the case of
legal persons, their names and registered offices, as well as
declarations by them that, to the best of their knowledge, the
information contained in the prospectus is in accordance with
the facts and that the prospectus makes no omission likely to
affect its import.

2. Member States shall ensure that their laws, regulation and
administrative provisions on civil
liability apply to those
persons responsible for the information given in a prospectus.

However, Member States shall ensure that no civil liability shall
attach to any person solely on the basis of the summary,
including any translation thereof, unless it is misleading, inac-
curate or inconsistent when read together with the other parts
of the prospectus.

(1) OJ L 125, 5.5.2001, p. 15.

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Article 7

Minimum information

Detailed implementing measures regarding the specific
1.
included in a prospectus,
information which must be
avoiding duplication of
information when a prospectus is
composed of separate documents, shall be adopted by the
Commission in accordance with the procedure referred to in
Article 24(2). The first set of implementing measures shall be
adopted by . . . (*).

In particular, for the elaboration of the various models of

2.
prospectuses, account shall be taken of the following:

(a) the various

types of

information needed by investors
relating to equity securities as compared with non equity-
securities; a consistent approach shall be taken with regard
to information required in a prospectus for securities which
have a similar economic rationale, notably derivative
securities;

(b) the various

types

and characteristics of offers

and
admissions to trading on a regulated market of non-equity
securities. The information required in a prospectus shall be
appropriate from the point of view of
the investors
concerned for non-equity securities having a denomination
per unit of at least EUR 50 000;

(c) the

format used and the

information required in
prospectuses relating to non-equity securities,
including
warrants in any form, issued under an offering programme;

(d) the

are

securities

format used and the

information required in
insofar as
prospectuses relating to non-equity securities,
these
convertible,
exchangeable, subject to subscription or acquisition rights
or linked to derivative instruments, issued in a continuous
or repeated manner by entities authorised or regulated to
operate in the financial markets within the European
Economic Area;

subordinated,

not

(a) the criteria, and/or

the conditions in accordance with
which the above elements will be determined or,
in the
case of price, the maximum price, are disclosed in the
prospectus, or

(b) the

acceptances of

subscription of
the purchase or
securities may be withdrawn for not
than two
less
working days after the final offer price and amount of
securities which will be offered to the public have been
filed.

The final offer price and amount of securities shall be filed with
the competent authority of
the home Member State and
published in accordance with the arrangements provided for
in Article 14(2).

The competent authority of the home Member State may
certain
in the
it
if

the omission from the prospectus of
in this Directive or
referred to in Article 7(1),

2.
authorise
information provided for
implementing measures
considers that:

(a) disclosure of such information would be contrary to the

public interest, or

(b) disclosure of such information would be seriously detri-
mental to the issuer, provided that the omission would
not be likely to mislead the public with regard to facts
and circumstances essential for an informed assessment of
the issuer, offeror or guarantor, if any, and of the rights
attached to the securities to which the prospectus relates,
or

(e) the various activities and size of the issuer,

in particular
SMEs. For such companies the information shall be adapted
to their size and, where appropriate, to their shorter track
record;

(c) such information is of minor importance only for a specific
offer or admission to trading on a regulated market and is
not such as will influence the assessment of the financial
position and prospects of the issuer, offeror or guarantor, if
any.

(f)

if applicable, the public nature of the issuer.

The implementing measures referred to in paragraph 1
3.
shall be based on the standards in the field of financial and non
financial
securities
information set out by international
commission organisations, and in particular by IOSCO and
on the indicative Annexes to this Directive.

Article 8

Omission of information

adequate

3. Without prejudice
information of
to the
investors, where, exceptionally, certain information required
by implementing measures referred to in Article 7(1) to be
included in a prospectus
inappropriate to the issuer's
sphere of activity or to the legal form of the issuer or to the
securities to which the prospectus relates, the prospectus shall
contain information equivalent to the required information. If
there is no such information, this requirement shall not apply.

is

1. Member States shall ensure that where the final offer
price and amount of securities which will be offered to the
public cannot be included in the prospectus:

(*) 6 months after the date of entry into force of this Directive.

4.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning paragraph 2.

the Commission shall,

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Article 9

Validity of a prospectus, base prospectus and registration
document

A prospectus shall be valid for twelve months after its
1.
publication for offers to the public or admissions to trading on
a regulated market, provided that the prospectus is completed
by any supplements required pursuant to Article 16.

the Commission may,

in accordance with the
Directive,
procedure referred to in Article 24(2), adopt implementing
measures concerning paragraph 1. These measures will relate
only
the disclosure
requirements mentioned in paragraph 1 and will not entail
new disclosure requirements. The first set of
implementing
measures shall be adopted by . . . (*).

to the method of publication of

In the

case of

2.
the base
prospectus, previously filed, shall be valid for a period of up
to twelve months.

an offering programme,

3.
In the case of non-equity securities referred to in Article
5(4)(b) the prospectus shall be valid until no more of the
securities concerned are issued in a continuous or repeated
manner.

4.
A registration document, as referred to in Article 5(3),
previously filed, shall be valid for a period of up to twelve
months provided that
it has been updated in accordance
with Article 10(1). The registration document accompanied
by the securities note, updated if applicable in accordance
with Article 12, and the summary note shall be considered
to constitute a valid prospectus.

Article 10

Information

information that

in compliance with

1.
Issuers whose securities are admitted to trading on a
regulated market shall at least annually provide a document
they have
that contains or refers to all
published or made available to the public over the preceding
12 months in one or more Member States and in third
countries
under
Community and national laws and rules dealing with the regu-
lation of securities, issuers of securities, and securities markets.
Issuers shall refer at least to the information required pursuant
to Company Law Directives, Directive 2001/34/EC and Regu-
lation (EC) No 1606/2002 of the European Parliament and of
the Council of 19 July 2002 on the application of International
Accounting Standards (1).

obligations

their

2.
The document shall be filed with the competent authority
of the home Member State after the publication of the financial
statement. Where the document refers to information, it shall
be stated where the information can be obtained.

3.
The obligation set out in paragraph 1 shall not apply to
issuers of non-equity securities whose denomination per unit
amounts to at least EUR 50 000.

Article 11

Incorporation by reference

1. Member States shall allow information to be incorporated
in the prospectus by reference to one or more previously
published documents
that have been approved by the
competent authority of the home Member State or filed with
it in accordance with this Directive, in particular pursuant to
Article 10, or with Titles IV and V of Directive 2001/34/EC.
This information shall be the latest available to the issuer. The
summary shall not incorporate information by reference.

2. When information is incorporated by reference, a cross-
reference list must be provided in order to enable investors to
easily identify specific items of information.

the Commission shall,

3.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning the information to be incorporated by
reference. The first set of
implementing measures shall be
adopted by . . . (*).

Article 12

Prospectuses consisting of separate documents

1.
An issuer which already has a registration document
approved by the competent authority shall be required to
draw up only the securities note and the summary note
when securities are offered to the public or admitted to
trading on a regulated market.

In this case, the securities note shall provide information
2.
that would normally be provided in the registration document
if there has been a material change or recent development
investors' assessments since the latest
which could affect
updated
as
any
provided for in Article 16 was approved. The securities and
summary notes shall be subject to a separate approval.

registration document or

supplement

4.
In order to take account of technical developments on
financial markets and to ensure uniform application of this

3. Where an issuer has only filed a registration document
without approval, the entire documentation, including updated
information, shall be subject to approval.

(1) OJ L 243, 11.9.2002, p. 1.

(*) 6 months after the date of entry into force of this Directive.

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CHAPTER III

ARRANGEMENTS FOR APPROVAL AND PUBLICATION OF
THE PROSPECTUS

procedure referred to in Article 24(2), adopt implementing
measures
in accordance with
which time limits may be adjusted.

concerning the

conditions

Article 13

Approval of the prospectus

Article 14

Publication of the prospectus

No prospectus shall be published until

1.
it has been
approved by the competent authority of the home Member
State.

