COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation 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
Date: 2015-11-30
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: advertising, capital market, consumer information, disclosure of information, official market, publication, securities, single market, trade information

EUROPEAN 
COMMISSION 

Brussels, 30.11.2015  
SWD(2015) 255 final 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Regulation of the European Parliament and of the Council on the 
prospectus to be published when securities are offered to the public or admitted to 
trading 

{COM(2015) 583 final} 
{SWD(2015) 256 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
Table of Contents 

INTRODUCTION............................................................................................................... 5 
PROCEDURAL  INFORMATION  CONCERNING  THE  PREPARATION  OF  THE 

IMPACT ASSESSMENT ........................................................................................... 6 
1.  REGULATORY SCRUTINY BOARD...................................................................... 6 
2.  CONSULTATION OF INTERESTED PARTIES ..................................................... 7 
3.  POLICY CONTEXT, PROBLEM DEFINITION AND SUBSIDIARITY................ 7 
3.1.  Policy context .................................................................................................... 7 
3.2.  Problem definition............................................................................................. 8 
3.2.1.  Drivers ................................................................................................. 8 
3.2.2.  Problems............................................................................................ 10 
3.2.3.  Consequences .................................................................................... 13 
3.3.  How would the problem evolve without EU action? The Baseline Scenario . 13 
3.4.  Subsidiarity and proportionality...................................................................... 14 
3.5.  The EU’s right to act and justification ............................................................ 15 
4.  OBJECTIVES ........................................................................................................... 15 
5.  DESCRIPTION, ANALYSIS AND COMPARISON OF POLICY OPTIONS....... 17 
5.1.  Exemption thresholds ...................................................................................... 17 
5.1.1.  Description of policy options ............................................................ 18 
5.1.2.  Analysis of impacts and comparison of options................................ 18 
5.2.  Appropriate alleviated prospectus requirements for "secondary issuances"... 22 
5.2.1.  Description of policy options ............................................................ 24 
5.2.2.  Analysis of impacts and comparison of options................................ 25 

5.3.  Favourable treatment of issuers of debt securities with a high denomination 

per unit, with liquidity on the debt markets .................................................... 28 
5.3.1.  Description of policy options ............................................................ 31 
5.3.2.  Analysis of impacts and comparison of options................................ 31 
5.4.  Reforming the proportionate disclosure regime for SMEs ............................. 35 
5.4.1.  Description of policy options ............................................................ 35 
5.4.2.  Analysis of impacts and comparison of options................................ 35 

5.5.  Prospectus  summary  and  the  Key  Investor  Information  Document  under 

the Packaged Retail and Insurance-Based Investment Products Regulation .. 38 
5.5.1.  Description of policy options ............................................................ 38 
5.5.2.  Analysis of impacts and comparison of options................................ 39 
5.6.  System for the electronic access to prospectuses ............................................ 41 
5.6.1.  Description of policy options ............................................................ 42 
5.6.2.  Analysis of impacts and comparison of options................................ 42 
5.7.  Overall impact of the proposed options, compliance costs and subsidiarity... 44 
5.8.  Choice of legal instrument, compliance costs and subsidiarity....................... 48 
6.  MONITORING AND EVALUATION .................................................................... 49 
ANNEXES ..................................................................................................................... - 1 - 
ANNEX 1: GLOSSARY................................................................................................ - 1 - 

2 

 
 
 
 
ANNEX 3: BACKGROUND ON CAPITAL MARKETS UNION.............................. - 6 - 
ANNEX 4: SHORT DESCRIPTION OF THE PROSPECTUS DIRECTIVE.............. - 7 - 
1. 
INTRODUCTION.................................................................................................. - 7 - 
2.  PURPOSE AND SCOPE ....................................................................................... - 7 - 
3.  CONTENT OF THE PROSPECTUS .................................................................... - 8 - 
4.  APPROVAL OF THE PROSPECTUS .................................................................. - 8 - 
5.  LIABILITY AND SANCTIONS REGIME........................................................... - 9 - 
ANNEX  5:  EVALUATION  OF  THE  PROSPECTUS  DIRECTIVE  2003/71/EC,  AS 

AMENDED.......................................................................................................... - 10 - 
INTRODUCTION: SCOPE, METHODOLOGY AND INPUT.......................... - 10 - 

1. 
2.  BACKGROUND:  OBJECTIVES  AND  INTERVENTION  LOGIC  OF  THE 

PROSPECTUS DIRECTIVE............................................................................... - 11 - 
3. 
IMPLEMENTATION .......................................................................................... - 14 - 
4.  EVALUATION QUESTIONS AND ANSWERS............................................... - 15 - 
4.1.  Effectiveness .............................................................................................. - 15 - 
4.2.  Efficiency ................................................................................................... - 21 - 
4.3.  Relevance ................................................................................................... - 26 - 
4.4.  Consistency and coherence ........................................................................ - 29 - 
4.5.  Added value of the Prospectus Directive ................................................... - 30 - 
4.6.  Conclusions ................................................................................................ - 30 - 
ANNEX 6: SUMMARY OF PUBLIC CONSULTATION ......................................... - 32 - 
ANNEX  7:  SELECTED  STATISTICS  ON  INITIAL  PUBLIC  OFFERINGS  (IPOS) 

MADE IN EUROPEAN STOCK EXCHANGES ............................................... - 64 - 

ANNEX  8:  SUMMARY  OF  THE  MOST  SIGNIFICANT  ALLEVIATIONS 
GRANTED  BY  THE  PROPORTIONATE  DISCLOSURE  REGIME  FOR 
RIGHTS  ISSUES  AND  THE  ALLEVIATIONS  GRANTED  UNDER  THE 
PROPORTIONATE DISCLOSURE REGIME FOR SMES............................... - 66 - 

LIST OF FIGURES: 
Figure 1: Size and composition of capital markets as share of Gross Domestic Product ........ 12 
Figure 2: Problem Tree ............................................................................................................ 13 
Figure 3: The prospectus requirement in function of the total consideration of the offer ....... 18 
Figure 4: Denomination of debt securities ............................................................................... 30 
Figure 5: Annual number of prospectus approvals from 2006 to 2014 (total EEA) ........... - 15 - 
Figure  6:  Evolution  of  the  number  of  prospectuses  passported  out  between  2011  and  2014 
(total EEA) .................................................................................................................. - 16 - 
Figure  7:  Percentage  of  EU  bonds  with  a  denomination  between  EUR 50 000  and 
EUR 100 000 and above EUR 100 000....................................................................... - 18 - 
Figure  8:  Threshold  above  which  Member  States  require  a  prospectus  to  be  drawn  up 
(expressed as the total consideration of the offer in the EU over 12 months) ............ - 19 - 
Figure  9:  Number  of  prospectuses  drawn  up  using  the  proportionate  schedules  of  Annexes 
XXV to XXVIII (SMEs & Small Caps)...................................................................... - 20 - 
Figure 10: Number  of prospectuses drawn up using  the  proportionate schedules of Annexes 
XXIII & XXIV (rights issues)..................................................................................... - 21 - 
Figure 11: Number of "tripartite" prospectuses approved in the EU .................................. - 23 - 
Figure 12: Costs of capital in initial public offerings (IPO) ............................................... - 23 - 

3 

 
 
 
LIST OF TABLES: 
Table 1: Costs of raising capital............................................................................................... 11 
Table 2: Drivers and issues discussed ...................................................................................... 17 
Table 3: Threshold above which Member States require an EU prospectus to be drawn 
up (expressed as the total consideration of the offer in the EU over 12 months)............ 19 
Table 4: Thresholds - Impacts on stakeholders relative to option 1 ('do nothing') .................. 21 
Table 5: Thresholds - Achievement of objectives relative to option 1 ('do nothing') .............. 22 
Table 6: Overview of the most significant alleviations granted by the proportionate disclosure 
regime  for  'rights  issues',  in  the  share  registration  document  (compared  to  a  regular 
prospectus)(1) .................................................................................................................... 23 
Table 7: Secondary issuances - Impacts on stakeholders relative to option 1 ('do nothing') ... 28 
Table 8: Secondary issuances - Achievement of objectives relative to option 1 ('do nothing')28 
Table  9:  Examples  of  bond  issuance  in  Sterling,  Euro  and  US  Dollar  highlighting  the 
differences in minimum denominations........................................................................... 31 
Table 10: Denomination - Impacts on stakeholders relative to option 1 ('do nothing') ........... 34 
Table 11: Denomination - Achievement of objectives relative to option 1 ('do nothing') ....... 34 
Table 12: Proportionate disclosure regime - Impacts on stakeholders relative to option 1 ('do 
nothing')............................................................................................................................ 37 
Table  13:  Proportionate  disclosure  regime  -  Achievement  of  objectives  relative  to  option  1 
('do nothing')..................................................................................................................... 37 
Table 14: Prospectus summary - Impacts on stakeholders relative to option 1 ('do nothing'). 40 
Table 15: Prospectus summary - Achievement of objectives relative to option 1 ('do nothing')
.......................................................................................................................................... 41 
Table 16: System for the electronic access to prospectuses - Impacts on stakeholders relative 
to option 1 ('do nothing') .................................................................................................. 43 
Table  17:  System  for  the  electronic  access  to  prospectuses  -  Achievement  of  objectives 
relative to option 1 ('do nothing') ..................................................................................... 44 
Table 18: Summary of expected impacts of the proposed measures ....................................... 45 
Table 19: Disclosure requirements in Regulated Markets and MTFs................................. - 68 - 
Table 20: Analysis of issuers by market capitalisation by trading venue ........................... - 70 - 
Table 21: Total market capitalisation by trading venue (€bn) ............................................ - 71 - 
Table 22: 2013 trading turnover by trading venue (€mn) ................................................... - 71 - 

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INTRODUCTION 

The  Prospectus  Directive1  on  the  prospectus  to  be  published  when  securities2  are  offered  to 
the public or admitted to trading on a regulated market was adopted in order to make it easier 
and cheaper for companies to raise capital throughout the Union on the basis of approval from 
a  regulatory  authority  ("home  competent  authority")  in  only  one  Member  State.  Under  the 
Directive,  issuers,  offerors  or  persons  asking  for  the  admission  to  trading  on  a  regulated 
market3  can  use  a  "passport"  for  their  prospectuses  for  cross-border  offers  and  listings.  The 
Directive also ensures harmonised minimum protection for investors by guaranteeing that all 
prospectuses,  wherever  they  are  published,  provide  them  with  the  clear,  comprehensive  and 
standardised  information  they  need  to  make  informed  investment  decisions.  Investors  thus 
benefit  from  common  EU  standards  for  prospectus  disclosure  and  approval  by  national 
competent authorities. The Directive only concerns initial disclosure requirements for a public 
offer  or  listing  on  a  regulated  market.  It  neither  affects  on-going  nor  ad-hoc  reporting 
obligations  laid  down  in  particular  in  the  Transparency  Directive  and  Market  Abuse 
Regulation.4  

The Directive entered into force in 2005 and was reviewed in 20095: The review revealed that 
while  overall  the  Directive  was  meeting  its  objectives  of  market  efficiency  and  investor 
protection,  in  a  number  of  cases  it  created  legal  uncertainty  and  unjustified  requirements, 
which increased costs and created inefficiencies hampering the process of raising funds on the 
securities markets in the EU. To promote investor protection taking into account the loss of 
confidence in capital markets due to the financial crisis, the review identified in particular the 
need to improve the summary of the prospectus to make it a simpler and better understandable 
document.  

As  a  result  of  the  review,  the  Directive  was  amended  in  November  2010  as  part  of  a 
simplification  exercise  within  the  "Action  programme  for  the  reduction  of  administrative 
burdens"6.  The  objectives  were  to  increase  legal  clarity  and  efficiency  in  the  prospectus 
regime  while  enhancing  the  level  of  investor  protection  and  ensuring  that  the  information 
provided is sufficient and adequate. 

The main changes were as follows: 

• 

for  some  types  of  securities  issues  less  comprehensive  disclosure  requirements  were 
introduced  (small  and  medium  enterprises  [SMEs]  and  companies  with  reduced 

1 OJ L 345, 31.12.2003, p. 64–89; Annex 4 provides a short description of the Prospectus Directive (also referred 

to as "the Directive" below). 

2 Technical terms are explained in a glossary in Annex 2. 
3 Offerors or persons asking for the admission to trading on a regulated market are referred to below as "issuers". 
4  Directive  2004/109/EC  of  the  European  Parliament  and  of  the  Council  of  15  December  2004  on  the 
harmonisation  of  transparency  requirements  in  relation  to  information  about  issuers  whose  securities  are 
admitted  to  trading  on  a  regulated  market  and  amending  Directive  2001/34/EC,  OJ  L  390,  31.12.2004  and 
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse 
(market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and 
Commission  Directives  2003/124/EC,  2003/125/EC  and  2004/72/EC,  OJ  L  173,  12.6.2014.  Conditions  for 
admission  to  listing  also  remain  subject  to  existing  European  and  national  requirements  such  as  the  Listing 
Directive (Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to 
official stock exchange listing and on information to be published on those securities). 

5 Impact Assessment for the amending Directive SEC(2009) 1223. 
6  Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European  Economic  and 
Social Committee and the Committee of the Regions - Action Programme for Reducing Administrative Burdens 
in the European Union COM(2007) 23 final. 

5 

 
 
                                                 
market  capitalisation,  credit  institutions,  rights  issues  and  government  guarantee 
schemes); 

• 

• 

the format and content of the prospectus summary were amended; 

the  exemptions  from  the  obligation  to  publish  a  prospectus  when  companies  sell 
through  intermediaries  (“retail  cascades”)  and  for  employee  share  schemes  were 
clarified; 

•  disclosure  requirements  that  overlapped  with  the  Transparency  Directive7  were 

repealed; 

• 

the  definition  of  "qualified  investors"  in  the  Prospectus  Directive  were  aligned  with 
the  one  of  "professional  clients"  as  defined  in  the  Directive  on  Markets  in  Financial 
Instruments (MiFID).8 

These measures were expected to generate savings. The evaluation of the functioning of the 
amended Directive indicated that all stakeholder groups, issuers, investors and Member States 
consider the Directive to be a useful instrument to foster market efficiency and integration as 
well as investor protection (see Annex 5). The Directive has created a minimum standard for 
disclosure  and  approval  by  national  competent  authorities  which  can  be  relied  upon 
throughout  the  Union.  However,  despite  those  positive  achievements,  changes  were  largely 
incremental  and  not  sufficient  to  materially  reduce  the  cost  of  capital  raising  using  a 
prospectus.   

PROCEDURAL INFORMATION CONCERNING THE PREPARATION OF THE IMPACT ASSESSMENT 

An  Inter-Service  Steering  Group  for  this  Impact  Assessment,  chaired  by  the  Secretariat 
General comprised representatives from the following services of the European Commission: 
the Legal Service, the Directorates General for Competition; Economic and Financial Affairs; 
Financial  Stability,  Financial  Services  and  the  Capital  Markets  Union;  Internal  Market, 
Industry, Entrepreneurship & small and mid-sized enterprises; Justice; and Trade. This Group 
met three times. The last meeting took place on 28 July 2015.  

1.  REGULATORY SCRUTINY BOARD 

The Regulatory Scrutiny Board analysed this Impact Assessment and delivered a first opinion 
on 18 September 2015 that focused on the three following aspects: 

1) The report should elaborate on why the lighter regime for SMEs did not meet its objectives 
and explain better why the new approach is more likely to succeed. These explanations should 
be supported by relevant evidence and data, drawing inter alia on the stakeholder consultation 
and evaluation. 

2) As part of REFIT, the report should estimate the possible cost savings for SMEs introduced 
by lighter reporting requirements. In addition, it should substantiate the overall regulatory and 
administrative  burdens  for  prospectus  issuers,  including  for  bond,  secondary  or  frequent 
issuers. 

7  Directive  2004/109/EC  on  the  harmonisation  of  transparency  requirements  in  relation  to  information  about 

issuers whose securities are admitted to trading on a regulated market as amended. 

8 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial 

instruments and amending Directive 2002/92/EC and Directive 2011/61/EU; OJ L 173, 12.6.2014 

6 

 
 
                                                 
3) The report should present the package of preferred options in a clearer manner, specifying 
its separate elements, how they interrelate and their overall coherence. 

On  the  basis  of  a  revised  impact  assessment,  a  second  opinion  of  the  Regulatory  Scrutiny 
Board  was  provided  on  2  October  2015  that  acknowledged  that  the  revised  report  has  been 
improved.  

It noted that the relevant prospectus problems were better described, the package of preferred 
options  and  its  impacts  had  been  clarified,  cost  savings  estimates  had  been  added  and  the 
report drawn better on the evaluation and the stakeholder consultation. Moreover, the revised 
version explained better how the preferred options interact to generate synergies for issuers, 
which seem more comprehensive and substantial than the amendments from 2010. The report 
was therefore considered to be clearer and supports better the claim that the proposed changes 
can lead to costs savings and improve the function of the capital markets. 

