Commission Regulation (EC) No 211/2007 of 27 February 2007 amending Regulation (EC) No 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards financial information in prospectuses where the issuer has a complex financial history or has made a significant financial commitment (Text with EEA relevance)
Date: 2007-02-27
Institutions: European Commission
Subjects: approximation of laws, dissemination of information, publication, securities, stock-exchange listing

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Official Journal of the European Union

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COMMISSION REGULATION (EC) No 211/2007

of 27 February 2007

amending Regulation (EC) No 809/2004 implementing Directive 2003/71/EC of the European
Parliament and of the Council as regards financial information in prospectuses where the issuer
has a complex financial history or has made a significant financial commitment

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty
Community,

establishing the European

Having regard to Directive 2003/71/EC of
the European
Parliament and of the Council of 4 November 2003 on the
prospectus to be published when securities are offered to the
public or
and amending Directive
2001/34/EC (1), and in particular Article 5(5) thereof,

admitted to trading

(4)

Whereas:

to ensure,

In order
that Article 5(1) of
therefore,
Directive 2003/71/EC is not deprived of useful effect in
those cases and to introduce a greater measure of legal
certainty in this regard, it should be made clear that the
information requirements laid down in Annex I to Regu-
lation (EC) No 809/2004 are to be construed in that
context
information
concerning entities other
than the issuer, where the
omission of that information could prevent an investor
the issuer’s
from making an informed assessment of
financial position.

also to financial

relating

as

In view of the fact that, under Article 3 of Regulation
(EC) No 809/2004, the competent authorities may not
information for which no
request
is
express provision is made
necessary
the
the
clarify
competent authorities in this context.

in the Annexes,
of
responsibilities

the inclusion of

to

it

(1)

(2)

Commission Regulation (EC) No 809/2004 of 29 April
2004 implementing Directive 2003/71/EC of
the
European Parliament and of the Council as regards infor-
mation contained in prospectuses as well as the format,
incorporation by reference and publication of
such
prospectuses and dissemination of advertisements (2)
sets out
the information which must be
included in a prospectus, for different kinds of securities,
in order to comply with Article 5(1) of that Directive.
Those detailed information requirements cover, among
information concerning the
other things, the financial
issuer which must be included in a prospectus in order
to enable investors to understand the financial position
of the issuer.

in detail

financial

However, there are cases where the financial position of
the issuer is so closely linked with that of other entities
information concerning those entities is
that
indispensable for the purposes of giving full effect to
Article 5(1) of Directive 2003/71/EC, that is to say, for
complying with the obligation to include
in the
prospectus all the information necessary to enable the
investor to make an informed assessment of the issuer’s
financial position and prospects. Such cases may arise
where the issuer has a complex financial history and
those where the issuer has made a significant financial
commitment.

(1) OJ L 345, 31.12.2003, p. 64.
(2) OJ L 149, 30.4.2004, p. 1, as corrected by OJ L 215, 16.6.2004,
p. 3. Regulation as amended by Regulation (EC) No 1787/2006
(OJ L 337, 5.12.2006, p. 17).

the

(5) Where an issuer has a complex financial history, the
entire business undertaking of the issuer may not be
covered by historical
information relating to
financial
the issuer, but will be covered instead by financial infor-
mation drawn up by another entity. This is likely to be
the case where the issuer has made a significant acqui-
sition not yet reflected in its own financial statements;
where
is a newly incorporated holding
company; where the issuer is composed of companies
that were under common control or ownership but
which never formed a legal group; or where the issuer
has been formed as a separate legal entity following the
division of an existing business). In such cases, all or part
of the business undertaking of the issuer will have been
carried on by another entity during the period for which
the issuer is required to provide historical financial infor-
mation.

issuer

(6)

it

However,
is not currently possible to provide a
comprehensive list of cases that should be treated as
issuers with a complex financial history. It is likely that
transaction might be
new and innovative forms of
developed that would fall outside the cases specified in
It is therefore appropriate to provide a
any such list.
broad definition of
in which an
issuer should be treated as having a complex financial
history.

the circumstances

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(7)

(8)

(9)

(10)

(11)

An issuer should be treated as having made a significant
financial commitment where it has entered into a
binding agreement to acquire or dispose of a significant
entity or business, which is not yet completed at the date
of the approval of the prospectus. It is appropriate that
such cases should be subject to the same information
requirements as apply where the issuer has already
completed an acquisition or disposal, provided that the
agreed transaction, on completion, would give rise to a
significant gross change in the assets and liabilities and
earnings of the issuer.