2.
the
This competent authority shall notify the issuer,
offeror or the person asking for admission to trading on a
regulated market, as
its decision
regarding the approval of the prospectus within 15 working
days of the submission of the draft prospectus.

the case may be, of

If the competent authority fails to give a decision on the
laid down in this
prospectus within the
time
paragraph and paragraph 3,
this shall not be deemed to
constitute approval of the application.

limits

1.
Once approved the prospectus shall be filed with the
competent authority of the home Member State and shall be
made available to the public by the issuer, offeror or person
asking for admission to trading on a regulated market as soon
as practicable and in any case, at a reasonable time in advance
of, and at the latest at the beginning of, the offer to the public
or the admission to trading of
In
addition,
in the case of an initial public offer of a class of
shares not already admitted to trading on a regulated market
that
the
prospectus shall be available at least six working days before
the end of the offer.

is to be admitted to trading for the first

the securities involved.

time,

The prospectus shall be deemed available to the public

2.
when published either:

The time limit

3.
referred to in paragraph 2 shall be
extended to 30 working days if
the public offer involves
issued by an issuer which does not have any
securities
securities admitted to trading on a regulated market and who
has not previously offered securities to the public.

(a) by insertion in one or more newspapers

circulated
throughout, or widely circulated in, the Member States in
which the offer to the public is made or the admission to
trading is sought, or

4.
If the competent authority finds, on reasonable grounds,
that the documents submitted to it are incomplete or that
supplementary information is needed, the time limits referred
to in paragraphs 2 and 3 shall apply only from the date on
which such information is provided by the issuer, the offeror
or the person asking for admission to trading on a regulated
market.

the approval of a prospectus

The competent authority of the home Member State may
5.
transfer
to the competent
authority of another Member State, subject to the agreement
of that authority. Furthermore, this transfer shall be notified to
the issuer, the offeror or the person asking for admission to
trading on a regulated market within 5 working days from the
date of the decision taken by the competent authority of the
home Member State. The time limit referred to in paragraph 2
shall apply from that date.

6.
This Directive shall not affect the competent authority's
liability, which shall continue to be governed solely by national
law.

Member States shall ensure that their national provisions on
the liability of competent authorities apply only to approvals of
prospectuses by their competent authority or authorities.

7.
In order to take account of technical developments on
financial markets and to ensure uniform application of this
in accordance with the
Directive,

the Commission may,

the offices of

(b) in a printed form to be made available, free of charge, to
the public at
the market on which the
securities are being admitted to trading, or at the registered
office of the issuer and at the offices of the financial inter-
mediaries placing or selling the securities, including paying
agents, or

(c)

in an electronic form on the issuer's web-site and,
if
applicable, on the web-site of the financial intermediaries
placing or selling the securities, including paying agents, or

(d) in electronic form on the web-site of

the competent
authority of the home Member State if the said authority
has decided to offer this service.

A home Member State may require issuers which publish their
prospectus in accordance with (a) or (b) also to publish their
prospectus in an electronic form in accordance with (c).

3.
In addition, a home Member State may require publi-
cation of a notice stating how the prospectus has been made
available and where it can be obtained by the public.

The competent authority of the home Member State shall
4.
publish on its web-site over a period of twelve months, at its
choice, all the prospectuses approved, or at least the list of
approved in accordance with Article 13,
prospectuses
including,
a hyperlink to the prospectus
applicable,
if
published on the web-site of the issuer.

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In the case of a prospectus comprising several documents
5.
and/or incorporating information by reference, the documents
and information making up the prospectus may be published
and circulated separately provided that the said documents are
in accordance
made available, free of charge, to the public,
with the arrangements established in paragraph 2. Each
document
constituent
documents of the full prospectus may be obtained.

indicate where

other

shall

the

6.
The text and the format of the prospectus, and/or the
supplements to the prospectus, published or made available
to the public, shall at all times be identical to the original
version approved by the competent authority of the home
Member State.

disclosed in an oral or written form, even if not for advertising
purposes,
shall be consistent with that contained in the
prospectus.

5. When under this Directive no prospectus is required,
material information provided by an issuer or an offeror and
addressed to qualified investors or
special categories of
including information disclosed in the context of
investors,
meetings relating to offers of securities, shall be disclosed to
all qualified investors or special categories of
investors to
whom the offer is exclusively addressed. Where a prospectus
is required to be published, such information shall be included
in the prospectus or in a supplement to the prospectus in
accordance with Article 16(1).

7. Where the prospectus is made available by publication in
electronic form, a paper copy must nevertheless be delivered to
the investor, upon his request and free of charge, by the issuer,
the offeror, the person asking for admission to trading or the
financial intermediaries placing or selling the securities.

6.
The competent authority of the home Member State shall
have the power to exercise control over the compliance of
advertising activity, relating to a public offer of securities or
an admission to trading on a regulated market, with the prin-
ciples referred to in paragraphs 2 to 5.

8.
In order to take account of technical developments on
financial markets and to ensure uniform application of the
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning paragraphs 1, 2, 3 and 4. The first set
of implementing measures shall be adopted by . . . (*).

the Commission shall,

Article 15

Advertisements

1.
Any type of advertisements relating either to an offer to
the public of securities or to an admission to trading on a
regulated market shall observe the principles contained in
paragraphs 2 to 5. Paragraphs 2 to 4 shall apply only to
cases where the issuer, the offeror or the person applying for
admission to trading is covered by the obligation to draw up a
prospectus.

2.
Advertisements shall state that a prospectus has been or
will be published and indicate where investors are or will be
able to obtain it.

3.
Advertisements shall be clearly recognisable as such. The
information contained in an advertisement shall not be inac-
curate, misleading or inconsistent with that contained in the
prospectus or that expected to be contained therein.

4.
In any case, all information concerning the offer to the
public or the admission to trading on a regulated market

(*) 6 months after the date of entry into force of this Directive.

the Commission shall,

In order to take account of technical developments on
7.
financial markets and to ensure uniform application of this
Directive,
in accordance with the
procedure referred to in Article 24(2), adopt implementing
measures concerning the dissemination of advertisements
announcing the intention to offer securities to the public or
the admission to trading on a regulated market, in particular
before the prospectus has been made available to the public or
before the opening of
the subscription, and concerning
paragraph 4. The first set of implementing measures shall be
adopted by the Commission by . . . (*).

Article 16

Supplements to the prospectus

1.
Every significant new factor, material mistake or inac-
curacy relating to the information included in the prospectus
which is capable of affecting the assessment of the securities
and which arises or is noted between the time when the
prospectus is approved and the final closing of the offer to
the public or, as the case may be, the time when trading on a
regulated market begins, shall be mentioned in a supplement to
the prospectus. Such a supplement shall be approved in the
same way and published in accordance with at least the same
arrangements as were applied when the original prospectus
was published. The summary, and any translations thereof,
shall also be supplemented, if necessary to take into account
the new information included in the supplement.

for

Investors who have already agreed to purchase or
2.
subscribe
is
securities before
published shall have the right, exercisable within a time-limit
which shall not be shorter than two working days after the
publication of the supplement, to withdraw their acceptances.

supplement

the

the

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CHAPTER IV

CROSS-BORDER OFFERS AND ADMISSION TO TRADING

language accepted by the competent authority of the home
Member State.

Article 17

Community scope of approvals of prospectuses

1. Without prejudice to Article 23, where an offer to the
public or admission to trading on a regulated market
is
provided for in one or more Member States, or in a Member
State other than the home Member State,
the prospectus
approved by the home Member State, and any supplements
thereto, shall be valid for the public offer or the admission
to trading in any number of host Member States, provided
that the competent authority of each host Member State is
notified in accordance with Article 18. Competent authorities
of host Member States shall not undertake any approval or
administrative procedures relating to prospectuses.

2.
If there are significant new factors, material mistakes or
inaccuracies, as referred to in Article 16, arising since the
approval of the prospectus, the competent authority of the
home Member State shall
the publication of a
supplement to be approved as provided for in Article 13(1).
The competent authority of the host Member State may draw
the attention of the competent authority of the home Member
State to the need for any new information.

require

Article 18

Notification

the request of

The competent authority of the home Member State shall,
1.
at
the issuer or the person responsible for
drawing up the prospectus and within three working days
following that request, provide the competent authority of
the host Member States with a certificate of approval
attesting that the prospectus has been drawn up in accordance
with this Directive and with a copy of the said prospectus. If
applicable, this notification shall be accompanied by a trans-
lation of the summary produced under the responsibility of the
issuer or person responsible for drawing up the prospectus.
The same procedure shall be followed for any supplement to
the prospectus.

The application of the provisions of Article 8(2) and (3)

2.
shall be stated in the certificate, as well as its justification.