Further improvements were recommended, in particular on the estimated cost savings, that are 
taken into account in the version published today. 

2.  CONSULTATION OF INTERESTED PARTIES 

The  most  important  consultation  of  interested  parties  was  an  on-line  public  consultation 
which invited interested parties to comment on a broad range of issues between 18 February 
and  13  May  2015.9  This  consultation  was  accessible  through  the  European  Commission's 
central  consultation  tool  "EUSurvey"10  and  was  announced  widely  through  a  specific  press 
release  and  mentioned  in  meetings  and  presentations  as  well  as  more  generally  through  the 
launch  of  the  Commission's  landmark  project  on  a  Capital  Markets  Union.11  182  interested 
parties responded to the consultation.12 In addition, the European Commission was provided 
with  83  position  papers.  Furthermore,  the  European  Commission  consulted  national 
competent authorities specifically via the European Securities and Markets Authority (ESMA) 
between March and May 2015 in order to gather more detailed data. Finally, many interested 
parties  expressed  their  views  regarding  the  review  of  the  Prospectus  Directive  in  meetings 
held at the Commission's premises in Brussels. 

3.  POLICY CONTEXT, PROBLEM DEFINITION AND SUBSIDIARITY 

3.1.  Policy context 

This impact assessment serves several purposes: It contains the review required by Article 4 
of  the  Directive  which  requests  the  Commission  to  "assess  the  application  of  Directive 
2003/71/EC as amended by this Directive, in particular with regard to the application and the 
effects of the rules (…)" by 1 January 2016, in Annex 5 on evaluation. Annex 5 serves as the 
REFIT  evaluation  report  to  which  the  Commission  had  committed  itself  in  201413. 

9 Stakeholder views expressed in the public consultation are summarised in Annex 5. 
10 https://ec.europa.eu/eusurvey/home/welcome/runner  
11 For more information regarding the Capital Markets Union project see: http://europa.eu/rapid/press-release_IP-

15-4433_en.htm?locale=en  

12  Non-confidential  responses  can  been  accessed  via:  https://ec.europa.eu/eusurvey/publication/prospectus-

directive-2015?language=en#  

13  "Regulatory  Fitness  and  Performance  Programme  (REFIT):  State  of  Play  and  Outlook",  accompanying  the 
Commission  Communication  "Better  Regulation  for  Better  Results  –  An  EU  Agenda"  COM(2015)  215  final. 
http://ec.europa.eu/smart-regulation/better_regulation/documents/swd_2015_110_en.pdf  

7 

 
 
                                                 
Furthermore, on the basis of the conclusions drawn by the evaluation and problems detected, 
this  impact  assessment  serves  to  scrutinise  certain  potential  amendments  to  the  Directive 
which the Commission is reviewing as part of the Capital Markets Union initiative14 and as a 
contribution to its Jobs and Growth initiative.15  

3.2.  Problem definition 

The Prospectus Directive was a top priority in the Financial Services Action Plan16 in 1999 to 
foster  the  raising  of  capital  on  an  EU-wide  basis.  Although  it  has  led  to  a  significant 
harmonisation  of  the  rules  concerning  prospectuses  in  the  Member  States  and  created  the 
cross-border  passporting  mechanism,  the  evaluation  mentioned  above  has  identified  the 
following issues which seem to still hinder the raising of capital on an EU-wide basis.  

3.2.1.  Drivers 

1.  High costs of compliance with the Prospectus Directive 

Respondents to the public consultation stressed that compliance costs related to the Directive 
are  high.  Rough  estimates  for  costs  of  equity  prospectus  are  on  average  at  EUR 1  million. 
Estimates of the costs of a non-equity prospectus are considerably lower at around a fourth of 
the  costs  for  equity  prospectuses.  Furthermore,  prospectuses  and  their  summaries  are  long 
documents often focused on avoiding liability risks, thus legal fees are accounting for 40% or 
more  of  the  compliance  costs.  This  makes  the  drafting  and  approval  process  an  expensive, 
complex and time-consuming exercise. This holds especially for SMEs as some of these costs 
are fixed costs and thus the overall costs do not vary perfectly proportionally with the sums 
raised.  Therefore,  the  costs  of  a  new  prospectus  have  a  proportionally  bigger  impact  on 
smaller issuances.  

The review of the Prospectus Directive in 2010 tried to address the problem with the so-called 
"proportionate  disclosure  regimes",  introducing  alleviated  minimum  disclosure  and  thus  a 
reduced prospectus content for SMEs and rights issues. However, there was almost unanimity 
in  the  public  consultation  that  the  proportionate  disclosure  regimes  introduced  only  very 
limited improvements and were not widely used (see section 5.4).  
When assessing the specific costs of preparing a prospectus, available data is very limited17. 
Less than 20 respondents to the public consultation provided an estimate of these costs. The 
figures provided show a very wide range and respondents themselves stressed that they should 
not  be  generalised.  The  minimum  cost  estimates  for  an  equity  prospectus  range  from 
EUR 1 000  to  EUR  3  million,  with  an  average  of  almost  EUR 700 000.  The  maximum 

14 COM(2015) 468 final 

15  Commission  Communication  "An  Investment  Plan  for  Europe"  COM(2014)  903  final;  http://eur-

lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0903&from=EN  

16 

"Financial  Services: 

Implementing 

the 

framework 

for 

financial  markets:  Action  Plan", 

http://ec.europa.eu/internal_market/finances/docs/actionplan/index/action_en.pdf  

17The Centre for Strategy & Evaluation Services (CSES) published a study on the impact of the Prospectus Regime 
on EU financial markets in June 2008 which contained cost estimates on the basis of the feedback from a survey 
with  market  participants.  CSES  stressed  that  the  additional  costs  of  preparing  a  prospectus  vary  from  issue  to 
issue depending on what work has already been done by the issuer and its counsels, and provided estimates of 
the total costs of prospectuses, by type of prospectus (see Annex 5 below for further detail), which are broadly 
consistent  with 
thereof). 
to 
http://ec.europa.eu/finance/securities/docs/prospectus/cses_report_en.pdf  

the  consultation  (see  Annex  6  below  for  a  summary 

the  feedback 

8 

 
 
                                                 
amounts  range  between  EUR 10 000  and  EUR  4  million,  averaging  at  EUR 1.3  million18. 
Estimates of the costs of a non-equity prospectus are considerably lower with the minimum 
average of EUR 57 000 and the maximum average at almost EUR 500 000. Legal fees are by 
far the most important contributor to the overall cost of preparing a prospectus according to 
respondents  to  the  public  consultation,  as  legal  fees  represent  about  40%  of  the  total  costs. 
The second most important cost factor are internal costs (about 23%), followed by audit costs 
and fees charged by competent authorities representing together about a quarter of the costs. 
However, as for the total costs, the figures are rough estimates and would vary considerably 
from case to case. Fees charged by the national competent authorities are usually well below 
EUR 10 000 for one prospectus19.  

2.  Ineffective investor protection 

The  length  of  prospectuses  and  the  fact  that  they  are  often  drafted  with  the  objective  to 
address  any  potential  legal  liability  rather  than  to  inform  investors  in  a  suitable  way, 
undermine the objective to protect investors through the provision of suitable and appropriate 
information to protect them from being attracted into investments they would not have made 
had they fully understand the offer. Similarly, the divergent implementation and application 
of the Directive as well as very different approaches by Member States to regulate the offer of 
securities outside the scope of the Directive lead to irritation and uncertainty among investors. 

An example of ineffective investor protection is the prospectus summary which was intended 
to provide investors with concise and easy to understand information about the product. There 
was  a  widespread  dissatisfaction  expressed  by  most  respondents  to  the  public  consultation 
about  the  current  summary  regime.20  Almost  unanimously  they  consider  that  the  revised 
requirements  introduced  in  2010  have  not  been  helpful  and  as  a  result,  the  prospectus 
summary, as it exists today, is blamed for being too long, unwieldy  and  too comprehensive 
(see section 5.5).  

3.  Regulatory framework not flexible and inappropriate for SMEs and some securities  

The  insufficient  differentiation  and  proportionality  of  the  requirements  between  specific 
situations and issuers results in an inappropriate administrative burden and might even deter 
companies  from  accessing  capital  markets.  The  proportionate  disclosure  regimes  mentioned 
above are again a prominent example.  

Another  example  of  the  unsatisfactory  design  of  the  prospectus  regime  is  the  treatment  of 
securities with a high denomination of EUR 100 000 or above: Under both the Prospectus and 
Transparency  Directive,  a  system  of  exemption  and  alleviation  thresholds  currently  creates 
incentives for issuers to issue debt securities with a high denomination per unit, namely above 
EUR 100 000.21  The  OECD  found  that  this  threshold  most  likely  reduces  liquidity  on  the 
secondary  market  for  corporate  bonds  and  a  limits  issuance  of  debt  securities  in  smaller 
denominations  (see  section  5.3).22  The  other  consequence  is  that  such  a  threshold  prevents 

18 Estimates for initial public offerings were very similar (average minimum costs: about EUR 680 000; average 

maximum costs: almost EUR 1.6 million). 

19 For example, the German supervisory authority BaFin and the Luxemburg supervisory authority CSSF charge 

administrative fees of EUR 6 500 and EUR 8 000, respectively, for the approval of a base prospectus. 

20 See section 5 of Annex 6: Summary of public consultation. 
21 The incentive for debt issuers to denominate their debt securities above EUR 100 000 per unit is that they either 
have to disclose less information if the securities are admitted to trading on a regulated market, or are even fully 
exempted from the prospectus obligation if no such admission is sought. 

22  S.  Çelik,  G.  Demirtaş  and  M.  Isaksson  (2015),  "Corporate  Bonds,  Bondholders  and  Corporate  Governance", 

OECD Corporate Governance Working Papers, No. 16, OECD Publishing, Paris. 

9 

 
 
                                                 
many  investors  from  entering  the  bond  market  due  to  the  high  entry  tickets.  This  concerns 
mainly small investors, for example, small investment funds but also retail investors. 

4.  Insufficient harmonisation achieved by the Prospectus Directive  

The  Directive  leaves  Member  States  with  considerable  discretion  in  its  implementation  and 
application.  The  resulting  differences  hinder  the  emergence  of  a  truly  integrated  EU  capital 
market. For example, Member States have applied differently the flexibility in the Directive to 
exempt offers of securities with a total value below EUR 5 000 000 so that the requirement to 
produce  a  prospectus  kicks  in  at  different  levels  across  the  EU  (see  section  5.1).  There  are 
also  indications  that  prospectus  approval  procedures  are  in  practice  handled  differently 
between  Member  States  as  evidenced  by  ESMA's  peer  reviews  including  the  currently 
ongoing peer review.23 
The problems that arise from diverging implementation and application are also reflected in 
the  difficulties  investors  have  in  finding  and  comparing  issuances  even  if  they  come  with  a 
prospectus: No IT-tool exists which would allow investors easy and free online access to the 
relevant  material  or  would  even  ensure  that  they  are  immediately  informed  about  new 
issuances or offers (see section 5.6) 

5.  Insufficient alignment of more recent EU law with the Prospectus Directive 

The financial crises and market developments in the last years have led to a number of new or 
revised  legislative  texts  which  constitute  the  current  EU  legal  framework  for  financial 
markets.  Recent  examples  are  the  creation  of  SME  growth  markets  under  MiFID  II,  the 
introduction  of  key  information  documents  for  packaged  retail  and  insurance-based 
investment  products  (PRIIPs)  under  Regulation  (EU)  No  1286/2014  and  the  revision  of  the 
Transparency  Directive.  These  have  sometimes  led  to  insufficient  alignment  or  even 
inconsistencies with the Prospectus Directive. For instance the market capitalisation threshold 
of EUR 200 000 000 which defines SMEs under MiFID II is not coherent with the definition 
of  "companies  with  reduced  market  capitalisation"  under  the  Prospectus  Directive,  which  is 
based on a maximum market capitalisation of EUR 100 000 000. Likewise, when the PRIIPS 
Regulation  and  the  Prospectus  Directive  both  apply,  there  is  a  certain  level  of  redundancy 
between the key information document required under PRIIPS and the prospectus summary, 
with  both  documents  serving  the  same  objectives  of  comparing  investment  products  and 
helping investors' decision-making. It is thus necessary to review the prospectus regime with 
the  objective  of  creating  more  consistency  and  legal  clarity  with  regard  to  its  inter-linkages 
with other legislative instruments. 

3.2.2.  Problems 

The  above-identified  drivers  contribute  to  a  number  of  problems  which  limit  capital  market 
integration and efficiency as well as the effectiveness of investor protection in these markets 
in the Union. Capital markets play a very limited role in the financing of companies in most 
Member  States  and  the  capital  market  of  the  Union  is  very  fragmented.  The  following  four 
contextual problems are linked to the current legal regime for prospectuses in the Union.  

1.  High costs of financing on capital markets in some Member States. 

Initial  public  offerings  (IPOs)  and  debt  underwriting  are  characterised  by  substantial  fixed 
costs which are generated by due diligence and regulatory requirements, including the cost of 

23 http://www.esma.europa.eu/system/files/2012-300.pdf  

10 

 
 
                                                 
information  disclosure  required  by  investors  or  regulators  and  meeting  other  corporate 
governance  requirements.24  Data  shows  that  compliance  costs  and  disclosure  requirements 
related to an IPO are particularly high for smaller firms: A study25 estimates that listing costs 
can account for 10 to 15% of proceeds for IPOs of less than EUR 6 million and only 5 to 8% 
for  IPOs  above  EUR  50  million.  For  many  firms,  in  particular  SMEs,  initial  and  on-going 
listing costs outweigh the benefits of listing: According to the International Organization of 
Securities Commissions (IOSCO), the 'costs and fulfilment of regulatory requirements'26 (i.e. 
the  financial  and  bureaucratic  burden)  during  and  after  an  IPO  are  one  of  the  two  most 
important  impediments  faced  by  SMEs  in  accessing  capital  markets.  Table  1  illustrates  the 
relatively  high  burden  of  the  overall  costs  of  raising  capital,  which  include  the  cost  of  a 
prospectus, when smaller amounts are being raised. 

Table 1: Costs of raising capital 

Amount raised from the IPO 

less than EUR 6 million 
between EUR 6 million and EUR 50 million 
between EUR 50 million and EUR 100 million 
more than EUR 100 million 
Source: Federation of the European Securities Exchanges (FESE) 

Cost of raising capital  
(as a % of the amount raised) 
10 to 15% 
6 to 10% 
5 to 8% 
3 to 7.5% 

2.  Differences in financing conditions between Member States 

The size of capital markets is conventionally measured  by the ratio of outstanding financial 
assets  relative  to  economic  activity.  According  to  this  measure,  the  EU  market  is  relatively 
big.  However,  this  is  largely  driven  by  the  extremely  large  share  of  bank  assets.  The  stock 
market capitalisation on the other hand is below  the global average. Furthermore, there is a 
wide variation in the development of capital markets across EU Member States, as illustrated 
in  Figure  1  below:  several  EU  Member  States  (Luxemburg,  Ireland,  Netherlands  and 
Denmark) have relatively larger capital markets than the USA, suggesting that conditions in 
the EU can be supportive to the development of large capital markets.  

24 On costs of accessing public capital markets see also Commission Staff Working Document "Initial reflections 
on  the  obstacles  to  the  development  of  deep  and  integrated  EU  capital  markets  (SWD(2015)  13  final)  which 
accompanied the Green Paper (http://ec.europa.eu/transparency/regdoc/rep/10102/2015/EN/10102-2015-13-EN-
F1-1-ANNEX-1.PDF)  and  European  IPO  Task  Force,  EU  IPO  Report  –  Rebuilding  IPOs  in  Europe  (2015). 
http://www.europeanissuers.eu/_mdb/spotlight/44en_Final_report_IPO_Task_Force_20150323.pdf . 

25  FESE, Guide to Going Public in Europe, 2013. Annex 7 provides additional data on European IPOs by value and 

volume. 

26  IOSCO,  Final  Report:  SME  Financing  through  Capital  Markets,  http://www.iosco.org/library/pubdocs/pdf/ 

IOSCOPD493.pdf, p. 38. 

11 

 
 
                                                 
Figure 1: Size and composition of capital markets as share of Gross Domestic Product 

Source: IMF Global Financial Stability Report, April 2015 

3.  Limited access to finance for many SMEs 

European companies, and in particular SMEs, rely heavily on bank finance. The Commission 
services found that the vast majority of their financing is via banks and only 20 per cent of 
capital  or  less  is  obtained  from  capital  markets.  Also  for  SMEs  considerable  differences 
between  Member  States  exist:  In  Slovakia,  Denmark  and  Sweden  9  to  32%  of  SMEs  used 
equity as a source of funding, whereas in Hungary, Portugal and the Czech Republic almost 
no equity funding was used and the EU average is at only 3%.There are, of course, various 
factors influencing the decision of companies when choosing the most appropriate source of 
capital. For example, most companies have well-established relationships with their banks and 
therefore turn to them as a preferred choice of finance. Similarly, tax and liability treatments 
differ  between  different  sources  of  finance  and  Member  States.  Nevertheless,  the  recent 
banking crisis showed that reliance on bank financing only can have severe adverse effects in 
case  of  such  a  crisis.  Furthermore,  it  limits  the  company's  bargaining  position  vis-a-vis  the 
bank.  It  is  therefore  important  that  access  to  capital  markets  is  open  at  least  as  a  viable 
alternative.  