Since cases where the issuer has a complex financial
history or has made a significant financial commitment
are atypical, and indeed may be unique, it is not possible
to specify the information needed to fulfil the standard
specified by Directive 2003/71/EC for every conceivable
case. Accordingly, the supplementary information to be
in each
required should be whatever
is necessary,
particular case, to ensure that
the prospectus satisfies
the obligation laid down in Article 5(1) of Directive
2003/71/EC.
the
competent authority of the issuer should determine on
a case by case basis the information required (if any). The
fact that a competent authority may request such addi-
tional
information should not require the competent
authority to apply a higher standard of scrutiny to that
information, or to the prospectus in general, than that
which may be derived from Article 13 of Directive
2003/71/EC.

appropriate

therefore

that

is

It

securities giving rights

It is appropriate, given the fact that the need for further
the prospectus
information can arise only where
concerns
to
shares or other
shares,
that, when determining whether such a need
has arisen in the individual case, the competent author-
ities should base their examination on the requirements
laid down in item 20.1 of Annex I to Regulation (EC) No
809/2004 as regards the content of financial information
and the applicable accounting and auditing principles. A
impose requirements
competent authority should not
that go beyond those laid down in item 20.1 of Annex
I, or make them more onerous. However, it should be
possible to adjust their application of those requirements
the individual case
in the light of characteristics of
the
the securities,
relating to the precise nature of
economic substance of the transactions by which the
issuer has acquired its business undertaking, the specific
nature of that undertaking, and the range of information
that is already included in the prospectus.

(12) When making that determination, competent authorities
should have regard to the principle of proportionality. In
cases where there are alternative ways of satisfying the
obligation laid down in Article 5(1) of Directive
2003/71/EC through the disclosure of different kinds
information, or the presen-
of supplementary financial
tation of
the
information in different
that
competent authority should not require the issuer to
satisfy that obligation in a way that is more costly or
onerous than an adequate alternative.

formats,

(13)

Given the complexity of circumstances of each specific
to
it would be neither practicable nor efficient
case,
specify detailed rules to be applied by competent autho-
rities uniformly to all cases. It is necessary to provide for
a flexible approach so as to ensure, on the one hand, that
disclosure requirements are effective and proportionate
and, on the other hand, that the investor is adequately
protected through the provision of sufficient and appro-
priate information.

Furthermore, competent authorities should have regard
to whether an issuer has access to financial information
relating to another entity: it would not be proportionate
to require the inclusion of such information where the
issuer cannot obtain that information with reasonable
in
effort. This consideration is likely to be relevant,
particular,
takeover.
context of
Similarly,
it may not be proportionate to require the
inclusion of financial information which does not exist
at the time when the prospectus is drawn up, or to
require the auditing or restatement of supplementary
to the issuer of
financial
complying with
any
potential benefit to the investor.

information if
that

the costs
requirement

a hostile

outweigh

in the

financial

Supplementary financial
information should not be
information
requested in cases where the financial
provided in the audited consolidated financial statements
of the issuer itself, in any pro forma information, or in
using merger
information prepared
any
applicable
the
permitted
accounting
accounting standards) is likely to be sufficient 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.

(where

by

(14)

Regulation (EC) No 809/2004 should therefore be
amended accordingly.

(15)

The Committee of European Securities Regulators (CESR)
has been consulted for technical advice,

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HAS ADOPTED THIS REGULATION:

item 20.1 of Annex I as regards the content of financial
information and the applicable accounting and auditing prin-
ciples, subject to any modification which is appropriate in
view of any of the following factors:

Article 1

Regulation (EC) No 809/2004 is amended as follows:

(a)

the nature of the securities;

1. In the second paragraph of Article 3, the second sentence is

replaced by the following:

‘Subject to Article 4a(1), a competent authority shall not
request that a prospectus contain information items which
are not included in Annexes I to XVII.’