CHAPTER V

USE OF LANGUAGES AND ISSUERS INCORPORATED IN
THIRD COUNTRIES

Article 19

Use of languages

1. Where an offer to the public is made or admission to
trading on a regulated market is sought only in the home
shall be drawn up in a
Member State,

the prospectus

is sought
excluding the home Member State,

2. Where an offer to the public is made or admission to
in one or more
trading on a regulated market
Member States
the
prospectus shall be drawn up either in a language accepted
by the competent authorities of those Member States or in a
language customary in the sphere of international finance, at
the choice of the issuer, offeror or person asking for admission,
as the case may be. The competent authority of each host
Member State may only require that the summary be translated
into its official language(s).

For the purpose of the scrutiny by the competent authority of
the home Member State, the prospectus shall be drawn up
either
in a
in a language accepted by this authority or
language customary in the sphere of international finance, at
the choice of the issuer, offeror or person asking for admission
to trading, as the case may be.

including

the home Member State,

3. Where an offer to the public is made or admission to
trading on a regulated market is sought in more than one
Member State
the
prospectus shall be drawn up in a language accepted by the
competent authority of the home Member State and shall also
be made available either
in a language accepted by the
competent authorities of each host Member State or in a
language customary in the sphere of international finance, at
the choice of the issuer, offeror, or person asking for admission
to trading, as the case may be. The competent authority of
each host Member State may only require that the summary
referred to in Article 5(2) be translated into its official
language(s).

4. Where admission to trading on a regulated market of
non-equity securities whose denomination per unit amounts
to at least EUR 50 000 is sought in one or more Member
States, the prospectus shall be drawn up either in a language
accepted by the competent authorities of the home and host
Member States or in a language customary in the sphere of
international finance, at the choice of the issuer, offeror, or
person asking for admission to trading, as the case may be.
Member States may choose to require in their national legis-
lation that a summary be drawn up in their official language(s).

Article 20

Issuers incorporated in third countries

1.
The competent authority of the home Member State of
issuers having their registered office in a third country may
approve a prospectus for an offer
for
admission to trading on a regulated market, drawn up in
accordance with the legislation of a third country, provided
that:

to the public or

(a) the prospectus has been drawn up in accordance with
international
securities
commission organisations, including the IOSCO Disclosure
Standards, and

set by international

standards

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(b) the information requirements,

including information of a
financial nature, are equivalent to the requirements under
this Directive.

In the case of an offer to the public or admission to
2.
issued by an
trading on a regulated market of securities,
issuer incorporated in a third country,
in a Member State
other than the home Member State, the requirements set out
in Articles 17, 18 and 19 shall apply.

implementing measures

3.
In order to ensure uniform application of this Directive,
in
the Commission may adopt
accordance with the procedure referred to in Article 24(2),
stating that a third country ensures
the equivalence of
prospectuses drawn up in that country with this Directive,
law or of practices or procedures
by reason of its national
based on international standards set by international organi-
sations, including the IOSCO Disclosure Standards.

CHAPTER VI

COMPETENT AUTHORITIES

Article 21

Powers

1.
Each Member State shall designate a central competent
administrative authority responsible for carrying out the obli-
gations provided for in this Directive and for ensuring that the
provisions adopted pursuant to this Directive are applied.

However, a Member State may, if so required by national law,
designate other administrative authorities to apply Chapter III.

These competent authorities shall be completely independent
from all market participants.

If an offer of securities is made to the public or admission to
trading on a regulated market is sought in a Member State
central
other
than the home Member State, only the
competent
each
Member State shall be entitled to approve the prospectus.

administrative

designated

authority

by

2. Member States may allow their competent authority or
authorities to delegate tasks. Except for delegation of the publi-
cation on the Internet of approved prospectuses as mentioned
in Article 14, any delegation of tasks relating to the obligations
provided for in this Directive and in its implementing measures
shall end on . . . (*). Any delegation of tasks to entities other
than the authorities referred to in paragraph 1 shall be made in
a specific manner stating the tasks to be undertaken and the
conditions under which they are to be carried out.

(*) Five years after the date of entry into force of this Directive.

interest and so that

These conditions shall include a clause obliging the entity in
question to act and be organised in such a manner as to avoid
conflict of
information obtained from
carrying out the delegated tasks is not used unfairly or to
prevent competition. In any case, the final responsibility for
supervising compliance with this Directive and with its
implementing measures and for approving the prospectus
shall lie with the competent authority or authorities designated
in accordance with paragraph 1.

shall

inform the Commission and the
Member States
competent
any
arrangements entered into with regard to delegation of tasks,
including the precise conditions regulating such delegation.

authorities of other Member States of

Each competent authority shall have all

3.
the powers
necessary for the performance of its functions. A competent
authority that has received an application for approving a
prospectus shall be empowered at least to:

(a) require issuers, offerors or persons asking for admission to
trading on a regulated market to include in the prospectus
supplementary
investor
protection;

if necessary

information,

for

(b) require issuers, offerors or persons asking for admission to
trading on a regulated market, and the persons that control
them or are controlled by them to provide information and
documents;

(c) require auditors and managers of the issuer, offeror or
person asking for admission to trading on a regulated
market, as well as financial
intermediaries commissioned
to carry out the offer to the public or ask for admission
to trading, to provide information;

(d) suspend a public offer or admission to trading for a
maximum of 10 consecutive working days on any single
occasion if it has reasonable grounds for suspecting that
the provisions of this Directive have been infringed;

(e) prohibit or suspend advertisements for a maximum of 10
consecutive working days on any single occasion if it has
reasonable grounds for believing that the provisions of this
Directive have been infringed;

(f) prohibit a public offer if it finds that the provisions of this
it has reasonable

Directive have been infringed or
grounds for suspecting that they would be infringed;

if

(g) suspend, or ask the relevant regulated markets to suspend,
trading on a regulated market
for a maximum of 10
consecutive working days on any single occasion if it has
reasonable grounds for believing that the provisions of this
Directive have been infringed;

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(h) prohibit trading on a regulated market if it finds that the

provisions of this Directive have been infringed;

(i) make public the fact that an issuer is failing to comply with

its obligations.

Where necessary under national law, the competent authority
may ask the relevant judicial authority to decide on the use of
the powers referred to in points (d) to (h) above.

4.
Each competent authority shall also, once the securities
have been admitted to trading on a regulated market, be
empowered to:

(a) require the issuer to disclose all material information which
may have an effect on the assessment of the securities
admitted to trading on regulated markets in order to
ensure investor protection or the smooth operation of
the market;

(b) suspend or ask the relevant regulated market to suspend
in its opinion, the issuer's
to

trading would be detrimental

the securities from trading if,
situation is such that
investors' interests;

(c) ensure that issuers whose securities are traded on regulated
markets comply with the obligations provided for
in
Articles 102 and 103 of Directive 2001/34/EC and that
equivalent
and
equivalent treatment is granted by the issuer to all securities
holders who are in the same position, in all Member States
where the offer to the public is made or the securities are
admitted to trading;

information is provided to investors

(d) carry out on-site inspections in its territory in accordance
with national law, in order to verify compliance with the
provisions of this Directive and its implementing measures.
Where necessary under national
competent
authority or authorities may use this power by applying
to the relevant judicial authority and/or in cooperation with
other authorities.

law,

the

5.
Paragraphs 1 to 4 shall be without prejudice to the possi-
bility for a Member State to make separate legal and adminis-
trative arrangements
for
for overseas European territories
whose external relations that Member State is responsible.

Article 22

Professional secrecy and cooperation between authorities

1.
The obligation of professional secrecy shall apply to all
persons who work or have worked for the competent authority
and for entities to which competent authorities may have
delegated certain tasks.
Information covered by professional
secrecy may not be disclosed to any other person or
authority except in accordance with provisions laid down by
law.

Competent authorities of Member States shall cooperate
2.
with each other whenever necessary for
the purpose of
carrying out their duties and making use of their powers.
Competent authorities shall render assistance to competent
authorities of other Member States. In particular, they shall
exchange information and cooperate when an issuer has
its
more than one home competent authority because of
various
the
competent authority of the host Member State may request
the home
the assistance of
Member State from the stage at which the case is scrutinised,
in particular as regards a new type or rare forms of securities.
The competent authority of the home Member State may ask
the host
for information from the competent authority of
Member State on any items specific to the relevant market.

the competent authority of

securities. Where

appropriate,

classes

of

Paragraph 1 shall not prevent the competent authorities
3.
from exchanging confidential
Information thus
exchanged shall be covered by the obligation of professional
secrecy, to which the persons employed or formerly employed
by the competent authorities receiving the information are
subject.

information.