4.  Ineffective investor protection on capital markets, in particular in across borders 

By increasing the investment opportunities, efficient capital markets offer investors a broader 
set of financial products to (i) meet their investment objectives, (ii) diversify and manage their 
risks and (iii) optimise their risk-return profile, while respecting their investment constraints. 
However, considerable differences exist within the EU concerning investor protection, which 
are  mainly  caused  by  different  legal  and  institutional  traditions.  An  example  where  these 
differences  amongst  Member  States  become  obvious  are  withdrawal  rights  relating  to 
prospectuses. The withdrawal right is the right of investors who have agreed to purchase or 
subscribe for securities to withdraw their acceptances. The Directive grants such withdrawal 
rights during two working days under two sets of circumstances: (i) if the final offer price and 
amount of securities which will be offered to the public cannot be included in the prospectus 
and is thus published after the approval; or after the publication of a supplement by the issuer, 
when a significant new factor, a material mistake or an inaccuracy relating to the information 
included in the prospectus arises or is noted before the final closing of the offer to the public. 
Some  Member  States  have  introduced  additional,  sometimes  very  far-reaching  withdrawal 
rights.  This  creates  uncertainty  for  investors  as  to  their  level  of  protection  when  investing 

12 

 
 
  
abroad, but also for issuers who perceive these differences as legal risks deterring them from 
cross-border offers. This in turn, results in a considerable home-bias.  

3.2.3.  Consequences 

These problems make capital markets unattractive for many companies, in particular SMEs, 
as an alternative source of funding. However, if companies cannot raise capital effectively 
this often translates into less investment, fewer jobs and less growth in the Union. 

The  differences  across  Member  States  as  well  as  the  ineffective  investor  protection  make 
investors reluctant to invest in securities and in particular in those from other Member States. 
Similarly, issuers are not interested in targeting capital markets in other Member States as this 
would often trigger considerable additional costs while expectations to raise a lot of funding 
remain low. Taken together, this means missed investment and funding opportunities for 
investors and companies in the Union. 

Although the short-comings in the prospectus regime are only one part of the capital market 
regulatory  framework  and  there  are  many  other  factors  influencing  the  functioning  of  these 
markets,  these  shortcomings  can  in  specific  cases  nevertheless  be  the  decisive  element  that 
keeps a company from raising capital or keeps investors from investing in the most suitable 
financial instrument. Both situations would contribute to triggering the above consequences.  

Figure 2 illustrates how the problems and the drivers described above interrelate. Each of these 
drivers and problems can have adverse impacts as described in the third column of  Figure  2 
and in section 3.2.3 below. 

Figure 2: Problem Tree 

Drivers 

Problems 

Consequences 

Regulatory framework 
not flexible 

Limited access to finance for 
many SMEs 

Companies cannot raise 
capital effectively 

High costs of 
compliance  

High costs of financing on capital 
markets in some Member States 

Ineffective 
disclosure 

investor 

Ineffective investor protection on 
capital markets, in particular in a 
cross-border context 

investment,  fewer 

Less 
jobs, and less growth 

Insufficient  alignment 
and harmonisation 

Differences in financing 
conditions between Member 
States 

Missed investment and 
funding opportunities for 
investors and companies 

3.3.  How would the problem evolve without EU action? The Baseline Scenario 

Financial  fragmentation  has  a  significant  effect  on  the  possibility  to  share  economic  risks 
across  borders.  Economic  literature  identified  capital  markets  and  bank  credit  markets  as 

13 

 
 
 
having an important role in cushioning the impact of economic shocks.27 By giving access to 
foreign  assets,  the  capital  markets  channel  can  provide  stable  revenues  to  investors  when 
domestic income sources decay. The bank credit market channel assumes that banks provide 
stable  funding  to  the  economy  even  when  the  economic  activity  weakens  and  credit  risks 
increase. Studies on risk sharing in the euro area found that these channels were ineffective 
during  the  financial  crisis.  Indeed,  the  credit  market  channel  was  impaired  because  of  the 
severity and persistence of the economic downturn and because the fragmentation it entailed 
annihilated the cushioning effect of diversification. The reasons for the capital market channel 
having  a  limited  cushioning  effect  during  the  crisis  were  seen  in  the  limited  size  of  capital 
markets in the EU. Economic theory has long conjectured a link between financial integration, 
risk  sharing  and  higher  economic  growth  through  a  "risk-amelioration"  channel.  The  recent 
EU  experience  of  low  growth  coinciding  with  financial  market  fragmentation  is  consistent 
with it.28 

Deep,  liquid  and  efficient  capital  markets  bring  advantages  to  borrowers  and  investors  not 
only  during  times  of  financial  distress,  but  also  under  normal  market  conditions:  For 
borrowers  they  (i)  improve  their  access  to  funds;  (ii)  reduce  their  capital  costs  by  creating 
competition  among  investors;  and  (iii)  reduce  the  risk  of  disruption  in  financing  by 
diversifying  their  funding  sources.  On  the  investors'  side,  by  increasing  the  investment 
opportunities, efficient capital markets offer investors a broader set of financial products to (i) 
meet their investment objectives, (ii) diversify and manage their risks, and (iii) optimise their 
risk-return  profile,  while  respecting  their  investment  constraints  (such  as  terms  of  risk, 
duration, preference for certain asset types). 

As  described  above,  the  Directive  plays  an  important  role  at  the  gateway  of  EU  securities 
markets. If no measures were taken to improve the Directive, prospectus disclosure could not 
support  creating  deeper,  more  liquid,  more  efficient  and  less  fragmented  capital  markets 
within  the  EU.  While  Member  States  could  try  to  make  their  national  capital  markets 
somewhat  more  efficient,  they  could  not  change  the  shortcomings  of  the  Directive  itself. 
Companies,  in  particular  SMEs  and  companies  based  in  smaller  markets,  would  therefore 
remain deprived of a potentially important source of finance. This in turn would hamper the 
creation of jobs and growth in the Union.  

3.4.  Subsidiarity and proportionality 

According to the principle of subsidiarity (Article 5 (3) of the Treaty on the Functioning of 
the  European  Union),  action  on  EU  level  should  be  taken  only  when  the  objectives  of  the 
proposed  action  cannot  be  achieved  sufficiently  by  Member  States  alone  and  thus  mandate 
action  on  an  EU  level.  The  first  objective  of  reviewing  the  Directive  in  the  context  of  the 
Capital  Markets  Union  is  to  remove  undue  administrative  burden,  to  enable  companies,  in 
particular SMEs, to easily and timely access capital markets in order to diversify their sources 
of  capital  from  anywhere  within  the  EU,  and  thus  to  improve  the  financing  of  the  EU 
economy. The second and equally important objective is to safeguard investor protection by 
making  available  prospectus  disclosure  which  enables  them  to  take  informed  investment 

27 Compare Anderson, N., M. Brooke, M. Hume and M. Kürtösiová (2015), "A European Capital Markets Union: 
implications  for  growth  and  stability",  Bank  of  England  Financial  Stability  Paper  No.  33;  Demyanyk,  Y.,  C. 
Ostergaard and B. E. Sørensen (2008), "Risk sharing and portfolio allocation in EMU", DG ECFIN Economic 
Paper No 334.  

28 Compare Obstfeld, M. (1994), "Risk-taking, global diversification, and growth", American Economic Review, 
84, 5, pp. 1310-1329; Femminis, G. (2001), "Risk-sharing and growth: The role of precautionary savings in the 
"Education" model", Scandinavian Journal of Economics, 103, pp. 63-77. 

14 

 
 
                                                 
decisions.  Both  objectives  aim  at  facilitating  cross-border  flows  of  capital  and  ultimately  at 
enhancing growth and creating jobs in all EU Member States.  

The  passporting  of  harmonised  prospectuses  as  introduced  by  the  Prospectus  Directive  in 
2003  links  issuers  or  offerors,  authorities  and  potential  investors  from  different  Member 
States  and  European  Economic  Area  (EEA)-Member  States:  When  a  competent  authority 
approves a prospectus, the issuer can ask for a passport to another EU or EEA Member State 
where the prospectus can  then be used  without undergoing another  approval. The minimum 
content  of  the  prospectus  is  harmonised  at  EU  level  by  the  Prospectus  Regulation  (EC)  No 
809/2004.  The  prospectus  regime  is  therefore  European  in  nature  and  its  improvement  can 
only  be  tackled  at  EU  level.  The  possible  alternatives,  i.e.  non-legislative  action  at  Union 
level, e.g. guidelines by ESMA, and action at Member State level, could not sufficiently and 
effectively achieve the objectives as they could not amend the provisions of the Directive or 
Regulation. Improving the EU prospectus regime  will lead to  a more level  playing  field  for 
issuers and investors alike and to avoiding regulatory arbitrage, which in the end could work 
against the objectives of the Capital Markets Union. The proposed action would give a clear 
and  consistent  signal  throughout  the  EU  that  the  prospectus  regime  performed  well  even 
during the financial crisis, but that substantial improvements need to be made to create a truly 
single  market  for  capital  and  foster  convergence  amongst  Member  States.  Therefore,  the 
objectives of the proposed action cannot be achieved by the Member States alone and can be 
better achieved by the Union. 

The  options  analysed  respect  the  principle  of  proportionality,  are  adequate  for  reaching  the 
objectives  and  do  not  go  beyond  what  is  necessary.  The  retained  policy  options  are 
compatible  with  the  proportionality  principle,  taking  into  account  the  right  balance  between 
the public interest at stake and cost-efficiency. Member States will still enjoy flexibility due to 
the proposed exemption thresholds. The retained options are consistent with the existing EU 
transparency,  market  abuse  and  MiFID  regimes.  Thus,  financial  markets  can  continue  to 
function  on  the  basis  of  the  existing  legal  framework  without  having  to  face  unnecessary 
regulatory disruption. Hence, the overall objectives of reducing the administrative burden (in 
particular compliance costs) whilst safeguarding investor protection will be met.  

3.5.  The EU’s right to act and justification 

The  legal  basis  for  action  is  the  Treaty  on  the Functioning  of  the  European  Union  (TFEU), 
and in particular Article 114 thereof. 

4.  OBJECTIVES 

The general objectives of the proposal are to ensure that companies everywhere in the Union 
can  raise  capital  effectively  in  the  financial  markets  and  that  investors  can  invest  in  those 
securities they consider most appropriate for their needs, based on adequate disclosure about 
the  security  as  well  as  the  issuer.  This  should  help  to  increase  investment,  job  creation  and 
growth in the Union.  

Specific objectives would therefore be:  

1.  to reduce the costs of financing; 

2.  to achieve more convergence in the disclosure regimes for capital markets across Member 

States; 

15 

 
 
3.  to  improve  access  to  capital  markets  for  SMEs  and  companies  with  reduced  market 

capitalisation;  

4.  to improve investor protection in capital markets. 

Finally, operational objectives are: 

1.  to reduce the administrative burden of compliance with the Prospectus Directive; 

2.  to make the regulatory framework for prospectuses more flexible and appropriate for the 

various types of securities and issuers covered, in particular SMEs; 

3.  to achieve more convergence in the application of the Prospectus Directive; 

4.  to better align the Prospectus Directive with recent EU law; 

5.  to make disclosure to investors under the prospectus regime more effective. 

The operational objective of investor protection under the Prospectus Directive is primarily to 
be  understood  as  providing  retail  investors  with  access  to  appropriate  securities  and 
information  about  the  respective  security,  its  issuer  and  putting  them  in  a  position  to  assess 
and compare different offers. 

Consistency of the objectives with other EU policies: The identified objectives are coherent 
with the EU's fundamental goals of promoting a harmonised and sustainable development of 
economic  activities,  a  high  degree  of  competitiveness,  and  a  high  level  of  consumer 
protection, which includes safety and economic interests of citizens (Article 169 TFEU). 

Consistency of the objectives with fundamental rights: Future legislative measures on the 
prospectus  regime,  including  appropriate  sanctions,  need  to  be  in  compliance  with  relevant 
fundamental  rights  embodied  in  the  EU  Charter  of  Fundamental  Rights  ("EU  CFR"),  and 
particular  attention  should  be  given  to  the  necessity  and  proportionality  of  the  legislative 
measures. Only the protection of personal data (Article 8), the freedom to conduct a business 
(Art.  16)  and  consumer  protection  (Art.  38)  of  the  EU  CFR  are  to  some  extent  relevant. 
Limitations  on  these  rights  and  freedoms  are  allowed  under  Article  52  EU  CFR.  The 
objectives  as  defined  above  are  consistent  with  the  EU's  obligations  to  respect  fundamental 
rights. However, any limitation on the exercise of these rights and freedoms must be provided 
for by the law and respect the essence of these rights and freedoms. Subject to the principle of 
proportionality,  limitations  may  be  made  only  if  they  are  necessary  and  genuinely  meet  the 
objectives  of  general  interest  recognised  by  the  Union  or  the  need  to  protect  the  rights  and 
freedoms of others. 

In the case of the prospectus-related legislation, the general interest objective which justifies 
certain limitations of fundamental rights is the objective of ensuring the market integrity and 
financial  stability.  The  freedom  to  conduct  a  business  may  be  impacted  by  the  necessity  to 
follow certain disclosure, approval and filing obligations in order to ensure an alignment of 
interests in the investment chain and to ensure that potential investors act in a prudent manner. 
As  regards  the  protection  of  personal  data,  the  disclosure  of  certain  information  in  the 
prospectus is necessary to ensure that investors are able to conduct their due diligence. It is 
however  noted  that  these  provisions  are  currently  already  in  place  in  EU  law.  All  retained 
options safeguard proportionality with regard to limitation of fundamental rights.  

In  other  words,  the  objective  of  the  Prospectus  Directive  is  to  balance  on  the  one  hand  the 
trade-off between ensuring investor protection and limiting administrative burden for issuers 
and on the other hand the trade-off between fostering the internal market for capital and the 
Capital Market Union and preserving sufficient flexibility for national and local markets. 

16 

 
 
5.  DESCRIPTION, ANALYSIS AND COMPARISON OF POLICY OPTIONS  

In order to address the problems discussed above it is necessary to amend different parts of 
the  Prospectus  Directive.  Therefore,  as  already  indicated  above,  this  impact  assessment 
discusses  options  regarding  various  separate  issues.  Which  of  these  issues  address  which 
driver is illustrated in Table 2.  

Table 2: Drivers and issues discussed 

Driver: 

Ineffective 
investor 
protection

High costs of 
compliance 
with the 
Prospectus 
Directive 

Regulatory 
framework not 
flexible and 
inappropriate for 
SMEs and some 
securities 

Insufficient 
harmonisation 
achieved by the 
Directive 

Insufficient 
alignment of 
more recent EU 
law with the 
Directive 

Issue: 
Exemption 
thresholds 
"Secondary 
issuances" 
High 
denomination 
per unit 
Proportionate 
disclosure 
regime for 
SMEs 
Prospectus 
summary 
Electronic 
publication 
system 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

In the remainder of this chapter for each of these issues policy options will be described, their 
potential impacts discussed and their relative (dis-)advantages compared. 

5.1.  Exemption thresholds  

The  scope  of  the  Directive  is  defined  by  a  number  of  thresholds29.  These  thresholds  were 
initially  designed  to  strike  a  balance  between  investor  protection  and  alleviating  the 
administrative burden on small issuers and small offers. Some of these thresholds were raised 
by  Directive  2010/73/EC  (see  Annex  5).  However,  in  view  of  market  developments,  in 
particular  the  development  of  securities-based  crowdfunding,  some  thresholds,  including 
those not amended by the review in 2010, might need to be re-calibrated. 

The  thresholds  that  identify  the  offers  exempted  from  the  scope  of  application  of  the  EU 
Prospectus regime are related, firstly, to the size of an offer: under the current Article 1(2)(h) 
the EU prospectus is mandatory for offers above EUR 5 000 000, while under Article 3(2)(e) 
Member States are not allowed to require any prospectus for offers below EUR 100 000. For 
offers of a total consideration between EUR 100 000 and EUR 5 000 000, Member States are 
free to apply national rules. Secondly, under Article 3(2)(b) an offer of securities addressed to 
a restricted circle of non-qualified investors is exempted from the prospectus requirement: to 

29 Set out in Articles 1(2)(h) and (j), 3(2)(b), (c), (d) and (e), respectively. 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
that end, the Directive sets a limit of 150 natural or legal persons per Member State, other 
than qualified investors. This threshold was raised from 100 to 150 persons by the amending 
Directive 2010/73/EU. Figure 3 below illustrates the exemption thresholds related to the total 
consideration of an offer.  