2. The following Article 4a is inserted:

‘Article 4a

Share registration document
complex financial history or
commitment

schedule in cases of
financial

significant

1. Where the issuer of a security covered by Article 4(2)
has a complex financial history, or has made a significant
financial commitment, and in consequence the inclusion in
the registration document of certain items of financial infor-
mation relating to an entity other than the issuer is necessary
in order to satisfy the obligation laid down in Article 5(1) of
Directive 2003/71/EC, those items of financial information
shall be deemed to relate to the issuer. The competent
authority of the home Member State shall
in such cases
request that the issuer, the offeror or the person asking for
admission to trading include those items of information in
the registration document.

Those items of financial information may include pro forma
information prepared in accordance with Annex II. In this
context, where the issuer has made a significant financial
commitment any such pro forma information shall illustrate
the anticipated effects of the transaction that the issuer has
to “the
agreed to undertake, and references in Annex II
transaction” shall be read accordingly.

The

2.
any request
pursuant to paragraph 1 on the requirements set out in

authority shall base

competent

(b) the nature and range of information already included in
the prospectus, and the existence of financial information
relating to an entity other than the issuer in a form that
might be included in a prospectus without modification;

(c)

the facts of the case, including the economic substance
of the transactions by which the issuer has acquired or
disposed of its business undertaking or any part of it,
and the specific nature of that undertaking;

(d) the ability of the issuer to obtain financial information

relating to another entity with reasonable effort.

Where, in the individual case, the obligation laid down in
Article 5(1) of Directive 2003/71/EC may be satisfied in
more than one way, preference shall be given to the way
that is the least costly or onerous.

referred
for

law of any other person,
6(1)
in Article
contained
information

Paragraph 1 is without prejudice to the responsibility
3.
including the
under national
of Directive
persons
the
in
2003/71/EC,
prospectus. In particular, those persons shall be responsible
for the inclusion in the registration document of any items
of
authority
pursuant to paragraph 1.

information requested by the

competent

to
the

4.
For the purposes of paragraph 1, an issuer shall be
treated as having a complex financial history if all of the
following conditions apply:

(a)

its entire business undertaking at
the
prospectus is drawn up is not accurately represented in
the historical financial information which it is required to
provide under item 20.1 of Annex I;

the time that

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(b) that inaccuracy will affect the ability of an investor to
make an informed assessment as mentioned in Article
5(1) of Directive 2003/71/EC; and

variation of more than 25 %, relative to one or more indi-
cators of the size of the issuer's business, in the situation of
an issuer.’

(c)

information relating to its business undertaking that is
necessary for an investor to make such an assessment is
included in financial
information relating to another
entity.

3. In the first paragraph of item 20.1 of Annex I, and items
20.1 and 20.1 bis of Annex X, the following sentence is
inserted in each case after the first sentence:

5.
For the purposes of paragraph 1, an issuer shall be
treated as having made a significant financial commitment
if it has entered into a binding agreement to undertake a
transaction which, on completion, is likely to give rise to a
significant gross change.

In this context, the fact that an agreement makes completion
of the transaction subject to conditions, including approval
by a regulatory authority, shall not prevent that agreement
from being treated as binding if it is reasonably certain that
those conditions will be fulfilled.

In particular, an agreement shall be treated as binding where
it makes the completion of the transaction conditional on
the outcome of the offer of the securities that are the subject
matter of
in the case of a proposed
the offer of securities that are the subject
takeover,
matter of the prospectus has the objective of funding that
takeover.

the prospectus or,
if

‘If
the issuer has changed its accounting reference date
during the period for which historical financial information
is required, the audited historical information shall cover at
least 36 months, or the entire period for which the issuer
has been in operation, whichever is the shorter.’

4. In the first paragraph of item 13.1 of Annex IV, items 8.2
and 8.2 bis of Annex VII, item 11.1 of Annex IX, and item
11.1 of Annex XI, the following sentence is inserted in each
case after the first sentence:

‘If
the issuer has changed its accounting reference date
during the period for which historical financial information
is required, the audited historical information shall cover at
least 24 months, or the entire period for which the issuer
has been in operation, whichever is the shorter.’

Article 2

Entry into force

For the purposes of paragraph 5 of this Article, and of
6.
item 20.2 of Annex I, a significant gross change means a

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

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 27 February 2007.

For the Commission

Charlie McCREEVY
Member of the Commission