Article 23

Precautionary measures

1. Where the competent authority of the host Member State
finds that irregularities have been committed by the issuer or
by the financial institutions in charge of the public offer or that
breaches have been committed of the obligations attaching to
the issuer by reason of the fact that the securities are admitted
to trading on a regulated market, it shall refer these findings to
the competent authority of the home Member State.

2.
If, despite the measures taken by the competent authority
of the home Member State or because such measures prove
inadequate, the issuer or the financial institution in charge of
legal or
the public offer persists in breaching the relevant
regulatory provisions,
the host
the competent authority of
Member State, after informing the competent authority of the
home Member State, shall take all the appropriate measures in
order to protect investors. The Commission shall be informed
of such measures at the earliest opportunity.

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CHAPTER VII

IMPLEMENTING MEASURES

Article 24

Committee procedure

The Commission shall be assisted by the European
instituted by Decision 2001/528/EC

1.
Securities Committee,
(hereinafter referred to as ‘the Committee’).

2. Where reference is made to this paragraph, Articles 5 and
7 of Decision 1999/468/EC shall apply, having regard to the
the
provisions of Article 8 thereof
implementing measures adopted in accordance with this
procedure do not modify the essential provisions of
this
Directive.

and provided that

accordance with this Directive are subject
appeal to the courts.

to the right

to

CHAPTER VIII

TRANSITIONAL AND FINAL PROVISIONS

Article 27

Amendments

With effect
2001/34/EC is hereby amended as follows:

from the date set out in Article 29, Directive

1. Articles 3, 20 to 41, 98 to 101, 104 and 108(2) (c) (ii) shall

be deleted;

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

2.

in Article 107(3), the first subparagraph shall be deleted;

3.

The Committee shall adopt its rules of procedure.

4. Without prejudice to the implementing measures already
adopted, on the expiry of a four-year period following its entry
into force of this Directive the application of its provisions
providing for the adoption of technical rules and decisions in
accordance with the procedure referred to in paragraph 2 shall
be suspended. On a proposal
the
renew the
European Parliament
provisions concerned in accordance with the procedure laid
down in Article 251 of the Treaty and, to that end, shall
review them prior to the expiry of the four-year period.

and the Council may

from the Commission,

Article 25

Sanctions

1. Without prejudice to the right of Member States to
impose criminal sanctions and without prejudice to their civil
liability regime, Member States shall ensure, in conformity with
their national law, that the appropriate administrative measures
can be taken or administrative sanctions be imposed against
the persons responsible, where the provisions adopted in the
implementation of this Directive have not been complied with.
Member States shall ensure that these measures are effective,
proportionate and dissuasive.

2. Member States shall provide that the competent authority
may disclose to the public every measure or sanction that has
the provisions adopted
been imposed for infringement of
the disclosure would
to this Directive, unless
pursuant
seriously jeopardise the financial markets or cause dispropor-
tionate damage to the parties involved.

Article 26

Right of appeal

Member States shall ensure that decisions taken under laws,
in
regulations

administrative

provisions

adopted

and

3.

in Article 108(2)(a), the words ‘the conditions of estab-
lishment, the control and circulation of listing particulars
to be published for admission’ shall be deleted;

4. Annex I shall be deleted.

Article 28

Repeal

With effect from the date indicated in Article 29, Directive
89/298/EEC shall be repealed. References to the repealed
Directive shall be construed as references to this Directive.

Article 29

Transposition

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this
Directive not later than [. . .] (*). They shall forthwith inform
the Commission thereof. When Member States adopt those
measures they shall contain a reference to this Directive or
shall be accompanied by such a reference on the occasion of
their official publication. The methods
for making such
reference shall be laid down by Member States.

Article 30

Transitional provision

1.
Issuers which are incorporated in a third country and
whose securities have already been admitted to trading on a
regulated market shall choose their competent authority in
accordance with Article 2(1)(m)(iii) and notify their decision
to the competent authority of their chosen home Member
State by 31 December 2005.

(*) Eighteen months after the date of entry into force of this Directive.

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financial

By way of derogation from Article 3, Member States
2.
which have used the exemption in Article 5(a) of Directive
institutions or
89/298/EEC may continue to allow credit
other
institutions
which are not covered by Article 1(2)(j) of this Directive to
offer debt securities or other transferable securities equivalent
to debt securities issued in a continuous or repeated manner
within their territory for five years following the date of entry
into force of this Directive.

institutions equivalent

to credit

Article 32

Entry into force

This Directive shall enter into force on the day of its publi-
cation in the Official Journal of the European Union.

By way of derogation from Article 29,

3.
the Federal
Republic of Germany shall comply with Article 21(1) by . . . (*).

Article 33

Addressees

This Directive is addressed to the Member States.

Article 31

Review

Done at . . .

Five years after the date of entry into force of this Directive, the
Commission shall make an assessment of the application of
this Directive and present a report to the European Parliament
and the Council, accompanied where appropriate by proposals
for its review.

For the European Parliament

For the Council

The President

The President

(*) Five years after the date of entry into force of this Directive.

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ANNEX I

PROSPECTUS

I. SUMMARY

The summary shall provide in a few pages the most important information included in the prospectus, covering at
least the following items:

A.

identity of directors, senior management, advisers and auditors

B. offer statistics and expected timetable

C. key information concerning selected financial data; capitalisation and indebtedness; reasons for the offer and

use of proceeds; risk factors

D.

information concerning the issuer

— history and development of the issuer

— business overview

E. operating and financial review and prospects

— research and development, patents and licences, etc.

— trends

F. directors, senior management and employees

G. major shareholders and related-party transactions

H. financial information

— consolidated statement and other financial information

— significant changes

I. details of the offer and admission to trading

— offer and admission to trading

— plan for distribution

— markets

— selling shareholders

— dilution (equity securities only)

— expenses of the issue

J.

additional information

— share capital

— memorandum and articles of association

— documents on display

II. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, ADVISERS AND AUDITORS

The purpose is to identify the company representatives and other individuals involved in the company's offer or
admission to trading; these are the persons responsible for drawing up the prospectus as required by Article 5 of
the Directive and those responsible for auditing the financial statements.

III. OFFER STATISTICS AND EXPECTED TIMETABLE

The purpose is to provide key information regarding the conduct of any offer and the identification of important
dates relating to that offer.

A. Offer statistics

B. Method and expected timetable

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IV. KEY INFORMATION

The purpose is to summarise key information about the company's financial condition, capitalisation and risk
factors. If the financial statements included in the document are restated to reflect material changes in the
company's group structure or accounting policies, the selected financial data must also be restated.

A. Selected financial data

B. Capitalisation and indebtedness

C. Reasons for the offer and use of proceeds

D. Risk factors

V. INFORMATION ON THE COMPANY

The purpose is to provide information about the company's business operations, the products it makes or the
services it provides, and the factors which affect the business. It is also intended to provide information regarding
the adequacy and suitability of the company's properties, plant and equipment, as well as its plans for future
capacity increases or decreases.

A. History and development of the company

B. Business overview

C. Organisational structure

D. Property, plant and equipment

VI. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The purpose is to provide the management's explanation of factors that have affected the company's financial
condition and results of operations for
statements, and
management's assessment of factors and trends which are expected to have a material effect on the company's
financial condition and results of operations in future periods.

the historical periods covered by the financial

A. Operating results

B. Liquidity and capital resources

C. Research and development, patents and licences, etc.

D. Trends

VII. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

The purpose is to provide information concerning the company's directors and managers that will allow investors
to assess their experience, qualifications and levels of remuneration, as well as their relationship with the company.

A. Directors and senior management

B. Remuneration

C. Board practices

D. Employees

E. Share ownership

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VIII. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS

The purpose is to provide information regarding the major shareholders and others that may control or have an
influence on the company. It also provides information regarding transactions the company has entered into with
persons affiliated with the company and whether the terms of such transactions are fair to the company.

A. Major shareholders

B. Related-party transactions

C. Interests of experts and advisers

IX. FINANCIAL INFORMATION

The purpose is to specify which financial statements must be included in the document, as well as the periods to
be covered, the age of the financial statements and other information of a financial nature. The accounting and
auditing principles that will be accepted for use in preparation and audit of the financial statements will be
determined in accordance with international accounting and auditing standards.

A. Consolidated statements and other financial information

B. Significant changes

X. DETAILS OF THE OFFER AND ADMISSION TO TRADING DETAILS

The purpose is to provide information regarding the offer and the admission to trading of securities, the plan for
distribution of the securities and related matters.