Figure 3: The prospectus requirement in function of the total consideration of the offer 

Some  stakeholders  claim  that  the  thresholds  are  set  too  low  as  they  render  the  Directive 
already applicable to small offers. In particular the threshold of EUR 100 000 be it at national 
or EU level, is regarded as too low to support emerging models such as crowdfunding.  

5.1.1.  Description of policy options 

Option  1  –  "Do  nothing":  Exemption  thresholds  of  EUR 100 000,  EUR 5 000 000  and  150 
persons  remain  unchanged  and  Member  States  retain  the  ability  to  regulate  prospectus 
requirements for offers between EUR 100 000 and EUR 5 000 000 as they deem appropriate. 

Option  2  –  "Raise  the  upper  threshold  under  Article  1(2)(h)"  from  EUR 5 000 000  to 
EUR 10 000 000, keep the other thresholds unchanged.   

Option  3  –  "Raise  the  lower  threshold  under  Article  3(2)(e)"  from  EUR 100 000  to 
EUR 500 000, keep the other thresholds unchanged. 

Option 4 – "Raise the number of non-qualified investors under Article 3(2)(b)": Raise from 
150  to  300  the  maximum  number  of  non-qualified  investors  to  whom  an  offer  can  be 
addressed  in  each  Member  State  without  triggering  a  prospectus  obligation,  keep  the  other 
thresholds unchanged.  

5.1.2.  Analysis of impacts and comparison of options  

Option  1:  With  regard  to  the  "EUR  5  000  000"  and  "150  persons"  thresholds,  the  general 
feedback from the consultation was that they should remain unchanged because they already 
strike  an  appropriate  balance  between  investor  protection  and  alleviating  the  administrative 
burden  on  small  issuers  and  small  offers.  According  to  stakeholders,  reducing  barriers  to 
access capital markets could not be effectively achieved by raising them. The preference for a 
status  quo  was  confirmed  by  the  Expert  Group  of  the  European  Securities  Committee 
(EGESC),  where  a  majority  of  Member  States  was  reluctant  to  change  the  thresholds, 
highlighting in particular that the quantum of 150 persons is already very large in view of the 
underlying  concept  of  "restricted  circle  of  non-qualified  investors".  Besides,  as  the  "150 
persons"  threshold  is  expressed  per  Member  State,  increasing  it  further  could  cause  some 

18 

 
 
 
cross-border offers addressed to several thousands of non-qualified investors within the EU to 
become prospectus-exempt30, which would run counter the objective of investor protection. 

Option 2: An increased upper threshold would not affect larger issuers as they do not usually 
carry  out  offerings  on  such  small  scale.  Smaller  issuers,  especially  private  companies  or 
issuers traded on multilateral trading facilities (including SME growth markets) might benefit 
from  lower  regulatory  costs  if  they  issued  and  offered  securities  for  a  total  consideration 
between the old and the new threshold. However, such savings are confined to Member States 
who  would:  (1)  decide  to  forego  any  disclosure  obligation  at  national  level  or  (2)  apply 
significantly  lighter  disclosure  requirements  below  the  new  threshold.  Currently,  based  on 
available data, 17 Member States extend the prospectus obligation below the EUR 5 000 000 
threshold, while 9 Member States don't (Table 3). A reduction in administrative burden would 
be granted to small issuers domiciled in these 9 Member States, assuming that the latter do not 
extend the prospectus obligation below the new threshold of EUR 10 000 000. In the other 17 
Member  States,  the  increase  to  EUR  10  000  000  would  have  no  effect  assuming  these 
Member States continue to apply their current lower thresholds.  

Table  3:  Threshold  above  which  Member  States  require  an  EU  prospectus  to  be  drawn  up 
(expressed as the total consideration of the offer in the EU over 12 months) 

Threshold 
(EUR) 

Member 
States 

100 000 

250 000

1 000 000 

1  500 000 

2 500 000 

5 000 000 

Belgium, Bulgaria, 
Germany, France(1), 
Hungary, Latvia, 
Slovak Republic, 
Slovenia 

Austria 

Czech 
Republic, 
Denmark, 
Romania(2) 

Finland(3), 
Luxemburg 

The 
Netherlands, 
Sweden, 
Poland 

Croatia, Greece, 
Ireland, Italia, 
Lithuania, Malta, 
Portugal, Spain, United 
Kingdom 

Note: Data not available for Cyprus, Estonia. (1) Only for offers representing more than 50% of the share capital 
of the issuer. (2) EUR 200 000 for debt instruments. (3) Finland is in the process of raising this threshold to 
EUR 2 500 000.  
Source: ESMA. 

In  addition,  the  number  of  prospectuses  for  offers  between  EUR 5 000 000  (included)  and 
EUR 10 000 000 (excluded) approved by the national competent authorities in 2013 and 2014 
was fairly small: about 3% of all prospectuses related to offers within that range.31  

While it could be expected that there would have been more offers between EUR 5 000 000 
and EUR 10 000 000 if there was no or only a lighter prospectus requirement under national 
law, it is not possible to provide a robust estimate of the potential increase of capital raised in 
the  EUR 5 000 000  –  EUR  10 000 000  bracket.  It  should  also  be  borne  in  mind  that  the 
national prospectus requirements applicable in this bracket would not necessarily prove less 
costly  than  the  EU  prospectus.32  This  option  would  to  some  extent  run  counter  the  stated 
objective  to  achieve  more  convergence  in  the  disclosure  regimes  for  capital  markets  across 
Member  States.  Small  companies  in  Member  States  imposing  the  prospectus  requirements 
below  EUR  10 000 000  will  be  disadvantaged  in  comparison  to  companies  operating  in 
countries  not  imposing  such  thresholds,  potentially  leading  to  different  costs  of  capital 
according to the country of domicile. However, those companies would still be free to offer or 
list securities of this size range in more favourable markets.  

30 With the current threshold of '150 persons', an offer could in theory be addressed to up to 4 172 non-qualified 

investors within the EU (149 in each of the 28 Members States) without a prospectus. 

31  Raising  the  threshold  to  EUR  20 000 000  would  have  exempted  only  about  6%  of  prospectuses  approved  in 

2013 and 2014. 

32 Companies might nevertheless be obliged to produce a prospectus under national law. 

19 

 
 
                                                 
Retail investors, on the other hand, would be left with less information to take an investment 
decision or even no disclosure at all in those Member States who would decide not to put in 
place any safeguard below the new threshold. Hence Option 2 could result in reduced investor 
protection.  It  is,  however,  open  to  what  extent  such  investor  protection  concerns  would 
actually materialise as, even without an EU or national requirement to draw up a prospectus, 
issuers would still need to provide appropriate information to attract and convince investors.  

A minority of respondents to the consultation (essentially trade associations and some market 
operators)  argued  in  favour  of  raising  the  "EUR  5  000  000"  threshold  to  considerations 
between EUR 7 500 000 and EUR 50 000 000 (with EUR 10 000 000 most frequently cited), 
invoking  the  necessity  to  simplify  the  fund  raising  process  for  small  issuers  and  offerings. 
However,  according  to  the  majority  of  respondents  the  lack  of  convergence  regarding  the 
prospectus  requirement  throughout  the  EU  below  the  "EUR  5 000  000"  threshold  creates  a 
non-level  playing  field  and  represents  an  impediment  to  cross-border  financing  that  is 
contrary to the goals of the Capital Market Union. They argue that the flexibility of Member 
States below this threshold results in market fragmentation and thus higher compliance costs 
for issuers seeking to carry out offerings in several Member States. 

Option 3 would directly benefit small issuers and in particular securities-based crowdfunding 
in  those  nine  Member  States  which  currently  require  a  prospectus  for  offers  with  a 
consideration below EUR 500 000 and would preclude the introduction of such a requirement 
in  the  other  Member  States.  Currently,  platforms  and  companies  wishing  to  raise  funds  via 
crowdfunding  need  to  consider  each  Member  State  as  a  domestic  market  in  respect  of  the 
prospectus  requirement  and  to  carry  out  a  country-by-country  analysis  before  addressing 
investors across borders. Respondents to the consultation stated that offers on crowdfunding 
platforms  usually  have  a  total  consideration  between  EUR  50  000  and  EUR  1  500  000. 
Research found that the average fund raising on crowdfunding platforms in the EU was about 
EUR 250 00033. Therefore, raising the lower threshold from EUR 100 000 up to EUR 500 000 
would  provide  a  safe  harbour  for  the  development  of  the  vast  majority  of  crowdfunding 
initiatives.   

Option 4: Option 4 would most likely not have impacts on the majority stakeholder groups 
analysed  in  this  impact  assessment.  Stakeholders  suggest  that  the  "150  persons"  threshold 
could  be  increased  to  300  or  even  500  persons,  arguing  that  such  a  rise  could  benefit  the 
development of crowdfunding34. However, for crowdfunding platforms the 'private placement' 
threshold is much less relevant than those relating to the total consideration of the offer: today 
most  offers  on  crowdfunding  platforms,  even  if  addressed  to  more  than  150  non-qualified 
investors,  are  prospectus-exempt  anyway  because  they  remain  below  the  EUR "5  000  000" 
threshold,  or,  where  applicable,  the  lower  threshold  set  by  Member  States  at  national  level 
above  which  the  prospectus  requirement  applies35.  This  is  reflected  in  comments  from 
stakeholders  from  the  crowdfunding  sector  who  responded  to  the  consultation.  They  were 

33 This is confirmed by the few available data on crowdfunding platforms worldwide and in the EU: 89% of funds 
raised  through  equity-based  crowdfunding  platforms  internationally  for  the  years  2009-2011  were  for  projects 
raising less than $250,001 (~220,000 €). According to ESMA's report "Investment-based crowdfunding: insights 
from regulators in the EU" of May 2015, UK hosts 57% of the regulated platforms in the EU. An analysis of data 
on UK platforms between 2011 and the first quarter of 2014 found that the average amount raised was £199,095 
(~ 270,000 €) through equity crowdfunding.  

34  It was reported that in one Member State where crowdfunding is most  developed, the number of investors on 

some of the most popular platforms ranges from 50 to 400 persons on average. 

35 The data provided in footnote 33 suggests that projects of average size on major crowdfunding platforms in the 
Union  were  considerably  below  the  EUR 100 000  threshold.  In  any  case,  offers  on  crowdfunding  platforms 
would only exceptionally reach the EUR 5 000 000 threshold from where the Prospectus Directive applies.  

20 

 
 
                                                 
satisfied with the 'EUR 5 000 000' threshold but mainly criticised Member States' discretion 
to extend the prospectus requirement below that level, arguing that the diversity of domestic 
regulations was a barrier to the development of equity crowdfunding in Europe.  

Furthermore,  a  threshold  of  300  non-qualified  investors  per  Member  State  would  add  up  to 
8 400  non-qualified  investors  across  the  entire  Union.  Were  those  investors  to  invest  only 
EUR  2 500  on  average,  this  would  add  up  to  more  than  20  million  euro  of  retail  money 
collected without a legal requirement for appropriate disclosure. This would go far beyond the 
original  objective  of  the  exemption  which  was  to  serve  as  a  kind  of  'de  minimis'  clause 
allowing issuers in a private placement to include a restricted circle of non-qualified investors 
in their offer. 

Impacts per stakeholder:  

Options 

Description 

Raise the threshold of Article 
1(2)(h) (EUR 5 000 000) to a 
higher level while 
maintaining Member States' 
ability to extend the 
prospectus requirement below 
such threshold, subject to 
option 3 

Raise the threshold of Article 
3(2)(e) (EUR 100 000) to 
EUR 500 000, below which 
Member States cannot extend 
the prospectus requirement 

Option 2 

Option 3 

Types of issuers and 
markets affected 

- Unlisted companies 
and companies not listed 
on a regulated market (1) 

Estimated impact 

If threshold set at 10 million 
euro: at least 3% of approved 
prospectuses in 2013-2014 
would have fallen out of scope 
If threshold set at 20 million 
euro : at least 6% of approved 
prospectuses in 2013-2014 
would have fallen out of scope 

- Unlisted companies 
and companies not listed 
on a regulated market  
- Companies raising 
capital through 
crowdfunding platforms 

n/a(2) 

(1) As a prospectus is required upon admission to trading of securities on a regulated market, companies listed on 
a regulated market would not normally benefit from the exemption.  
(2) No data available on the size of public offers taking place in the EUR 100 000 – EUR 5 000 000 range, where 
a prospectus is required under national law.  

Table 4: Thresholds - Impacts on stakeholders relative to option 1 ('do nothing') 

Impacted  
parties: 

Options: 
Option 2 (upper 
threshold): 
Option 3 (lower 
threshold): 
Option 4 (300 
persons): 

Larger 
issuers/ 
offerors 

Small 
issuers/ 
offerors* 

Wholesale  
investors 

Retail  
investors 

Competent 
authorities 

0 

0 

+ 

++ 

+ 

+ 

0 

0 

0 

- 

0 

- 

0 

0 

0 

*SMEs and companies with a reduced market capitalisation 
++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

Comparison of options: 

Option  2  and  3  would  have  similar  effects  on  small  issuers  and  investor  protection,  but 
arguably  with  a  different  magnitude  as  each  one  of  them  targets  different  ranges  of  the 
offering  activity.  While  Option  3  would  lower  the  regulatory  burden  on  offers  in  the  range 
between  EUR  100  000  and  EUR  500  000,  Option  2  would  do  so  on  offers  in  the  range 
between  EUR  5  000  000  and  EUR  10 000 000  to  the  extent  that  there  are  no  disclosure 

21 

 
 
requirement  at  national  level.  Higher  thresholds  under  both  option  2  and  3  would  reduce 
administrative burden and make access to capital markets relatively easier for SMEs not listed 
on regulated markets. However, the effectiveness of option 2 would largely depend on how 
each Member State would compensate for the absence of EU disclosure requirement under the 
new threshold. In those Member States who decide not to put in place a national prospectus 
requirement  below  the  new  threshold,  retail  investors  would  suffer  from  the  reduction  of 
available  information  while  small  offers  of  securities  would  be  facilitated.  Conversely,  in 
those  Member  States  who  impose  a  national  prospectus,  investor  protection  would  not  be 
affected and there would be no real reduction of administrative burden on SMEs. This option 
will  also  result  in  an  increase  of  the  size  range  of  offers  or  admissions  to  trading  where 
prospectus  requirements  might  diverge  among  Member  States.  In  comparison,  the 
effectiveness  of  option 3  can  be  more  easily  predicted  (as  it  does  not  depend  on  national 
choices  by  Member  States),  but  would  be  of  a  lesser  magnitude  given  the  range  of  offers 
concerned. It would lower administrative burden for offers which would no longer fall under 
the  national  prospectus  requirements  and  SMEs'  access  to  capital  markets  would  improve. 
Retail  investors  might  benefit  from  an  increase  in  the  number  of  offers  but  would  see  a 
reduction in approved disclosure material. Both options would not trigger any costs (except 
maybe search costs and compliance costs in option 2 for issuers wishing to offer securities to 
the  public  in  several  Member  States)  but  would  have  some  positive  impacts  on  access  to 
capital markets, they can be considered efficient and effective.  

It  is  even  more  difficult  to  assess  the  impacts  of  option  4  as  it  would  rather  work  'at  the 
fringes' of the scope of application. There is no obvious reason for exempting offers on the 
basis of the number of (retail) investors as each investor should have the right to benefit from 
investor  protection.  Therefore,  the  '150  persons'  exemption  is  only  justified  if  there  is  an 
appropriate trade-off in the form of the costs of compliance or if it is to provide legal certainty 
at  the  fringes.  These  objectives  are  already  achieved  with  the  current  threshold  level. 
Therefore, option 4 provides a much lower net benefit than options 2 and 3.   

The  preferred  options  are  therefore  Options  2  and  3  combined,  i.e.  to  raise  the  lower 
threshold of Article 3(2)(e) from EUR 100 000 to EUR 500 000 and the upper threshold of 
Article 1(2)(h) from EUR 5 000 000 to EUR 10 000 000.  

Table 5: Thresholds - Achievement of objectives relative to option 1 ('do nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 
Option 4: 

Administrative 
burden  
reduction 
+ 
+ 
0 

SME access to 
capital markets 

Investor  
protection 

Efficiency 

Effectiveness 

++ 
+ 
0 

0/- 
- 
- 

+ 
+ 
- 

++ 
+ 
- 

++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

5.2.  Appropriate alleviated prospectus requirements for "secondary issuances" 

A company which already has a class of securities admitted to trading on a regulated market 
is known to the market through the prospectus it prepared and got approved on the occasion 
of  its  initial  listing  (IPO),  as  well  as  through  the  ongoing  disclosure  requirements  under 
Regulation  (EU)  596/2014  (Market  Abuse  Regulation)  and  Directive  2004/109/EC 
(Transparency  Directive).  This  could  justify  the  introduction  of  certain  alleviations  in  the 
disclosure requirements when such company makes further offers to the public, as some of the 
information  about  the  issuer  usually  contained  in  the  prospectus  (e.g.  the  'operating  and 
financial review' and the 'historical financial information') could also be found in the annual 

22 

 
 
financial report which issuers whose securities are admitted to trading on a regulated market 
have  to  publish  under  the  Transparency  Directive.  The  annual  financial  report  comprises, 
among others, the audited financial statements and the management report.  