A. Offer and admission to trading

B. Plan for distribution

C. Markets

D. Holders of securities who are selling

E. Dilution (for equity securities only)

F. Expenses of the issue

XI. ADDITIONAL INFORMATION

The purpose is to provide information, most of which is of a statutory nature, that is not covered elsewhere in the
prospectus.

A. Share capital

B. Memorandum and articles of association

C. Material contracts

D. Exchange controls

E. Taxation

F. Dividends and paying agents

G. Statement by experts

H. Documents on display

I. Subsidiary information

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ANNEX II

REGISTRATION DOCUMENT

I. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, ADVISERS AND AUDITORS

The purpose is to identify the company representatives and other individuals involved in the company's offer or
admission to trading; these are the persons responsible for drawing up the prospectus and those responsible for
auditing the financial statements.

II. KEY INFORMATION ABOUT THE ISSUER

The purpose is to summarise key information about the company's financial condition, capitalisation and risk
factors. If the financial statements included in the document are restated to reflect material changes in the
company's group structure or accounting policies, the selected financial data must also be restated.

A. Selected financial data

B. Capitalisation and indebtedness

C. Risk factors

III. INFORMATION ON THE COMPANY

The purpose is to provide information about the company's business operations, the products it makes or the
services it provides, and the factors which affect the business. It is also intended to provide information regarding
the adequacy and suitability of the company's properties, plants and equipment, as well as its plans for future
capacity increases or decreases.

A. History and development of the company

B. Business overview

C. Organisational structure

D. Property, plants and equipment

IV. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The purpose is to provide the management's explanation of factors that have affected the company's financial
condition and results of operations for
statements, and
management's assessment of factors and trends which are expected to have a material effect on the company's
financial condition and results of operations in future periods.

the historical periods covered by the financial

A. Operating results

B. Liquidity and capital resources

C. Research and development, patents and licences, etc.

D. Trends

V. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

The purpose is to provide information concerning the company's directors and managers that will allow investors
to assess their experience, qualifications and levels of remuneration, as well as their relationship with the company.

A. Directors and senior management

B. Remuneration

C. Board practices

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D. Employees

E. Share ownership

VI. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS

The purpose is to provide information regarding the major shareholders and others that may control or have an
influence on the company. It also provides information regarding transactions the company has entered into with
persons affiliated with the company and whether the terms of such transactions are fair to the company.

A. Major shareholders

B. Related-party transactions

C. Interests of experts and advisers

VII. FINANCIAL INFORMATION

The purpose is to specify which financial statements must be included in the document, as well as the periods to
be covered, the age of the financial statements and other information of a financial nature. The accounting and
auditing principles that will be accepted for use in preparation and audit of the financial statements will be
determined in accordance with international accounting and auditing standards.

A. Consolidated statements and other financial information

B. Significant changes

VIII. ADDITIONAL INFORMATION

The purpose is to provide information, most of which is of a statutory nature, that is not covered elsewhere in the
prospectus.

A. Share capital

B. Memorandum and articles of association

C. Material contracts

D. Statement by experts

E. Documents on display

F. Subsidiary information

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ANNEX III

SECURITIES NOTE

I. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, ADVISERS AND AUDITORS

The purpose is to identify the company representatives and other individuals involved in the company's offer or
admission to trading; these are the persons responsible for drawing up the prospectus and those responsible for
auditing the financial statements.

II. OFFER STATISTICS AND EXPECTED TIMETABLE

The purpose is to provide key information regarding the conduct of any offer and the identification of important
dates relating to that offer.

A. Offer statistics

B. Method and expected timetable

III. KEY INFORMATION ABOUT THE ISSUER

The purpose is to summarise key information about the company's financial condition, capitalisation and risk
factors.
If the financial statements included in the document are restated to reflect material changes in the
company's group structure or accounting policies, the selected financial data must also be restated.

A. Capitalisation and indebtedness

B. Reasons for the offer and use of proceeds

C. Risk factors

IV. INTERESTS OF EXPERTS

The purpose is to provide information regarding transactions the company has entered into with experts or advisers
employed on a contingent basis.

V. DETAILS OF THE OFFER AND ADMISSION TO TRADING

The purpose is to provide information regarding the offer and the admission to trading of securities, the plan for
distribution of the securities and related matters.

A. Offer and admission to trading

B. Plan for distribution

C. Markets

D. Selling securities holders

E. Dilution (for equity securities only)

F. Expenses of the issue

VI. ADDITIONAL INFORMATION

The purpose is to provide information, most of which is of a statutory nature, that is not covered elsewhere in the
prospectus.

A. Exchange controls

B. Taxation

C. Dividends and paying agents

D. Statement by experts

E. Documents on display

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ANNEX IV

SUMMARY NOTE

The summary note shall provide in a few pages the most important information included in the prospectus, covering at
least the following items:

— identity of directors, senior management, advisers and auditors

— offer statistics and expected timetable

— key information concerning selected financial data; capitalisation and indebtedness; reasons for the offer and use of

proceeds; risk factors

— information concerning the issuer

— history and development of the issuer

— business overview

— operating and financial review and prospects

— research and development, patents and licences, etc.

— trends

— directors, senior management and employees

— major shareholders and related-party transactions

— financial information

— consolidated statement and other financial information

— significant changes

— details on the offer and admission to trading

— offer and admission to trading

— plan for distribution

— markets

— selling shareholders

— dilution (for equity securities only)

— expenses of the issue

— additional information

— share capital

— memorandum and articles of incorporation

— documents available for inspection

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STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 30 May 2001, the Commission presented a proposal for a Directive on the prospectus to be

published when securities are offered to the public or admitted to trading (1).

2. The European Central Bank delivered its Opinion on 16 November 2001 (2) and the Economic and
Social Committee adopted its Opinion on 17 January 2002 (3). On 14 March 2002, the European
Parliament adopted its Opinion at first reading (4).

3. In the light of the abovementioned Opinions on the original proposal, the Commission presented an

amended proposal on 9 August 2002 (5).

4. On 24 March 2003, the Council adopted its common position pursuant to Article 251 of the

Treaty.

II. OBJECTIVE

Offers to the public of securities or the admission of securities to trading on a regulated market
generally trigger the obligation to draw up a prospectus to ensure that
the public is properly
informed. The main aim of the Directive is to create a true European passport for issuers by giving
Community-wide validity to the prospectus approved by the issuer's home supervisor,
in order to
facilitate the raising of capital for all types of companies. To this end the Directive harmonises
requirements for the drawing up, approval and distribution of the prospectus.

III. ANALYSIS OF THE COMMON POSITION

The common position follows closely the Commission's amended proposal.

In so doing it includes a large number of amendments proposed by the European Parliament to the
original Commission proposal to the extent they were included in the amended Commission proposal.
Some are included as proposed, namely amendments 1, 3, 4, 8, 9, 19, 29, 30, 31, 41, 43, 44, 46, 64,
50, 53, 58, 59, 60, 61 and 62, while others are included in spirit or with different wording, namely
amendments 22, 26, 28 and 75, 40, 47, 48, 49 and 63. Some have been only partially included in the
common position, namely 5 (in a different wording), 10, 76, 20, 23, 32, 33, 34, 45, 52 and 73.

Some amendments not included in the amended Commission proposal have not been included in the
common position for the same reasons, namely amendments 2, 6, 11, 65 rev. (for the main part), 17,
21, 27, 35, 36 and 37.

The remaining amendments are to a large extent also included in the common position but not in the
way set out in the amended Commission proposal and a limited number of amendments which were
included in the amended Commission proposal are not taken over in the common position. The extent
to which these amendments of the European Parliament have been included in the common position is
set out and explained below.

(1) OJ C 240 E, 28.8.2001, p. 272.
(2) OJ C 344, 6.12.2001, p. 4.
(3) OJ C 80, 3.4.2002, p. 52.
(4) OJ C 47 E, 27.2.2003, p. 524.
(5) OJ C 20 E, 28.1.2003, p. 122.

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The common position contains some further changes in comparison with the amended Commission
proposal. The majority of the changes made are of a predominantly technical drafting nature and have
been made in order to enhance legal certainty or to make the text clearer, while others modify the
Commission proposal in a more substantial manner, e.g. the change in the definition of the home
Member State.

THE RECITALS

The recitals have been amended to take account of the changes to the enacting terms of the Directive.

CHAPTER I — GENERAL PROVISIONS

Article 1 — Purpose and scope

In addition to the exemptions from the scope set out in the amended Commission proposal, the
common position introduces some further exemptions set out below:

In line with the amended Commission proposal Article 1(2)(b) is limited to non-equity securities and
part of amendment 65 rev. of the European Parliament is thus included. However, in order to take
account of the situation in some Member States where the central bank is constituted in the form of a
shareholding company, Article 1(2)(c) of the common position makes it clear, that the directive shall
not apply to shares of capital in central banks of Member States.

In some Member States, in particular Finland, the right to occupy an apartment, real estate or part
thereof is linked to ownership of a share in a housing association. Such shares are not fungible because
of the difference of rights attached to each share, and therefore should not be considered shares for the
purposes of this Directive. To make it clear that they are not covered, Article 1(2)(g) of the common
position, in line with other Directives, explicitly exempts them from the scope of this Directive.

According to Article 2(2) of the amended Commission proposal, small offers of securities, those
totalling less than 2 500 000 euro, were not considered offers of securities to the public, which
would include such offers in the scope of the Directive but not in the obligation to publish a
prospectus. The Council finds it more appropriate to exclude such securities from the scope of the
Directive altogether, see Article 1(2)(h) and to leave to each Member State the right to define at national
level the legislation applicable to such offers, but to give the issuers of such securities the possibility of
‘opting in’ into the scope of the Directive and draw up a prospectus in accordance with the Directive, if
they so wish, see Article 1(3) of the common position. In any case issuers of very small offers totalling
less than 100 000 euro, calculated over a period of 12 months, are still not obliged to draw up a
prospectus, however, see Article 3(2)(e) of the common position.

A special type of mortgage bonds ‘bostadsobligationer’ issued only in Sweden, are also exempted from
the scope of the Directive, Article 1(2)(i) of the common position, because of the special nature of this
particular traditional type of bond. However, the Directive lays down specific conditions which these
bonds must fulfil, in order to ensure the protection of the investor. As is the case for the issuers of
small offers, the issuer of such bonds has an option to ‘opt in’ into the Directive by drawing up a
prospectus, see Article 1(3) of the common position.

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Finally, Article 1(2)(j) of the common position exempts small offers of bonds issued by credit insti-
tutions from the scope of the Directive, because of the domestic nature of such offers makes it
appropriate to regulate them at national level. The bonds referred to in Article 1(2)(j) are therefore
exempted from the scope of the Directive, but the issuers of such bonds may benefit from the ‘opt in’
option set out in Article 1(3) and draw up a prospectus according to the Directive if they so wish.

Article 1(3) of the common position sets out the ‘opt in’ option referred to above. The drafting of the
option follows that of the option set out in the amended Commission proposal, but has been amended
to include the issuers of small securities offers,
‘bostadsobligationer’ and the small offers of bonds
referred to in Article 1(2)(j). The common position extends the ‘opt in’ option also to cover securities
unconditionally and irrevocably guaranteed by a Member State or by one of its regional or local
authorities.

In order to avoid any doubt, recital 11 makes it clear that securities which are not covered by the scope
of the Directive remain unaffected by it. The Directive therefore does not impose any obligation upon
issuers of exempted securities, e.g. non-equity securities issued by the European Central Bank, to draw
up a prospectus.

Article 2 — Definitions

The common position amends a number of definitions in comparison with the amended Commission
proposal.

In the definition of ‘securities’, Article 2(1)(a), it has been made clear that money market instruments
with a maturity of less than 12 month are not considered securities for the purposes of the Directive.
In largely following the amended Commission proposal
the common position partially includes
amendment 13 of the European Parliament.

The definitions of ‘equity securities’ and ‘non-equity securities’ are unchanged from the amended
Commission proposal, but recital 12 of the common position adds an explanation of how these
terms should be understood. This recital states i.a. that depositary receipts and convertible notes,
e.g. securities convertible at the option of the investor, fall under the definition set out in this
Directive of non-equity securities.

The definition of ‘qualified investors’
in Article 2(1)(e) has been amended to give a more precise
definition of legal entities which are not small or medium sized enterprises. In order to strike a
balance between the flexibility foreseen in the amended Commission proposal, which was based on
amendment 15 of the European Parliament, and the need felt by some Member States to guarantee
natural persons resident on their territory the full investor protection offered by the Directive, the
common position makes it an option for Member States to choose to let natural persons be considered
as qualified investors. This option has, however, been extended to place small and medium-sized
enterprises on the same footing as natural persons, since the need for investor protection is considered
the same in both cases. Amendment 15 of the European Parliament is thus partially included in the
common position.

The definition of ‘credit institution’ in Article 2(1)(g), has been made more precise, by including a
reference to Directive 2000/12/EC.

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‘home Member State’ has been amended in comparison with the amended
The definition of
Commission proposal. The common position follows the approach of the amended Commission
proposal with separate treatment for equity and small denomination non-equity securities on the
one hand and large denomination non-equity securities aimed at the professional market on the
other, but strikes a different balance between the two categories, inspired by amendments 2 and 16
of the European Parliament. In the common position the balance is struck in a way that permits issuers
of higher denomination bonds and certain derivative instruments to choose as the home Member State
either the Member State where it has its registered office or the Member State where the securities in
question are to be admitted to trading or are offered to the public for the first time. The limit for
higher denomination bonds is set at 5 000 euro per unit. For EU issuers of all other securities the home
Member State is defined as the Member State where the issuer has its registered office. This solution
balances the need to preserve the principle of home Member State control against the need to take into
account the fact that some competent authorities may have developed a particular expertise and
experience in certain complex securities and therefore may be the best placed to approve certain
prospectuses.

Although amendment 16 as proposed by the European Parliament has thus not been included in the
common position, the balance struck in the common position is closer to the approach of the
European Parliament than was the case in the amended Commission proposal.

For non-EU issuers the treatment is that foreseen in the amended Commission proposal, with the added
provision that an issuer who has not chosen its home Member State, because another entity had offered
its securities to the public or asked for admission to a regulated market, can, according to the Directive,
subsequently elect a different home Member State.

The definition of ‘approval’ in Article 2(1)(q) has been made more precise.

Article 2(2) of the amended Commission proposal has been deleted in order to avoid both a positive
and a negative definition of what constitutes an offer of securities to the public. The types of offer in
that provision have now been set out in Article 3(2) of the common position, see below.

The criteria determining who can be considered a qualified investor have been set out in paragraph 2
and the provision relating to the register of qualified investors is set out in paragraph 3 where it has
been redrafted to take account of the fact that small and medium-sized enterprises are also covered, see
above.

Article 2(4) of the common position has been amended to make it clear that the definition of small and
medium sized enterprises can be adjusted either upwards or downwards and the adjustment must take
account of EU legislation and recommendations.

Article 3 — Obligation to publish a prospectus

Article 3(1) has been redrafted to set out the obligation incumbent upon Member States in a more
precise manner.

Article 3(2) refers to the types of offer set out in the deleted Article 2(2) of the amended Commission
proposal, see above. It is thus made clear that these offers are covered by the scope of the Directive, but
not by the obligation to publish a prospectus. The limit set out in Article 3(2)(e) was amended, from
2 500 000 euro to 100 000 euro, compared to Article 2(2) of the amended Commission proposal,
since small offers are now excluded from the scope of the Directive, see above, but with an option to
‘opt in’. However, when they ‘opt in’ the very small offers will still not be subject to the obligation to
publish a prospectus because of the Community wide exemption of the publication of a prospectus for
such offers. The last subparagraph of Article 3(2) has been redrafted to make it clear that when
placements of securities are made through financial intermediaries it is the final placement that matters.

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Article 4 — Exemptions from the obligation to publish a prospectus

Except for paragraph 2(h) Article 4 essentially follows the amended Commission proposal with only
minor amendments. Paragraphs 1(b) and (c) and 2(c) and (d) specify that when the competent authority
assesses whether the information in the document to be made available is equivalent to that of a
prospectus it must take into account what is required according to Community legislation. In the cases
set out in paragraphs 1(d) and (e) and 2(e) the Council finds it sufficient to require that the document
setting out the required information is made available, as is the case in paragraph 1(b) and (c) as
opposed to published, as proposed in the amended Commission proposal.