One already-existing alleviation is the option given by the Prospectus Directive to issuers to 
draw  up  a  prospectus  as  three  separate  documents  (the  registration  document,  the  securities 
note  and  the  summary)  approved  separately  and  at  different  points  in  time  ("tripartite 
prospectus").  The  rationale  behind  this  is  that  the  information  relating  to  the  issuer  in  the 
registration document can be prepared and kept up-to-date "on the shelf" and then completed 
later by adding a securities note and a summary when market conditions allow the issuer to 
raise  financing.  The  intent  of  this  "tripartite  regime"  is  to  provide  issuers  with  an  optional 
faster  and  more  flexible  procedure  since  producing  a  securities  note  and  a  summary  at  the 
time  of  issue  is  much  less  time-consuming  than  the  preparation  of  a  full-blown  prospectus. 
Yet, as shown in the evaluation below (Annex 5), the tripartite prospectus is only popular in a 
few Member States36 and there is scope to encourage more issuers to use it. 

Another existing alleviation is the proportionate disclosure regime granted to ‘rights issues’, 
i.e. any issue of statutory pre-emption rights which allows for the subscription of new shares 
and is addressed only to existing shareholders. Under this regime, a prospectus consists of a 
registration document and a securities note which contain less information items than required 
for a normal prospectus as illustrated in Table 6. 

Table  6:  Overview  of  the  most  significant  alleviations  granted  by  the  proportionate  disclosure 
regime for 'rights issues', in the share registration document (compared to a regular prospectus)(1) 

1. The following information items and sub-
items – required in a regular prospectus – are 
not required: 

(cid:131)  Selected financial information  
(cid:131)  Operating and financial review 
(cid:131)  Capital resources 
(cid:131)  Conflicts of interests 
(cid:131)  Remuneration and benefits 
(cid:131)  Pro forma financial information 
(cid:131)  History and development 
(cid:131) 

Important events in the developments of 
the issuer's business 

(cid:131)  Products sold or services performed 
(cid:131)  Breakdown of revenues by category of 

activity and geographic market 
(cid:131)  List of issuer's subsidiaries and 

information thereof 

2. The following items need only be disclosed 
for the past year (instead of the past two 
years) 
(cid:131)  Material contracts  

3. The following items need only be disclosed 
for the past year (instead of the past three 
years) 
(cid:131)  Historical financial information  
(cid:131)  Nature of the issuer's operation and its 

principal activities  

(cid:131)  Related party transactions  
(cid:131)  Dividend per share 

(1) Comparison between Annexes I and XXIII of the Prospectus Implementing Regulation No 809/2004. 

Although  the  alleviations  granted  under  that  regime  are  significant  and  aim  at  avoiding 
duplications  with  ongoing  disclosures  under  the  Transparency  Directive,  the  regime  is  in 
practice rarely used, arguably because its scope is too narrow (only "rights issues" to existing 
shareholders  are  covered).  In  consequence,  only  97  prospectuses  were  drawn  up  under  that 
regime in 2013-2014, i.e. 1.2% of all prospectuses approved in those years (see figures in the 
evaluation, Annex 5). The specific problem to be addressed is the insufficient differentiation 
between  the  prospectus  required  upon  first  admission  to  trading  (IPO)  and  the  prospectuses 

36 The tripartite prospectus is only widely used in France, Luxembourg and Norway (see Figure 7 of Annex V). In 
the  case  of  France,  this  is  attributable  to  procedural  alleviations  –  the  shortened  approval  process  once  the 
shelf registration is used in a prospectus - associated with the "document de référence" (see Option 5 below). 

23 

 
 
 
                                                 
required for subsequent offers ('secondary issuances') once the issuer is listed. For secondary 
issuances, in the absence of widespread use of proportionate disclosure regime, this leads to 
overlapping  disclosure  between  the  prospectus  and  the  ongoing  disclosure  required  by  the 
Transparency  Directive.  Besides,  issuers  already  listed  on  regulated  markets  face  the  time-
consuming and costly process of preparation and approval of their prospectus which makes it 
often difficult for them to take advantage of market windows. In the public consultation they 
expressed the need for faster access to capital markets when using a prospectus. 

5.2.1.  Description of policy options 

Option 1 – "Do nothing and keep the current regime": If no action was taken, the alignment 
of disclosure requirements between the Prospectus Directive and the Transparency Directive 
would  remain  limited  to  rights  issues.  For  other  secondary  issuances  the  duplication  of 
disclosures  would  continue.  Absent  any  incentive  to  encourage  its  use,  the  tripartite 
prospectus would remain a popular practice in only a handful of Member States. 

Option  2  –  "Abolish  the  admission  prospectus  when  securities  are  already  listed  on  a 
regulated  market".  Under  this  option,  the  exemption  of  admission  prospectus  in  Article 
4(2)(a) of the Directive would be extended to all fungible securities (equity and non-equity) 
already listed on a regulated market in the EU, and the 10% dilution cap would be removed37. 
As  an  issuer  of  such  securities  is  already  subject  to  the  disclosure  obligations  under  the 
Market  Abuse  Regulation  and  Transparency  Directive,  investors  would  have  access  to  the 
secondary issuers annual and half-yearly financial reports and the inside information38 on that 
issuer, as both are required to be made public as regulated information.  

Option 3 – "Raise the dilution threshold of Article 4(2)(a)". Under this option, the exemption 
of  admission  prospectus  in  Article  4(2)(a)  of  the  Directive  would  be  extended,  but,  unlike 
under Option 2, subject to conditions. The threshold for the dilution of existing shares would 
be  raised  from  10%  to  20%  of  shares  of  the  same  class  already  admitted  to  trading  on  the 
same  regulated  market,  calculated  over  a  period  of  12  months.  In  addition,  the  exemption 
would be extended from shares to all fungible securities.  

Option  4  –  "Alleviate  the  prospectus  regime  for  all  secondary  issuances  of  securities".  The 
current proportionate disclosure regime of Article 7(2)(g) of the Directive would be extended 
to all secondary issuances of securities39 and recalibrated to take into account all information 
that  issuers  on  a  regulated  market  or  on  an  SME  growth  market  have  already  published 
pursuant  to  the  Market  Abuse  Regulation,  the  Transparency  Directive  (for  issuers  on  a 
regulated  market)  or  the  market  rules  concerning  ongoing  periodic  financial  reporting  (for 
issuers  on  an  SME  growth  market).  Option  4  would  therefore  focus  the  secondary  issuance 
prospectus  on  information  needed  by  investors  in  securities  that  are  already  known  on  the 
market and are subject to the disclosure requirements of regulated markets. This approach is 
supported by a large majority of respondents to the public consultation40 and Member States 
as  it  would  address  the  perceived  failure  of  the  current  prospectus  regime  to  adequately 
distinguish between the information appropriate when an issuer is new to a public market and 
when  it  is  seeking  financing  through  secondary  issuances  (where  a  significant  amount  of 

37 Currently, the prospectus exemption is conditional on the newly issued shares representing less than 10% of the 

number of shares of the same class already admitted to trading on the same regulated market. 

38 I.e. information of a precise nature, which has not been made public, relating, directly or indirectly, to one or 
more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have 
a significant effect on the prices of those financial instruments. 

39 Including rights issues, open offers and re-opening of debt issuances. 
40 Investors' associations generally did not express a view on the proportionate disclosure regime for rights issues.  

24 

 
 
                                                 
information  is  already  in  the  public  domain  with  regard  to  the  financial  statements  and  the 
operating and financial review of the issuer's past performances). 

Option  5  –  "Universal  registration  document  and  tripartite  prospectus  for  frequent  issuers": 
The  registration  document,  containing  information  on  the  issuer,  is  typically  the  part  of  a 
prospectus  which  generates  the  most  discussion  with  the  competent  authority  during  the 
scrutiny and approval process. A registration document typically amounts up to 2/3 or 4/5 of 
the size of a full prospectus. To streamline prospectus approvals, Option 5  envisages a new 
optional system for frequent issuers who repeatedly file updated registration documents with 
their national competent authorities. A "universal registration document"41 would contain the 
essential  descriptive  information  about  the  issuer  (incl.  risk  factors,  business  overview, 
corporate governance, shareholding structure, financial information), irrespective of the type 
of securities to be issued by the company. When a national competent authority reviews the 
registration  document  every  year,  the  review  process  of  the  securities  note  and  summary 
becomes a more straightforward  and  faster exercise. An issuer which  has  obtained approval 
for its universal registration document with its competent authority for three consecutive years 
would be granted a fast-track approval process of 5 days (instead of the current 10 days) for 
the approval of  the  securities note  and the summary.  The  aim  is  to  provide  frequent  issuers 
with  easier  and  faster  access  to  capital  markets  once  an  opportunity  to  raise  funds  presents 
itself. This new system would be optional and available to all listed issuers (including SMEs) 
on regulated markets and multilateral trading facilities. 

Options 2 and 3 are mutually exclusive but could be combined with options 4 and 5  

5.2.2.  Analysis of impacts and comparison of options  

Option  2  would  lead  to  a  considerable  reduction  in  the  administrative  burden  for  listed 
issuers, but would deprive investors of essential information which only a prospectus contains 
and  which  is  not  featured  in  the  ongoing  disclosures  required  under  the  Market  Abuse 
Regulation and the Transparency Directive. In the absence  of a prospectus, investors would 
no  longer  have  access  to  comprehensive  and  well-structured  information  on  the  issuer 
(shareholding  structure,  board  practices,  related  party  transactions,  risk  factors,  etc.),  on  the 
securities (terms and conditions, risk factors, use of the capital raised, etc) and the admission 
itself  (timetable,  expenses,  etc.).  This  full  exemption  would  therefore  severely  undermine 
investor protection and investor confidence as investors may be less willing to participate to 
secondary  issuances  of  listed  issuers.  In  light  of  these  shortcomings,  Option  2  will  not  be 
pursued further. 

Option  3  would  open  the  incentive  to  increase  capital  and/or  "reopen"  previous  debt 
issuances to more issuers and may have a positive effect on the liquidity of equity and non-
equity  markets.  A  threshold  of  20%  seems  to  reflect  the  needs  of  market  participants  as 
voiced in their responses to the consultation, without compromising the interests of existing 
shareholders.  A  higher  threshold  than  20%,  on  the  other  hand,  would  potentially  allow  for 
transformational transactions which significantly alter the capital structure of a company to be 
exempted from the prospectus requirement and thus would not be desirable from an investor 
protection point of view. The suggestion to raise the dilution threshold from 10% to 20% was 
supported  by  Member  States  and  respondents  to  the  public  consultation42.  It  would  also 
benefit smaller companies for which already a fairly small new issuance could represent more 

41 France has already introduced with some success a similar mechanism known as "document de référence". Other 

Member States have expressed interest in exploring further this system. 
42 In particular stock exchange operators, banks and associations of issuers. 

25 

 
 
                                                 
than 10% of its capital. As offers resulting in a capital dilution in excess of 20% are, however, 
likely  to  be  transformational  transactions  with  a  significant  impact  on  the  structure  and 
prospects  of  the  company,  it  is  legitimate  that  detailed  information  should  continue  to  be 
provided to investors through a prospectus.  

Through its wider scope, Option 4 has the potential of significantly increasing recourse to the 
proportionate  disclosure  regime  (PDR)  for  secondary  issuances.  The  PDR  for  rights  issues 
established by Directive 2010/73/EU was only used in 97 prospectuses in 2013 and 2014 in 
the Union, representing a mere 1.2% of the total  number of prospectuses  approved in those 
years.  Option  4  would  extend  the  current  PDR  to  all  secondary  issuances  of  securities 
fungible with securities already admitted to trading on a regulated market or an SME growth 
market, as well as offers of non-equity securities by issuers whose shares are already admitted 
to trading on a regulated market or SME growth market. Besides, in order to increase take-up 
of  the  PDR,  Option  4  would  cover  all  forms  of  "secondary"  equity  issuances  (share  capital 
increases  with  or  without  pre-emptive  rights  for  existing  shareholders).  Based  on  statistical 
data provided by 21 Member States, an average of 70% of all equity prospectuses approved in 
2013  and  2014  corresponded  to  secondary  issuances  (public  offers  made  by  companies 
already  admitted  to  trading  on  a  regulated  market  or  an  MTF).  Equity  prospectuses 
represented  a  quarter  of  all  prospectuses  approved  in  the  EU  in  2014  (935  prospectuses). 
Assuming that the total number of prospectuses approved in the EU remains stable at around 
4 000 per year on average and that the new regime would be used mostly by equity issuers - 
re-openings  of  non-equity  "benchmark"  issuances  still  appear  to  be  a  rare  practise  in  the 
Union  -  the  expected  usage  rate  of  the  new  proportionate  disclosure  regime  could  be 
estimated  at  17.5%  (instead  of  1.2%  currently)  of  all  approved  prospectuses,  i.e.  700 
prospectuses per year on average43.  

Based on an analysis of some of the elements that do not have to be disclosed in the current 
PDR (e.g. 2 years of historical financial information, selected key financial data and operating 
and financial review) compared to a regular equity prospectus, Option 4 is estimated to reduce 
the  cost  of  a  secondary  issuance  prospectus  by  about  20%  when  compared  to  a  full 
prospectus44. Compared to producing a regular equity prospectus (that would otherwise cost 
about € 1 million on average), this means that savings of around EUR 200 000 per prospectus 
seem  realistic.  Based  on  these  assumptions,  the  administrative  costs  saved  under  Option  4 
could be in the range of EUR 130 million per year45. 

Option  5:  The  idea  of  a  fast-track  approval  process  of  5  working  days  for  frequent  issuers 
admitted to trading on regulated markets or MTFs who file annually a universal registration 
document with their competent authority, is modelled on the "document de référence" which 
has  been  in  operation  in  France  for  more  than  two  decades  and  which  around  350  issuers 
voluntarily  file  every  year  with  the  French  competent  authority.  Such  issuers  integrate  the 
universal  registration  document  into  a  tripartite  prospectus  when  they  offer  securities  to  the 

43  4 000  (number  of  prospectuses  approved)  x  25%  (share  of  equity  prospectuses  in  the  total)  x  70%  (share  of 

secondary issuances of the equity prospectuses) = 700 

44  The  Commission  impact  assessment  accompanying  the  legislative  proposal  for  the  first  revision  of  the 
Prospectus  Directive  in  September  2009  made  the  assumption  that  50%  of  the  average  cost  of  producing  a 
prospectus  could  be  saved  by  issuers  using  the  proportionate  disclosure  regime  for  rights  issues.  This  cost 
reduction was based on an estimated breakdown of the cost of producing a prospectus and on the assumption that 
the costs related to external auditors would be reduced by 100%, transaction counsel costs by 30%, publication 
costs by 20%, lead manager costs by 50%, issuer internal costs by 50% and auditors costs by 100%. 

45 4,000 prospectuses x (17.5% - 1.2%)[share of prospectuses concerned] x 200,000€ [savings per prospectus] = 
130m€. As cost savings of 20% are regarded as a cautious estimate, savings could even be higher, up to twice as 
much.  

26 

 
 
                                                 
public. Based on data collected by ESMA during the 2013-2014 period46, only 20% of equity 
prospectuses  (excluding  IPO  prospectuses)  and  32%  of  non-equity  prospectuses  (excluding 
base prospectuses) were approved by competent authorities in less than 10 working days. In 
France, partly due to the widespread use of tripartite prospectuses, these proportions are much 
higher,  50%  and  55%,  respectively.  Therefore,  the  introduction  of  a  universal  registration 
document could shorten approval times significantly across the EU.  

Assuming that the number of prospectuses approved every year remains in the range observed 
in  2013-2014  (around  4000  per  year),  a  more  widespread  use  of  the  universal  registration 
document  could  lead  to  370  equity  prospectuses  and  838  non-equity  prospectuses  to  be 
approved  every  year  in  less  than  10  working  days  (instead  of  respectively  150  and  493  on 
average per year in 2013-2014). Use of the universal registration document could potentially 
lead an increase by 146% for fast track approvals in the case of equity and by 70% in fast 
track approvals for non-equity prospectuses. Although these shortened approval times cannot 
easily be expressed in monetary terms, shorter approval times means more opportunities for 
issuers to seize "market windows" and raise financing on capital markets. 

Impacts per stakeholder:  

Options 

Description 

Option 3 

Extend exemption of 
admission prospectus of 
Article 4(2)(a) to all fungible 
securities and raise dilution 
threshold from 10% to 20%  

Option 4 

Extend scope of 
'proportionate disclosure 
regime' to all secondary 
issuances of securities 

Option 5 

Fast-track approval for 
frequent issuers filing a 
'universal registration 
document' every year and 
drawing up a tripartite 
prospectus 

Issuers and markets 
affected 

Estimated reduction of 
administrative burden 

Issuers (including SMEs) 
listed on regulated 
markets issuing "more of 
the same" 

Issuers (including SMEs) 
listed on regulated 
markets or SME growth 
markets who only 
occasionally offer 
securities to the public  

Issuers (including SMEs) 
listed on a RM or traded 
on MTFs (including SME 
growth markets) who 
frequently issue new 
securities / offer them to 
the public 

n/a(1) 

Around € 130 million per 
year, saved collectively 
by issuers drawing up a 
PDR prospectus.  

Increase by ~150% and 
~70% respectively in the 
number of equity and 
non-equity prospectuses 
approved by competent 
authorities in less than 10 
working days, every 
year. 

SME-GM = SME growth markets. 
(1) There are no available EU data linking capital dilution with prospectuses required on account of an admission 
to trading on a regulated market (with no concurrent offer to the public). 
Note: The three options target different types of issuers and transactions; they would be implemented in parallel. 

46 Based on 1 481 approved equity prospectuses (excluding IPO prospectuses) and 3 047 non-equity prospectuses 
(excluding base prospectuses) approved in 2013 and 2014 in the 28 Member States as well as Iceland, Norway 
and Liechtenstein. 

27 

 
 
                                                 
Table 7: Secondary issuances - Impacts on stakeholders relative to option 1 ('do nothing') 

Options: 

Impacted parties: 

Wholesale  
investors 

Larger 
issuers/ 
offerors 
++ 
+ 
+ 
+ 

Small 
issuers/ 
offerors* 
+ 
++ 
++ 
++ 
*Falling under the exemptions for SMEs and companies with a reduced market capitalisation 
++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

Option 2: 
Option 3: 
Option 4: 
Option 5: 

Retail  
investors 

+ 
0 
+ 
+ 

-- 
0 
+ 
+ 

0 
0 
0 
0 

Competent 
authorities 

Comparison of options: 

Option 2 would be the most radical but is not pursued due to its detrimental consequences for 
investor protection. Options 4 and 5 would alleviate considerably the burden on issuers, albeit 
less  radically  than  option  2.  These  Options  would  safeguard  investors'  interests,  while 
addressing different profiles of listed issuers. Both options provide "tools" which listed issuers 
are free to use or not. Listed issuers frequently offering securities to the public would seek the 
flexibility  of  the  tripartite  prospectus  and  fast-track  approval  granted  under  Option  5,  in 
exchange  for  the  commitment  to  file  a  comprehensive  registration  document  every  year. 
Conversely, listed issuers who do not envisage regular capital raising on the market will be 
more inclined to make use of the proportionate regime under Option 4 as it allows them to 
draw up a lighter registration document (still, the normal approval process applies).  

Option 3 is independent of the other options and would be preferred because of its positive 
impacts  on  the  administrative  burden  as  well  as  SME's  access  to  finance.  The  preferred 
options are therefore Options 3, 4 and 5 combined. 

Table 8: Secondary issuances - Achievement of objectives relative to option 1 ('do nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 
Option 4: 
Option 5: 

Administrative 
burden 
++ 
+ 
+ 
+ 

SME access to 
capital markets 
0 
+ 
+ 
+ 

Investor  
protection 
-- 
0 
0 
0 

Efficiency 

Effectiveness 

+ 
+ 
+ 
+ 

- 
+ 
+ 
+ 

++: major improvements; +: some improvement; 0: no or marginal impacts; – : some deterioration; – –
: significant deterioration  

5.3.  Favourable treatment of issuers of debt securities with a high denomination 

per unit, with liquidity on the debt markets 

The  specific  problem  to  be  addressed  is  the  potential  adverse  unintended  effects  of  the 
existing  exemptions  under  the  Prospectus  Directive  which  grant  a  favourable  treatment  to 
companies  issuing  debt  securities  with  a  denomination  per  unit  of  EUR  100 000  or  above. 
There is evidence that such a high threshold creates an incentive for debt issuers to only issue 
in  large  denominations,  which  as  a  consequence  contributes  to  inhibiting  liquidity  on  the 
secondary  market  for  bonds  and  limits  the  issuance  of  debt  securities  in  smaller,  retail-
friendly denominations. 

More specifically, the Prospectus Directive contains a prospectus exemption in Article 3(2)(d) 
for  issuers  of  securities  (debt  or  equity)  with  a  denomination  per  unit  of  at  least  EUR 

28 

 
 
 
 
100 00047. In practice this exemption (which only applies to public offers48) is used by issuers 
of  non-equity  securities  traded  on  unregulated  markets  or  by  issuers  of  unlisted  non-equity 
securities  offered  to  institutional  investors  through  private  placements  which  may  then  be 
traded over the counter. 

On  the  contrary,  non-equity  securities  traded  on  regulated  markets  are  caught  by  the 
prospectus  requirement  on  account  of  their  admission  to  trading  so  that  the  exemption  of 
Article  3(2)(d)  does  not  apply.  Instead,  the  Directive  grants  alleviations  to  issuers  of  high-
denomination  debt.  The  prospectus  necessary  for  the  admission  to  trading  on  regulated 
markets49  of  debt  securities  with  a  denomination  per  unit  of  at  least  EUR  100  000  is  less 
burdensome than for smaller denominations50: the content to be covered in the prospectus is 
reduced,  no  summary  is  required  and  issuers  benefit  from  some  greater  flexibility  in  the 
choice of language used in the documents. This dual information content between retail and 
wholesale  debt  prospectuses  creates  an  incentive  to  only  issue  in  larger  denominations  in 
order to save the costs and time for a prospectus. 

Therefore,  the  incentive  for  debt  issuers  to  denominate  their  debt  securities  above  EUR 
100 000 per unit is (i) either less information and no summary to disclose if the securities are 
admitted to trading on a regulated market, (ii) or no prospectus at all if no such admission is 
sought.  This  favourable  treatment  encourages  investment-grade  issuers  to  issue  non-equity 
securities  in  denomination  per  unit  above  EUR  100  000,  making  them  inaccessible  to  retail 
investors.  

The EUR 100 000 threshold (which was raised from EUR 50 000 by Directive 2010/73/EU 
from  1  July  2012)  was  originally  intended  as  a  "price  protection"  for  non-professional 
investors, but it is now argued that the differentiation made by the Directive between "retail" 
and "wholesale" prospectuses mainly leads issuers, including blue chip companies with a high 
creditworthiness, to shun the retail market to avoid the costs of preparing a "retail prospectus" 
and  because  they  can  easily  find  funding  from  institutional  investors.  This  is  eventually 
detrimental to European retail investors, at a time when a growing portion of them needs to 
have  access  to  appropriate  debt  securities  to  invest  their  savings  in  anticipation  of  their 
retirement.  

However today, the high-quality end of the corporate bond market is inaccessible to them, as 
the  majority  of  securities  are  denominated  above  EUR  100  000.  This  is  illustrated  in  the 
evaluation report in Annex 5. According to OECD data, about 70 per cent of bonds listed in 
the Union are in such high denominations. 

47 Although the "100,000 €" exemption of Article 3(2)(d) targets all securities, it is only used in practice by issuers 
of  non-equity  securities  (there  is  no  evidence  that  shares  are  issued  anywhere  in  the  EU  with  a  denomination 
above 100,000 €). 

48 There is no such prospectus exemption in case of admission of securities to trading on a regulated market. 
49  To  date,  there  is  no  reliable  data  available  about  the  number  and  volume  of  bonds  which  are  traded  on  EU 
regulated  markets,  MTFs  and  over  the  counter  (OTC),  MiFID  II  for  the  first  time  establishes  a  principle  of 
transparency  for  non-equity  instruments  such  as  bonds  and  derivatives  and  broadens  the  pre-  and  post-trade 
transparency regime to include non-equity instruments, but is not applied yet. High denomination bonds which 
are "plain vanilla", i.e. non-structured, will however be still directly (without financial intermediary) accessible 
to retail investors on an "execution-only basis" even when MiFID II will be applied.  

50 The Implementing Regulation No 809/2004 contains schedules for issuers of debt securities with a denomination 
per unit of at least EUR 100 000 ("wholesale prospectus", Annexes IX & XIII) which are lighter than those for 
debt securities with a denomination per unit below EUR 100 000 ("retail prospectus", Annexes IV & V). 

29 

 
 
                                                 
Figure 4: Denomination of debt securities  

Source: OECD 201551 

Figure 4 illustrates the apparent anomaly caused by the favourable provisions granted by the 
EU  prospectus  regime.  Several  US  and  European  companies  issued  almost  identical  bonds 
around the same date, if not on the same day, in two European currencies and in US dollar. 
However, the differences in denomination are obvious: while the minimum denomination in 
the European currencies is at or above the exemption threshold of EUR 100 000 and therefore 
out  of  scope  for  retail  investors  (except  some  high-net-worth  individuals),  the  minimum 
denomination in US dollar is only USD 1 000 or USD 2 000, i.e. clearly accessible by retail 
investors.  This  shows  that  the  EUR  100  000  denomination  threshold  might  deprive  retail 
investors from access to blue chip bonds issued by well-known international companies with 
good  credit  ratings.  Although  the  business  considerations  behind  these  differences  in 
denominations are not known, it can reasonably be inferred that these companies did not try to 
avoid retail participation in the US (as evidenced by the low denomination in US dollar) while 
they purposely chose to denominate their debt securities in the EU at a level which would be 
inaccessible to  EU  retail investors  and would grant them a lighter  prospectus regime (if  the 
securities  were  to  be  admitted  to  trading  on  a  regulated  market)  or  a  total  prospectus 
exemption (if the securities were to be traded on a multilateral trading facility or not listed at 
all). Overall, it can be considered that the EUR 100 000 has distorted the behaviour of debt 
issuers in the EU. 

51  S.  Çelik,  G.  Demirtaş  and  M.  Isaksson  (2015),  "Corporate  Bonds,  Bondholders  and  Corporate  Governance", 

OECD Corporate Governance Working Papers, No. 16, OECD Publishing, Paris. 

30 

 
 
 
                                                 
Table 9: Examples of bond issuance in Sterling, Euro and US Dollar highlighting the differences 
in minimum denominations 

Announce Date  Minimum Piece Amount Outstanding 

Issuer Name 
McDonald's Corp 
McDonald's Corp 
McDonald's Corp 
Walgreens Boots 
Walgreens Boots 
Walgreens Boots 
Bat Intl Finance 
Bat Intl Finance 
Bat Intl Finance 
Pepsico Inc 
Pepsico Inc 
Pepsico Inc 
BP Capital PLC 
BP Capital PLC 
BP Capital PLC 
GBP: Pound Sterling, EUR: Euro, USD: US Dollar;  
Source: The Wealth Management Association (WMA), based on data provided by Bloomberg 

300 000 000 
400 000 000 
500 000 000 
300 000 000 
750 000 000 
2 000 000 000 
650 000 000 
800 000 000 
1 500 000 000 
500 000 000 
500 000 000 
1 000 000 000 
750 000 000 
1 250 000 000 
1 250 000 000 

06/04/2014 
06/04/2014 
06/04/2014 
11/10/2014 
11/10/2014 
11/06/2014 
09/02/2013 
03/10/2015 
06/10/2015 
10/23/2012 
04/23/2014 
08/08/2012 
03/07/2011 
02/11/2015 
02/10/2015 

100 000 
100 000 
1 000 
100 000 
100 000 
2 000 
100 000 
100 000 
2 000 
100 000 
100 000 
2 000 
100 000 
100 000 
1 000 

Currency 
GBP 
EUR 
USD 
GBP 
EUR 
USD 
GBP 
EUR 
USD 
GBP 
EUR 
USD 
GBP 
EUR 
USD 

5.3.1.  Description of policy options 

Option 1 – "Do nothing": the EUR 100 000 threshold of Article 3(2)(d) remains unchanged 
and  the  dual  standard  of  disclosure  linked  to  the  EUR  100  000  denomination  per  unit,  as 
mandated  by  Article  7(2)(b)  for  non-equity  securities  admitted  to  trading  on  a  regulated 
market, is kept.  

Option 2 – "Lower the threshold": Lower the EUR 100 000 threshold of Article 3(2)(d) to a 
level  between  EUR  10  000  and  EUR  50  000  (level  in  place  before  the  amending  Directive 
2010/73/EU was adopted).  

Option  3  –  "Remove  the  incentives  to  issue  debt  securities  in  high  denominations".  This 
option has two components: (i) it removes the prospectus exemption under Article 3(2)(d) of 
the  Directive  and  (ii)  for  non-equity  securities  admitted  to  trading  on  a  regulated  market,  it 
unifies  the  disclosure  regimes  in  order  to  promote  retail  investor  participation  in  debt 
securities listed on regulated markets. 

5.3.2.  Analysis of impacts and comparison of options  

Option 1 - If no action was taken the current situation would persist. As the threshold is fixed 
in the Directive, Member States could not address the issue at their level. A large part of the 
debt securities would remain outside the reach of retail investors. The market fragmentation 
between  non-equity  securities  below  and  above  the  EUR 100 000  threshold  would  remain. 
This part of the market would remain fairly illiquid because of the size of the single securities 
which  limits  the  range  of  potential  investors  considerably  while  the  public  market  would 
remain small and therefore neglected by many smaller investors. No reliable data is available 
whether  the  current  EUR  100  000  threshold  is  overall  beneficial  for  the  protection  of  retail 
investors or not. 

Option  2  would  at  least  partially  address  the  concerns  regarding  liquidity  in  the  sense  that 
more investors, possibly including a higher number of non-qualified investors, could afford to 
buy  debt  securities  in  denominations  between  EUR  10  000  and  EUR 50 000.  The  positive 

31 

 
 
effect of this option on the liquidity of the secondary market for debt securities is only likely 
to be sizable if the new threshold is set close to or at EUR 10 000. Where bonds denominated 
above  the  new  threshold  would  be  admitted  to  trading  on  a  regulated  market,  a  wholesale 
prospectus (without a summary) would be required, whose content would not be suitable for 
those retail investors who could afford to spend more than EUR 10 000 in one bond. In that 
case, some retail investors may invest a considerable share of their savings in one security for 
which they would receive insufficient information. Therefore, investor protection could suffer 
considerably.  

Under  Option  3,  where  admission  to  trading  on  a  regulated  market  is  sought,  a  single 
disclosure  standard  for  non-equity  prospectuses  would  be  adopted  by  defining  the  same 
minimum  information  items  through  the  implementing  legislation  (currently  the  Prospectus 
Regulation).  Companies  issuing  debt  securities  admitted  to  trading  on  regulated  markets 
would cease to be incentivised to  use denominations  of  EUR  100 000  or  above  as  doing  so 
would not translate into lighter disclosure requirements any longer. The average denomination 
per  unit  of  bonds  traded  on  regulated  markets  should  therefore  decrease  and,  assuming  the 
overall  volume  of  debt  issuances  admitted  to  trading  on  regulated  markets  remains 
unchanged,  retail  investors  would  benefit  from  more  investment  opportunities  as  more 
corporate bond issuances would become accessible to them due to their lower denomination 
per unit. Retail investor participation into corporate bonds listed on regulated markets would 
therefore increase, in line with the CMU objectives. There is however a risk that this Option 
could  lead  to  a  shift  of  new  listings  of  debt  securities  from  regulated  markets  towards 
multilateral trading facilities, as the Directive does not apply to the admission to trading on 
these  venues.  Option  3  seeks  to  introduce  a  level playing  field in the  disclosure  contents of 
prospectuses drawn up for non-equity securities admitted to trading on the regulated market 
(arguably  a  small  fraction  of  all  non-equity  securities  issued),  by  removing  the  distinction 
between "retail" and "wholesale" prospectuses, to foster liquidity on the regulated markets for 
non-equity securities, while ensuring adequate investor protection, as a prospectus will still be 
required. 

Responses to the consultation did not provide a clear picture on any prevailing view regarding 
the removal of the favourable treatments granted to the above issuers. In particular, it should 
be  noted  that  the  consultation  did  not  highlight  the  unification  of  the  debt  prospectus 
templates as being a question to be treated at the level of the Directive. 

Where no admission to trading on a regulated market is sought, i.e. for debt securities traded 
on  multilateral  trading  facilities  or  offered  through  private  placements,  the  removal  of  the 
prospectus  exemption  of  Article  3(2)(d)  for  public  offers  of  debt  securities  would  also 
contribute to lifting one potential cause for the lack of liquidity in secondary debt markets and 
foster  more  "retail-friendly"  denominations,  consistent  with  the  objective  to  foster  retail 
participation in these markets. 