The directors and employees referred to in paragraph 1(e) may not always be in a position to have a
full enough knowledge of the company they work for to justify an exemption from the obligation to
publish a prospectus in all cases. In order to protect their position the common position therefore
stipulates that the application of paragraph 1(e) is restricted to cases where the employer has securities
already admitted to trading on a regulated market and therefore is subject to ongoing disclosure
requirements. The information requirement in paragraph 2(f) has been aligned on the requirement
in paragraph 1(e) and a document containing some core information must now also be made available
in the case referred to in paragraph 2(f).

the common position introduces an exemption not

foreseen in the amended
Article 4(2)(h) of
Commission proposal, namely to exempt securities already traded on a regulated market from the
obligation to publish a prospectus when admission to trading is sought on another regulated market in
the Community. This possibility offers added flexibility to market participants and could facilitate the
raising of capital on a new market. In order to ensure that investors receive sufficient information a
number of conditions set out in (h) must, however, be fulfilled before this exemption can apply.

The scope of the implementing measures to be adopted pursuant to Article 4(3) has been restricted to
those provisions where the Council finds implementing measures necessary, notably in relation to the
meaning of equivalence.

CHAPTER II — DRAWING UP OF THE PROSPECTUS

Article 5 — The prospectus

Article 5(2) of the common position stipulates that the summary should convey the essential charac-
teristics and risks associated with the issuer in a brief manner and in non-technical language. While the
requirement set out in the amended Commission proposal and in amendment 24 of the European
Parliament, that the summary should be limited to 2 500 words was deemed to have merit as an
indication of the length of the summary, the Council found it too restrictive to be applied as a stringent
requirement.
It would for instance have had a different scope in the different languages of the
Community according to the structure of each language. It is however, indicated in recital 19 that
the summary should normally not exceed 2 500 words. Amendment 24 has thus been partially incor-
porated in the common position.

It has been stipulated that the summary must be drawn up in the language in which the prospectus was
first drawn up. The possibility for a host Member State to require a translation of the summary is set
out in Article 19. In order to avoid any doubt as to whether the issuer might in any event be under an
obligation to provide a prospectus in the national language of the investor in some cases, Article 5(2)(c)
of the common position states that the summary should contain a warning that where a claim related
to the information contained in a prospectus is brought to a court, the plaintiff investor might, under
the national legislation in the Member States, have to bear the translation costs of the prospectus before
the start of legal proceedings. The warning in the summary should also cover the rule on civil liability
set out in Article 6(2). Finally it has been made clear that the exception for high denomination
non-equity securities in the last sentence of Article 5(2) is subordinate to the provisions of Article
19(4).

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Article 5(4)(a) makes explicit reference to ‘warrants in any form’. The intention is to cover all warrants,
including equity warrants, and to make clear that a base prospectus should be published for such
securities.

Paragraph 4 further aims to enhance the protection of the investor by stipulating that the final terms of
the offer should if possible be provided to the investors and filed with the competent authority in
advance of the beginning of the offer, and by recalling that the provisions of Article 8(1)(a) are
applicable.

Article 6 — Responsibility attached to the prospectus

The wording of Article 6 has been clarified to take account of the fact that the issuer can be a legal
person. The words ‘at least’ have been added to indicate that Member States are free at national level to
extend responsibility to other persons such as auditors or advisors.

Article 7 — Minimum information

Article 7 is largely unchanged from the amended Commission proposal. Article 7(2)(c) has been aligned
on Article 5(4)(a) and an addition has been made in Article 7(2)(f) stipulating that, where necessary,
account should be taken of the public nature of the issuer,
in developing the different models of
prospectuses. As in the amended Commission proposal, amendment 29 of the European Parliament is
included and extended to cover non-financial information too.

The indicative Annexes are unchanged from the amended Commission proposal.

Article 8 — Omission of information

Article 8 is largely unchanged from the amended Commission proposal. To avoid doubt, the second
subparagraph of Article 8(1) now also uses the terms ‘the final offer price and amount’, as in the first
subparagraph. Article 8(2)(c) of the common position further aims to give the competent authority a
certain limited flexibility in authorising the omission of unimportant information from the prospectus.
The common position thus includes amendment 25 of the European Parliament, albeit in a slightly
different wording. The scope of the implementing measures to be adopted by the Commission has been
limited in paragraph 2 to where the Council finds implementing measures necessary.

Article 9 — Validity of a prospectus, base prospectus and registration document

Article 9 is unchanged from the amended Commission proposal, except for more precise wording of
Article 9(3) and stricter limitation on the validity of the prospectus for non-equity securities issued in a
continuous or repeated manner by credit institutions.

Article 10 — Information

Article 10 of the common position has been redrafted in comparison with Article 10 of the amended
Commission proposal. In order to reduce the administrative burden on issuers and to reduce costs, it
makes clear that the obligation on the issuers is limited to the provision of a document or a list that
contains or refers to all information that the issuer has already published or made available to the
public over the previous 12 months in one or more Member States and in third countries in
compliance with obligations under Community and national laws and rules dealing with the regulation
of securities. No new disclosure obligations are imposed, since disclosures under existing law should be
adequate. Since this obligation is not particularly burdensome it applies to all issuers, regardless of their
size, with the sole exception set out in Article 10(3) for issuers of very large denomination non-equity
securities which was also contained in the amended Commission proposal. Paragraph 4 explicitly states
that the implementing measures to be adopted by the Commission will relate only to the method of
publication and will not entail any new disclosure requirements.

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The title of the article has been amended to reflect the emphasis on information.

Article 11 — Incorporation by reference

Article 11 is unchanged from the amended Commission proposal.

Article 12 — Prospectuses consisting of separate documents

Article 12 is unchanged from the amended Commission proposal, except for a clarification in the
second subparagraph that
the securities note shall provide information that would normally be
provided in the registration document if there has been a material change or recent development
which could affect
investors assessments since the latest updated registration document or any
supplement according to Article 16 was approved.

CHAPTER III — ARRANGEMENTS FOR APPROVAL AND PUBLICATION OF THE PROSPECTUS

Article 13 — Approval of the prospectus

The common position maintains the deadline of 15 days working days, extendable to 30 days, for the
it does not
approval of a prospectus, as set out in the amended Commission proposal. However,
mention what would happen if the competent authorities did not meet the deadline, which implies
that the consequences must be regulated according to national law. The approval of the prospectus was
deemed too important, however, to permit approval by default, and paragraph 2 therefore stipulates
that the failure of the competent authorities to react shall not be deemed to be an approval of the
application. Paragraph 5 of the amended Commission proposal has thus been deleted. Amendment 38
of the European Parliament is thus not included. The determination of the home Member State as set
out in Article 2(1)(m), was also considered to represent a provision of such importance that it should
not be derogated from and paragraph 2 of the amended Commission proposal, which allowed the
issuer to choose another home Member State if the competent authority failed to give a decision within
the set time limit, has therefore been amended accordingly.

The last sentence of paragraph 6 has been deleted as unnecessary in the light of the first sentence of the
same paragraph. Paragraph 7 has been changed to make it clear that the deadlines set out in Article 13
can be adjusted and not only reduced. The main part of amendment 39 of the European Parliament is
thus not incorporated in the common position

Article 14 — Publication of the prospectus

Article 14 has been amended to ensure the protection of the investor:

— a deadline has been introduced in the last sentence of paragraph 1 to make sure that investors have
sufficient time to evaluate the prospectus before the end of the offer in the case of an initial public
offering of a class of shares not already admitted to trading on a regulated market. Read together
with the first sentence of paragraph 1 this means that amendment 42 of the European Parliament
has been included in the common position, albeit with a slightly different wording;

— In paragraph 2 Member States have been given the option of requiring that publication always must

be done in electronic form;

— In paragraph 3 Member States have the option of requiring the publication of a notice stating how

the prospectus has been made available and where it can be obtained by the public;

— Paragraph 5 states that, in the case of a prospectus being made up of several documents, each
indicate where the other constituent documents of the full prospectus may be

document shall
obtained.

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In addition, to take account of practice in some Member States, Member States have been given the
option of requiring the publication of prospectuses on the website of the competent authority, but only
if the said competent authority has decided to offer this service.

Recital 30 further states that the prospectus should be filed with the relevant competent authority and
be made available to the public by the issuer, the offeror or the person asking for admission to trading
on a regulated market, subject to EU provisions related to data protection.