Regarding  the  EUR  100 000  threshold  of  Article  3(2)(d),  the  majority  of  Member  States 
expressed  a  preference  for  leaving  it  unchanged  because  this  exemption  supposedly  offers 
legal  certainty  to  issuers  and  because  they  believe  that  there  are  other  more  fundamental 
reasons explaining the lack of liquidity of the secondary markets for bonds. Conversely, stock 
exchange  operators  and  portfolio  managers  supported  the  removal  of  Article  3(2)(d),  as  the 
EUR  100  000  was  repeatedly  criticised  by  these  professionals  for  being  a  barrier  to  the 
development of electronic trading platforms using a central limit order book protocol, and for 
constituting  an  impediment  to  proper  diversification  of  portfolios.  Lastly,  the  Financial 
Service  User  Group  (FSUG)  expressed  the  view  that  the  threshold  should  not  be  adjusted 

32 

 
 
downwardly  as  it  considered  that  the  benefits  that  such  a  downward  adjustment  provides  to 
issuers would not outweigh the negative effects it has on retail investors.  

Impacts per stakeholder:  

Option  2  would  broaden  the  exemption  from  the  prospectus  obligation  considerably  and 
therefore  benefit  larger  issuers  as  they  would  no  longer  have  to  issue  in  EUR  100 000  but 
could  use  denomination  between  EUR  10  000  to  EUR  50 000,  or  above,  and  thereby  gain 
some flexibility. Smaller issuers would not be impacted much as they usually do not use such 
high  denominations.  However,  some  might  issue  in  denominations  between  EUR  10  000  to 
EUR  50 000  in  order  to  avoid  the  prospectus  obligation.  Wholesale  investors  (e.g.  portfolio 
managers)  would  benefit  as  well  as  they  would  gain  some  flexibility  in  their  investments  if 
more securities were offered in smaller denominations. The majority of retail investors would 
probably not be affected directly; depending on where the threshold is set between EUR 10 
000  to  EUR  50 000  only  a  few  might  be  able  to  afford  to  invest  in  securities  of  such 
denominations.  The  lower  the  threshold,  the  higher  the  risk  that  retail  investors  might  take 
uninformed investment decisions.  

Option  3  may  result  in  a  relatively  higher  disclosure  burden  for  debt  issuers  seeking 
admission to trading on a regulated market, although it will have to be taken into account that 
the  revision  of  the  Prospectus  Directive  will  alleviate  a  substantial  number  of  burdens 
attached  to  the  preparation  of  a  prospectus,  in  particular  the  alleviations  for  secondary 
issuances  and  frequent  issuers  (see  section  3.2)  and  those  resulting  from  the  simplified  and 
shortened summary (see section 3.5). The level 2 Regulation that contains all the details to be 
reported  in  a  prospectus  will  also  be  considerably  streamlined,  thereby  also  contributing  to 
reduce  the  disclosure  burdens.  The  expected  higher  disclosure  burdens  can  therefore  not  be 
compared to the current situation but to the situation when the revised Prospectus legislation 
will enter into application. 

Smaller issuers, who do not typically issue non-equity securities with a denomination above 
EUR  100  000,  should  not  be  affected  by  this  option.  The  ability  of  retail  investors  to 
participate in the corporate debt market would be enhanced as this option would potentially 
lead  to  the  decrease  of  the  average  denomination  per  unit  of  bonds  traded  on  regulated 
markets.  Besides,  under  that  option,  the  removal  of  the  exemption  of  Article  3(2)(d) 
Prospectus  Directive  will  not  necessarily  cause  an  increase  in  the  administrative  burden  on 
issuers  who  currently  make  use  of  it  today.  This  is  because  issuers  currently  use  this 
exemption  as  an  additional  legal  protection  to  avoid  the  prospectus  requirement,  while  they 
are  already  eligible  to  the  exemption  of  Article  3(2)(a)  Prospectus  Directive52,  as  debt 
securities  traded  on  multilateral  trading  facilities  and/or  offered  through  private  placements 
are  typically  addressed  to  professional  investors  only.  In  addition,  issuers  seeking  legal 
certainty  may  still  introduce  a  contractual  clause  imposing  a  "minimum  entry  ticket"  per 
investor of EUR 100 000, thus placing themselves under the prospectus exemption of Article 
3(2)(c)53, which will not be removed. 

52 "The obligation to publish a prospectus shall not apply to the following types of offer: (…) (a) an offer of securities addressed 

solely to qualified investors." 

53 "The obligation to publish a prospectus shall not apply to the following types of offer: (…) (c) an offer of securities addressed 
to investors who acquire securities for a total consideration of at least EUR 100 000 per investor, for each separate offer." 

33 

 
 
                                                 
Table 10: Denomination - Impacts on stakeholders relative to option 1 ('do nothing') 

Impacted  
parties: 

Options: 

Option 2: 
Option 3: 

Larger 
issuers/ 
offerors 
++ 
- 

Small 
issuers/ 
offerors 
0 
0 

Wholesale  
investors 

Retail  
investors 

Competent 
authorities 

+ 
0 

0 
++ 

+ 
0 

++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

Comparison of options: 

Option  2  would  reduce  administrative  burden  for  issuers  of  high  denomination  bonds  and 
give them more flexibility in choosing a lower denomination. SME access to capital markets 
would not be affected as SMEs do not typically issue securities of such high denominations. 
Investor  protection  would  suffer  as  some  retail  investors  may  be  able  to  afford  to  buy 
securities with a denomination of EUR 10 000 to EUR 50 000. The efficiency of the option is 
difficult to assess as it on the one hand will address the risk to liquidity in bond markets at 
least to some extent at almost no cost in terms of implementation, on the other hand, it will 
not improve but reduce investor protection. As this latter impact is regarded more important 
than the (uncertain) liquidity impact and the reduction of administrative burden for some debt 
issuers the overall effectiveness is considered to be negative. 

For  companies  issuing  debt  securities  with  a  denomination  above  EUR  100 000,  Option  3 
will  result  in  a  somewhat  higher  administrative  burden  than  under  option  1  (depending  on 
how the unified disclosure schedules compares with the previous wholesale template), but it 
will  create  more  opportunities  for  investors  (in  particular  retail  investors)  to  invest  in  non-
equity  securities,  and  in  particular  in  corporate  bonds,  and  it  will  remove  one  barrier  to 
liquidity  on  the  secondary  markets  for  debts,  while  enhancing  retail  participation  into  these 
markets.  

Preferred 
option 

Description 

Types of issuers and 
markets targeted 

Option 3 

(i) Unify the disclosure regimes 
for  retail  and  wholesale  non-
to 
equity  securities  admitted 
trading on a regulated market,  
(ii)  Remove 
the  prospectus 
exemption of Article 3(2)(d) for 
denominations  of  EUR  100 000 
or more 

All  issuers  of  non-equity 
securities,  whether  traded 
on 
regulated  markets, 
MTFs  or  offered  through 
private placements  

Estimated impact 

It can be expected that 
a considerable share of 
debt  securities  will  be 
issued in much smaller 
e.g. 
denominations, 
EUR 1 000,  as 
is 
mainly done in the US. 
(1) 

it 

(1) Compared to the current situation where more than 70% of debt securities issued have a denomination per unit 
of more than EUR 100 000. 

Thus option 3 is the preferred option.  

Table 11: Denomination - Achievement of objectives relative to option 1 ('do nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 

Administrative 
burden 
+ 
- 

SME access to 
capital markets 
0 
0 

Investor  
protection 
-- 
++ 

Efficiency 

Effectiveness 

0 
+ 

- 
+ 

++: major improvements; +: some improvement; 0: no or marginal impacts; – : some deterioration; – –
: significant deterioration  

34 

 
 
 
5.4.  Reforming the proportionate disclosure regime for SMEs 

The  proportionate  disclosure  regime  for  SMEs  and  companies  with  reduced  market 
capitalisation  (SME  PDR)  established  by  Directive  2010/73/EU  was  only  used  in  143 
prospectuses in 2013 and 2014 in the Union, representing a mere 1.8% of the total number of 
prospectuses  approved  in  those  years.  The  SME  PDR  has  not  delivered  its  intended  effect 
mainly because it is still perceived as too burdensome. The reductions were so small that most 
issuers decided not to make use of the SME PDR as they feared that damage from the possible 
'stigma'  of  making  use  of  the  regime,  regarded  as  a  potential  attempt  to  hide  some 
information, might be greater than the benefit of the reduced prospectus costs.  

5.4.1.  Description of policy options 

Option 1 – "Do nothing and keep the proportionate disclosure regime for SMEs as it is"  

Option 2 – "Design a new SME PDR that would further alleviate the mandatory contents of 
the proportionate disclosure regime for SMEs. To avoid the abovementioned SME stigma, the 
new SME PDR would not be available for companies listed on a regulated market. It would, 
however, be available to all unquoted SMEs and SMEs traded on MTFs (including the new 
category of SME growth markets).54 The objective is to cut administrative burden for SMEs 
who  wish  to  do  a  public  offer  or  to  trade  on  an  MTF/SME  growth  market  but  do  not  seek 
admission to trading on regulated markets. 

Option  3  –  "Modified  alternative  presentation  ("MAP")  prospectus":  An  alternative 
prospectus  format  in  the  form  of  a  prospectus  template  containing  standardised  language 
typically included in prospectuses which SMEs could then complement themselves with their 
specific,  individual  issuer  /  issue-specific  information.  This  format  would  create  a  distinct 
approach to prospectuses for SMEs as they would "fill in" a prospectus instead of draft it from 
scratch. The "MAP prospectus" would also contain guidance on how to fill in the additional 
issuer / issue-specific content not covered by the standardised language. In addition, ESMA 
and  national  competent  authorities  would  be  required  to  develop  tools  to  assist  SMEs  in 
drafting a "MAP prospectus" and remove any national rule forcing SMEs to use the services 
of  an  intermediary  (lawyer,  bank,  etc.)  to  interact  with  the  competent  authority  during  the 
approval process in order to reduce the cost of preparing a prospectus. Prospectus drawn up as 
a  "MAP  prospectus"  might  be  easier  for  investors  to  compare  than  regular  prospectuses,  as 
their content would partially consist of standardised language. It is important to point out that 
this alternative format would be optional, i.e. issuers would not be obliged to use it and would 
still have the possibility to draw up a prospectus in a classic format under the proportionate 
disclosure regime. Being an alternative format under the proportionate disclosure regime, the 
"MAP prospectus" would not be available for companies listed on a regulated market.  

Options 2 and 3 are not mutually exclusive but could be implemented in a combined manner.  

5.4.2.  Analysis of impacts and comparison of options  

Option 2: Although no reliable data exists on the number of prospectuses drawn up for public 
offers  by  unlisted  companies  which  meet  the  definition  of  an  SME,  a  major  part  of  the 
prospectuses  approved  for  public  offers  carried  out  by  companies  traded  on  MTFs/SME 

54 Annex 8 provides a comparison between the disclosure requirements of some major MTFs and those of the 

Prospectus Directive on regulated markets. 

35 

 
 
                                                 
growth  markets  can  reasonably  be  assumed  to  have  been  drawn  up  by  either  SMEs  or 
companies  with  reduced  market  capitalisation.55  Companies  listed  on  MTFs/SME  growth 
markets can therefore serve as a useful proxy to estimate the potential number of prospectuses 
which could be drawn up under the new SME PDR. Based on statistical data from 24 Member 
States,  on  average  8%  of  all  prospectuses  approved  in  2013  and  2014  were  drawn  up  for  a 
public offer of securities traded on an MTF. Assuming that the total number of prospectuses 
approved  in  the  EU  remains  around  4 000  per  year  on  average, this  means  that  at  least  320 
prospectuses per year could be eligible to the new SME PDR.  

Assuming that the average cost of producing a prospectus for a small quoted company is EUR 
700 000  (the  average  minimum  cost,  based  on  the  consultation  feedback),  and  that  the  cost 
reduction  could  be  in  the  range  of  20%56  (based  on  the  information  items  that  would  no 
longer  be  required  to  be  disclosed,  including  the  third  year  of  historical  financial  data),  the 
savings  in  administrative  costs  for  issuers  whose  securities  are  traded  on  MTFs  could  be 
around 140 000 euro per prospectus or 45 million euro per year in total57.  

Option  3:  The  "MAP"  prospectus  containing  standardised  language  would  provide  SMEs 
with  additional  flexibility  in  the  choice  of  the  disclosure  format.  It  would  avoid  or  reduce 
significantly  the  cost  of  legal  advice  in  the  preparation  of  the  prospectus  by  empowering 
SMEs  to  draw  up  the  prospectus  with  their  in-house  capacity.  This  presentation  might  also 
appeal  more  to  (retail)  investors  who  might  find  it  easier  to  understand  and  to  compare 
prospectuses based on this template. Furthermore, institutional investors might not be ready to 
adjust to the new format. Therefore, it might probably appeal most to very small issuers which 
are  of  little  interest  for  institutional  investors  anyway  but  rely  on  small,  in  particular  local 
investors.  Lastly,  although  there  is  no  precedent  for  this  new  format  in  the  EU,  it  is  worth 
highlighting that a similar format has been available in the United States since 1989 for the 
filing requirements of small companies under state securities laws58. 

Impacts per stakeholder:  

Option 2 would not directly affect larger issuers. Smaller issuers of securities on MTFs would 
benefit  significantly  from  the  revised  PDR  as  administrative  burden  would  be  reduced 
considerably.  Wholesale  investors  would  benefit  from  more  offers  by  smaller  issuers  and 
retail investors would benefit from both more offers and less but more appropriate disclosure 
documentation.  The  relatively  few  smaller  issuers  of  securities  on  regulated  markets  who 
currently  make  use  of  the  PDR  would  no  longer  be  able  to  do  so.  For  them,  administrative 
burden  would  most  likely  increase  slightly  as  the  revised  full-fledged  prospectus  would 
probably still be more demanding in terms of costs and effort than the current PDR. This cost 
would stand against the benefit for investors who would no longer have to deal with different 
types  of  prospectuses  in  the  prime  market  which  many  retail  investors  consider  as  a  ‘safe 
harbour with no strings attached’.  

55 While the assumption that all issuers on MTFs would qualify is clearly an overestimate, it is balanced by the fact 
that unlisted issuers will also benefit from the lighter regime, although their number cannot be reliably estimated. 
56  The  Commission  impact  assessment  accompanying  the  legislative  proposal  for  the  first  revision  of  the 
Prospectus  Directive  in  September  2009  made  the  assumption  that  the  reduction  of  the  costs  compared  to 
producing a regular prospectus would lie in the range of 10 to 20 percent. 

57 320 prospectuses x 700,000€ [current average costs] x 20% cost savings = 45m€. 

58  The  Small  Company  Offering  Registration  Form  (U-7)  developed  by  the  North  American  Securities 

Administrators Association (NASAA). 

36 

 
 
                                                 
Option 3 would have similar effects and would also be optional for smaller issuers. As it is 
not available under the current regime, there would be no adverse impact on small issuers on 
regulated markets.  

Types  of  issuers  and 
markets affected  
- Unquoted SMEs 

Options  Description 

- Simplify further the contents of the 
proportionate disclosure regime for 
SMEs (based on the content of 
admission documents required by EU 
junior MTFs(1)) 

Option 2  

Option 3 

- Under the proportionate disclosure 
regime for SMEs, create an 
alternative format in the form of a 
template containing standardised 
language (questionnaire type). 

- SMEs and companies 
with  reduced  market 
capitalisation  (<  200 
million euro) traded on 
MTFs  

Estimated reduction of 
burden 
Option 2 : Around 45 
million euro per year 
saved collectively by 
SMEs drawing up a 
prospectus under the 
proportionate regime 

Option 3 : n/a(2) 

MTF = multilateral trading facility.  
(1) EU Multilateral trading facilities catering for SMEs (e.g. AIM, OMX First North, Madrid Mercado 
Alternativo Bursátil (MAB)…)   
(2) The new "question & answer" template is a new creation with no precedent in the EU.    

As both options provide considerably greater advantages for eligible issuers than the current 
PDR without detriment to investors it can be expected that those issuers will make more use 
of this option than of the current regime. It is also important to note that the scope of eligible 
issuers will be larger.  

Table  12:  Proportionate  disclosure  regime  -  Impacts  on  stakeholders  relative  to  option  1  ('do 
nothing') 

Impacted 
 parties: 

Options: 

Larger 
issuers/ 
offerors 
0 
0 

Small 
issuers/ 
offerors* 
++ 
++ 

Option 2: 
Option 3: 

0 
0 
*Falling under the exemptions for SMEs and companies with a reduced market capitalisation 
++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

+ 
+ 

+ 
+ 

Wholesale  
investors 

Retail  
investors 

Competent 
authorities 

Comparison of options: 

Option  2  would  most  likely  have  the  above  positive  impacts  on  administrative  burden  for 
SMEs aiming to raise capital through offers of securities to the public. Option 3 would also 
have these same positive impacts but might result in additional cost savings for the drawing 
up  of  a  proportionate  SME  disclosure  document.  The  preferred  options  are  therefore 
options 2 and 3 combined.  