Article 15 — Advertisements

Article 15 has been made more precise than in the amended Commission proposal. Paragraph 5 of the
amended Commission proposal would have obliged an issuer or offeror to disclose to the public
material
information regarding an offer addressed to qualified investors only, which would have
created an unnecessary obligation on the issuer or offeror. To avoid this the common position
makes it clear that paragraphs 2 to 4 apply only to cases where there is an obligation to draw up
a prospectus. The reworded paragraph 5 aims to ensure that all material
information reaches the
qualified investors or special categories of investors to whom the offer is addressed. The common
position does not specify how this information should be disclosed, and the part of amendment 45 of
the European Parliament relating to this issue is thus not included. In cases where a prospectus has to
be published, such material information shall be included therein or in a supplement, in accordance
with the provisions relating to the publication of prospectuses.

Paragraph 3 has been reworded to take account of the fact that this provision can also apply before a
prospectus has been published.

Paragraph 7 has been redrafted slightly in comparison with the amended Commission proposal to
make it clear that the implementing measures are not restricted to the period before the prospectus is
published.

Article 16 — Supplements to the prospectus

Article 16 has been amended in comparison with the amended Commission proposal in order to
enhance the protection of the investor. It is now stated explicitly that where a supplement is necessary
the summary shall also be supplemented to take account of the new information. More importantly,
investors who have already agreed to purchase or subscribe to the securities before the supplement was
published have been given the right to withdraw their acceptances at least two working days after the
publication of the supplement.

CHAPTER IV — CROSSBORDER OFFERS AND ADMISSIONS TO TRADING

Article 17 — Community scope of approvals of a prospectuses

Article 17 is unchanged from the amended proposal of the Commission.

Article 18 — Notification

In comparison with the amended Commission proposal the wording of Article 18 has been changed
only slightly to take account of the fact that it is not necessarily in all cases the issuer who is
responsible for drafting the prospectus, and to make it clear that the host Member State has a right
to receive a copy of the prospectus from the home Member State.

CHAPTER V — USE OF LANGUAGES AND ISSUERS INCORPORATED IN THIRD COUNTRIES

Article 19 — Use of languages

Concerning the language regime the common position largely follows the amended Commission
in order to ensure that the competent authority of the home Member State is
proposal. However,
always in a position to understand the content of the prospectus it has to approve, the common
position introduces a provision stipulating that even in cases where the offer is not made nor admission
sought in the home Member State, the prospectus has to be drawn up either in a language accepted by
the home Member State's authority or in a language customary in the sphere of international finance,
the choice being made by the issuer.

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So while paragraph 1 is identical to the amended Commission proposal and thus includes part of
amendment 51 of the European Parliament, the rest of amendment 51 is only partially included.

In order to limit the scope of the exceptions to the language regime, paragraph 4 of the common
position, in contrast with the amended Commission proposal, is limited to admission to trading on a
regulated market of non-equity securities of the denomination set out in the amended Commission
proposal, namely at least 50 000 euro. In line with paragraph 3, paragraph 4 of the common position
adds an option for Member States, both home and host, to decide whether their national legislation
should require that a summary be drawn up in their national language(s).

Article 20 — Issuers incorporated in third countries

Article 20 of the common position mainly follows the amended Commission proposal. The wording of
paragraph 1(b) has been tightened to stipulate that the information requirements referred to in (b) must
be equivalent, and not just ‘broadly equivalent’. Amendment 54 of the European Parliament is thus not
incorporated in the common position. The wording of paragraph 3 has been aligned with that of the
other provisions in the Directive and confers on the Commission the power to adopt implementing
measures. It still incorporates amendment 55 of the European Parliament, albeit with different wording.

CHAPTER VI — COMPETENT AUTHORITIES

Article 21 — Powers

In comparison with the amended Commission proposal, the common position emphasises the concen-
tration of competences in the central competent administrative authority.

Paragraph 1 stipulates that the designation of other administrative authorities to apply Chapter III must
be required by national law, and not merely by an administrative decision. The possibility for the
competent authority to delegate tasks to other bodies has been largely removed so as to concentrate the
responsibility for the supervision and approval of the prospectuses with the competent authority. In
order to allow for a transitional period in those Member States which currently permit the delegation of
functions, delegation will continue to be possible for a period of five years after the entry into force of
the Directive, and during this period may take place only on the conditions set out in paragraph 2. An
exception is made for the delegation of the publication of prospectuses on the internet as mentioned in
Article 14, since this task is of a purely technical nature and for practical reasons would be impossible
for smaller competent authorities to undertake. In any event, also during the transitional period, the
final responsibility for supervision and approval of prospectuses shall lie with the designated competent
authority.

It is also stipulated that the communication to the Commission and other Member States regarding any
delegation of tasks should include the precise conditions regulating such delegation. The conditions set
out in paragraph 2 for delegation during the transitional period correspond to those set out in the
amended Commission proposal, which in turn incorporated the main part of amendments 7 and 56 of
the European Parliament. However, to the extent these amendments aimed at allowing delegation on a
permanent basis, they have not been incorporated in the common position.

Because of its federal structure, the Federal Republic of Germany has been granted a transitional period
before it has to designate a single central competent authority, see Article 30(3).

Moreover, the wording of the fourth subparagraph of paragraph 1 has been amended to make the text
more precise, and the requirement to inform the Commission of the list of administrative authorities
has been deleted as unnecessary.

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The wording of paragraph 3 has been amended to set out more precisely the deadlines in (d), (e) and
(g) which now refers to ‘consecutive working days’, and the wording of the last subparagraph now
takes into account the fact that the rights set out in this paragraph can be enforced in different ways
according to national law.

Paragraph 4 makes it clear that the competent authority also shall have the right to carry out on-site
inspections under the conditions set out in national law, which may require that such inspections may
be undertaken only following a judicial decision and or in collaboration with other authorities.
Amendment 57 of the European Parliament has thus not been included in the common position.

In a recital it is recalled that for future developments of the Directive, consideration should be given to
the approval mechanism to be adopted to further enhance the uniform application of European
legislation on prospectuses, including the possible establishment of a European Securities Unit.

Article 22 — Professional secrecy and cooperation between authorities, and Article 23 —
Precautionary measures

These articles are unchanged from the amended Commission proposal.

CHAPTER VII — IMPLEMENTING MEASURES

Article 24 — Committee procedure, and Article 26 — Right of appeal

These articles are unchanged from the amended Commission proposal.

Article 25 — Sanctions

Article 25 is essentially unchanged from the amended Commission proposal, but the wording has been
made more precise.

CHAPTER VIII — TRANSITIONAL AND FINAL PROVISIONS

Article 27 — Amendments, Article 28 — Repeal, Article 29 — Transposition, Article 32 —
Entry into force, and Article 33 — Addressees

These articles are unchanged from the amended Commission proposal.

Article 30 — Transitional provisions

In comparison with the amended Commission proposal the common position adds two transitional
provisions which the Council considers necessary.

The first of these is set out in paragraph 2, which allows Member States who have made use of the
exemption in Article 5(a) of Directive 89/298/EEC in their national law to continue this exemption for
five years. This will exempt certain debt securities from the obligation to publish a prospectus during
the transitional period, provided they are issued in a continuous or repeated manner by credit insti-
institutions equivalent to credit institutions which regularly publish their
tutions or other financial
annual accounts and which, within the Community, are set up or governed by a special
law or
pursuant to such a law, or are subject to public supervision intended to protect savings.

The second of these is the exemption granted to the Federal Republic of Germany concerning Article
21(1), see above.

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Article 31 — Review

In order to ensure the review of the Directive the common position introduces an obligation for the
Commission to make an assessment of the application of this Directive and present a report to the
European Parliament and the Council, accompanied where appropriate by proposals for its review.
this assessment should focus in particular on the process of approval of
Recital 44 states that
prospectuses by Member States' competent authorities, and more generally on the application of the
home country principle, and whether or not problems of investor protection and market efficiency
might result from its application. The Commission should also examine the functioning of Article 10.

In addition to the changes set out above, a number of minor drafting changes of a purely technical
nature have been made to improve the quality of the wording.

IV. CONCLUSIONS

The Council considers that all the amendments made to the amended Commission proposal are fully in
line with the objectives of the Directive, which is to ensure investor protection and market efficiency, in
accordance with high regulatory standards adopted in the relevant international fora. The common
position incorporates a large majority of the amendments proposed by the European Parliament either
completely or partially. The Council finds that the Directive will facilitate the widest possible access to
investment capital on an Community-wide basis, including for small and medium sized enterprises
(SMEs) while at the same time ensuring appropriate protection of the investors.