Table 13: Proportionate disclosure regime - Achievement of objectives relative to option 1 ('do 
nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 

Administrative 
burden 
+ 
++ 

SME access to 
capital markets 
+ 
++ 

Investor  
protection 
0 
+ 

Efficiency  Effectiveness

+ 
+ 

+ 
+ 

++: major improvements; +: some improvement; 0: no or marginal impacts; – : some deterioration;  
– –: significant deterioration  

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.5.  Prospectus summary and the Key Investor Information Document under the 
Packaged Retail and Insurance-Based Investment Products Regulation 

The  prospectus  summary,  as  amended  by  the  Prospectus  Directive  II,  is  considered  as  not 
being  fit  for  purpose.  This  view  was  confirmed  by  responses  to  the  public  consultation  and 
reactions  of  Member  States  during  the  Expert  Group  of  the  European  Securities  Committee 
(EGESC).  Currently,  instead  of  being  a  document  which  is  short,  simple,  comparable  and 
easy  for  targeted  investors  to  understand,  a  summary  tends  to  be  lengthy,  generic  and 
technical  and  does  not  help  much  to  improve  the  knowledge  of  the  average  investor  about 
potential investment opportunities and risks.  

Besides, for certain types of securities, there will be a certain degree of duplication between 
the  prospectus  summary  and  the  key  information  document  (KID)  required  by  Regulation 
(EU)  No  1286/2014  (PRIIPS  Regulation,  which  will  become  applicable  on  31  December 
2016). The overlap between the prospectus summary and the PRIIPS KID should therefore be 
addressed. 

5.5.1.  Description of policy options 

Option 1 – "Do nothing and keep the current summary regime" 

Option  2  –  "Reduced  length  of  summaries":  Currently,  Article  24(1)  of  the  Prospectus 
implementing  Regulation  provides  that  a  prospectus  summary  shall  not  exceed  7%  of  the 
length of the prospectus or 15 pages, whichever is the longer. These ceilings could be lowered 
(e.g. to 5% and 10 pages), or the terms “whichever is the longer” replaced by "whichever is 
the shorter". 

Option 3 – "Free form summary": Replace the current summary with a free form summary 
only subject to a limit in the number of pages. Issuers would only be required to address pre-
determined key issues/headings: e.g. company overview, key balance sheet and profit and loss 
figures,  context  and  objectives  of  the  offering,  terms  and  conditions  of  the  securities 
offered/admitted  to  trading  and  five  main  risk  factors.  Issuers  would  not  be  constrained  in 
how they fill in the sections, except by the length limit and by the overarching principle that 
information be presented in a fair, balanced and understandable way. This option should be 
combined  with  option  2  and  thus  be  introduced  together  with  a  length  limit,  otherwise  it 
would most likely lead to excessively long summaries.  

Option 4 – "Redesign the summary as a KID+": The current summary could be replaced with 
a  Prospectus  Directive-specific  key  information  document  ("KID+"):  The  KID+  would  be 
focused only on the most material pieces of information on the issuer, the securities and the 
offer.  It  should  be  written  in  plain,  descriptive  language  which  the  average  retail  investor 
could understand, and its content should be presented in a fair, balanced and understandable 
way.  Its  length  could  be  limited  to  6  pages  of  A4-sized  paper,  i.e.  longer  than  the  KID 
prepared according to PRIIPS, but shorter than the current prospectus summary on average. It 
would  consist  of  the  information  sections  of  the  PRIIPS  KID  combined  with  additional 
information on the issuer and the offer to give potential investors a complete overview of the 
information  contained  in  the  prospectus.  This  additional  information  on  the  issuer  and  offer 
should also be structured by user-friendly headings inspired by those of the PRIIPS KID (e.g. 
"Who is the issuer of the securities?", "What are the key risks specific to the issuer?", "What 
are the essential facts relevant to the offer/issue?"). With regard to the section describing the 
securities,  the  issuer  would  be  allowed  to  fill  it  in  with  exactly  the  same  content  as  that 
contained  in  the  PRIIPS  KID,  if  such  securities  are  "packaged  products"  falling  under  the 

38 

 
 
scope  of  PRIIPS.  Therefore,  the  "PD-specific  KID+"  would  not  only  be  fit-for-purpose, 
shorter and accessible to retail investors, but it would also solve the content overlap between 
the PRIIPS KID and the prospectus summary for those securities which fall under the scope 
of both PD and PRIIPS.  

Option 2 and 3 could be combined; option 4 would also entail a length limit of an absolute 
number  of  pages.  The  specific  liability  regime  applying  to  the  summary  would  be  kept 
unchanged under all options. 

5.5.2.  Analysis of impacts and comparison of options  

Option 1: As the current requirements are laid down in the Prospectus Directive, the situation 
would  not  evolve  without  action  at  EU  level.  Issuers  would  still  face  the  high  costs  and 
administrative burden of preparing a summary which does not really achieve its objective to 
improve  investor  protection  as  it  is  not  read  or  understood  by  most  investors,  in  particular 
retail  investors.  Respondents  to  the  public  consultation,  including  a  majority  of  Member 
States, very strongly support reassessing the rules applying to the prospectus summary. This 
widespread  dissatisfaction  about  the  current  summary  and  the  need  for  alignment  with  the 
PRIIPs Regulation would be ignored if option 1 was retained. 

Option 2: Reducing the length of the prospectus summary would produce some 'quick wins': 
a  shorter  summary  would  be  more  concise  and  it  would  be  more  likely  that  investors,  in 
particular  retail  investors,  actually  read  it.  There  would  also  be less  of  a  risk  that  important 
information  is  hidden  in  less  relevant  material  so  that  investors  take  wrong  decisions.  A 
shorter summary might be cheaper to produce and certainly cheaper to translate. This would 
be particularly beneficial for SMEs. Furthermore, it would reduce the workload of competent 
authorities  to  some  extent.  This  option  would  address  concerns  raised  in  the  public 
consultation that  summaries are overly  lengthy, containing superfluous information and that 
even the volume of prospectuses gets artificially inflated to gain more pages for the summary.   

Option 3: A "Free form summary" could help issuers, in particular SMEs, in better presenting 
their specificities and free them from the need to complete sections of the current templates 
which might not be fully appropriate for them. A length limit would preclude the publication 
of  overly  long  "narrative"  documents  which  make  it  hard  for  the  reader  to  identify  the  key 
information.  A  risk  of  a  free  form  would  be  that  it  would  be  much  harder  to  compare  the 
features  of  different  security  offers  and  also  for  competent  authority  to  check  summaries  as 
part of the scrutiny and approval process. Whether it would otherwise help or harm investor 
protection  is  difficult  to  assess  and  would  probably  depend  on  the  preferences  of  the 
individual investor, whether he or she prefers structured information or a more narrative style.  

Option 4: Introducing the KID+ summary would allow investors to benefit from a disclosure 
document  which  is  much  shorter  and  from  which  it  is  much  easier  to  grasp  the  relevant 
information than it is currently in a prospectus summary. This would improve the comparison 
of  various  investment  products.  Furthermore,  a  KID+  summary  would  represent  a 
considerable  reduction  in  the  administrative  burden  for  issuers  as  the  document  would  be 
much  shorter  and  more  clearly  structured.  Here  again  these  savings  would  be  of  particular 
relevance for SMEs as for them the costs represent a bigger share of the total consideration 
than they do for larger issuers. Lastly, there was a clear appetite from a majority of Member 
States for Option 4 on the grounds that it would lead issuers to cease to draft summaries by 
copy-pasting parts of the prospectus, enable the re-use of the contents of the key information 
document  required  by  the  PRIIPS  Regulation,  and  significantly  reduce  the  length  of  the 
summary  while  making  its  content  more  user-friendly  and  accessible  to  the  average  retail 

39 

 
 
investor. If the format of the prospectus summary were to converge towards that of the KID, 
investors  would  find  it  easier  to  compare  investment  products  which  fall  under  the  PRIIPS 
Regulation and the Prospectus Directive. 

Impacts by stakeholders:  

A shorter summary (option 2) would present some benefit for all stakeholders. In most cases, 
however, they would be fairly minor. Only for smaller issuers and retail investors would they 
be more significant in relative terms.  

A free form summary (option 3) would make the preparation of the summary and in particular 
the presentation of the investment proposition easier for issuers, in particular smaller ones. As 
described above, it is more difficult to assess the impact on retail investors and it might net 
out across their different preferences. The impact on competent authorities would be positive 
on the one hand as the summaries would be shorter and potentially negative on the other hand 
as it might be more difficult to scrutinise them.  

As wholesale investors do not rely on summaries as much as retail investors do, the various 
options  would  not  impact  them  directly.  However,  if  the  changes  could  trigger  a  greater 
interest  in  transferable  securities  by  retail  investors,  this  would  make  the  market  more 
dynamic  and  liquid  which  would  benefit  wholesale  investors  as  well.  As  option  4  is  most 
likely to trigger such interest, it would be most likely to also benefit wholesale investors. 

Finally  option  4,  a  KID+,  would  have  strong  overall  positive  impacts  on  issuers  and  retail 
investors. Retail investors benefit from the redesign of the summary as a KID+ and from the 
fact that the maximum page limit exercises discipline on issuers to keep the document focused 
on what is really essential. Retail investors would also benefit as the predetermined and user-
friendly  headings  inspired  by  PRIIPS  would  allow  for  easier  comparison  of  investment 
opportunities. Issuers would benefit from the flexibility to draft brief narratives and assemble 
material  information  from  the  prospectus  under  accessible  headings.  Issuers  would  also 
benefit from the possibility to reuse existing PRIIPS KID contents in the prospectus summary. 
Positive  impacts  on  competent  authorities  would  arise  as  their  workload  in  approving 
prospectuses would be reduced. 

Table 14: Prospectus summary - Impacts on stakeholders relative to option 1 ('do nothing') 

Wholesale  
investors 

Retail  
investors 

Competent 
authorities 

Impacted  
parties: 

Options: 

Larger 
issuers/ 
offerors 
+/0 
+/0 
++ 

Small 
issuers/ 
offerors* 
+/0 
+ 
++ 

Option 2: 
Option 3: 
Option 4: 

0 
0 
+ 
*Falling under the exemptions for SMEs and companies with a reduced market capitalisation 
++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration;  
– –: significant deterioration  

+/0 
0? 
++ 

0 
0 
0 

Comparison of options: 

Option  2  would  have  a  limited  positive  impact  in  reducing  administrative  burden,  making 
SME  access  to  capital  markets  easier  and  ensuring  investor  protection.  As  it  would  only 
require minor legislative changes to achieve it would be an efficient measure. However, as the 
impacts would be limited its overall effectiveness would also be limited.  

40 

 
 
Option  3  would  have  a  similar  impact  regarding  administrative  burden  and  SME  access  to 
capital markets. But as it would remain uncertain whether it could ensure investor protection, 
its efficiency would be limited and its effectiveness marginal.  

Option  4  would  score  positive  on  all  criteria  as  it  would  reduce  administrative  burden, 
increase investor protection significantly and also facilitate SME access to capital markets. It 
would therefore be an efficient and very effective measure.  

Thus option 4 is the preferred option.  

Table 15: Prospectus summary - Achievement of objectives relative to option 1 ('do nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 
Option 4: 

Administrative 
burden 
+ 
+ 
++ 

SME access to 
capital markets 
+ 
+ 
+ 

Investor  
protection 
+ 
? 
++ 

Efficiency  Effectiveness

++ 
- 
+ 

+ 
0 
++ 

++: major improvements; +: some improvement; 0: no or marginal impacts; – : some deterioration;  
– –: significant deterioration  

5.6.  System for the electronic access to prospectuses 

Today it is not possible to search prospectuses in the EU in an efficient and effective manner: 
ESMA's  website  only  compiles  a  list  of  hyperlinks  to  prospectuses  and  supplements  on  the 
basis of notifications made to it by the national competent authorities of the Member States of 
the EU and EEA.59 The ESMA list: 

(i) 

(ii) 

(iii) 

(iv) 

does not contain all approved prospectuses, supplements and final terms which ESMA 
receives  from  competent  authorities  according  to  Articles  5(4)  and  13  of  the 
Prospectus Directive, 
is  not  up  to  date  as  time  lags  of  more  than  three  months  can  be  observed  between 
approval of a document by a competent authority and inclusion in the ESMA list,  
often  contains  inoperative  hyperlinks  or  hyperlinks  which  do  not  lead  to  the 
prospectuses but, e.g., to companies' homepages and  
only provides for a very limited search function60 as ESMA does not receive so-called 
"meta-data" describing the issuer and securities covered by the prospectus.  

Commission  services  are  not  aware  of  an  EU-wide  public  or  private  database  that  would 
allow for full text or targeted searches in all approved prospectuses.61 To date, it is not even 
clear if the prospectuses found online refer to still valid offers. No provisions for storage and 
access to prospectuses after termination of the validity period exist. 

59  http://registers.esma.europa.eu/publication/searchProspectus 
60 The only available search criteria are: home and host member state, security type, content type meaning regular 

or base prospectus, issuer name, approval and notification date. 

61  In  the  US,  the  Securities  and  Exchange  Commission  (SEC)  provides  an  online  database  called  EDGAR 
containing  registration  statements,  prospectuses  and  periodic  reports  as  well  as  recent  corporate  events,  and 
offers  numerous  search  tools.  This  database  was  mentioned  frequently  in  responses  to  the  Commission  public 
consultation on the review of the Prospectus Directive as an example for best disclosure practice. EDGAR's pilot 
program cost 30m$ in 1985, while the periodical three years modernization plans cost 49m$ in 1998 and 16m$ 
in 2014. EDGAR costs are financed by the SEC's budget that is in turn based on an offsetting scheme according 
to which the appropriation that would be funded by the Federal Treasury is actually financed by the fees paid by 
issuers and traders. 

41 

 
 
                                                 
5.6.1.  Description of policy options 

Option  1  –  "Do  nothing  and  keep  the  current  regime":  Continuation  of  the  current 
decentralised and fragmented system with very limited functionality and reliability in terms of 
comprehensiveness and timeliness.  

Option 2 – "Single national electronic access points": In order to provide a more efficient 
and  effective  access  to  prospectuses  and  related  Member  States  could  be  required  to  ensure 
that prospectuses and related documents approved or filed can be accessed easily and for free 
in  electronic  form  on  the  website  of  the  competent  authority  of  the  home  Member  State. 
Competent  authorities  will  remain  subject  to  the  obligation  to  transmit  the  approved 
prospectuses  to  ESMA,  as  well  as  issuers  will  remain  liable  for  the  content  of  published 
prospectuses. 

Option 3 "European single electronic access point": An online access and search system, 
free of charge users, could be set up. This would make all prospectuses and related documents 
approved under the Prospectus Directive accessible via a single website at ESMA and would 
include a search function for investors. It could be run by ESMA and could leverage on the 
fact that ESMA already receives all approved prospectuses, supplements and final terms and 
publishes a list of them according to Articles 5(4) and 13 of the Directive. In order to enable 
searches national competent authorities would be obliged to provide ESMA with meta-data on 
the prospectuses.62  

5.6.2.  Analysis of impacts and comparison of options  

Option  1:  In  principle,  the  provision  of  information  on  prospectuses  could  be  left  to  the 
market. However, so far no such private service tool has evolved in the in the more than ten 
years that the Prospectus Directive has been applicable. One reason for this might be that such 
a service would be relatively expensive if the provider had to ensure or even guarantee that 
the documents provided are the correct ones and still valid. These costs might then be too high 
to attract sufficient demand. On the other hand, if the service was not fully reliable, it would 
not be appreciated  either. There are therefore no reasons to expect such a private service to 
emerge in the future. Some national competent authorities have developed databases for the 
prospectuses  etc.  they  have  approved.  However,  not  all  Member  States  have  done  so  and 
where  they  exist  these  databases  are  only  available  in  the  national  languages  from  the 
competent authority's website. In order to get an overview of offers across the Union investors 
or  other  interested  parties  would  therefore  have  to  consult  28  websites  in  more  than  20 
languages.  It  would  therefore  remain  unlikely  that  European  prospectuses  could  easily  be 
searched  and  compared  across  borders.  This  precludes  investors  from  properly  considering 
investments  in  securities  which  might  be  suitable  for  them  and  issuers  might  have  more 
difficulties in raising the amount of finance they would like to raise. Only a small minority of 
respondents to the public consultation was in favour of keeping the status quo.  

Option 2: Member States and the EU would need to bear the costs of adapting the IT-systems 
developed  under  the  Transparency  Directive  in  order  to  integrate  prospectuses  and  related 
documents  as  well.  These  costs  would  depend  on  the  existing  design  and  functions  of 
competent  authorities'  and  Officially  Appointed  Storage  Mechanisms’  IT-infrastructures: 

62 Meta-data such as ISIN, Legal Entity Identifiers (LEI), type of issuer, IPO prospectus (yes or no), coverage of 
equity,  debt  or  both,  issuance  volume,  coverage  of  public  offer,  admission  to  trading  or  both,  trading  venue, 
maturity (for prospectuses covering fixed income securities) would allow for sensible search functions.  

42 

 
 
                                                 
authorities which already dispose of appropriate systems would not face relevant costs; others 
might have to make some investments to upgrade their systems.  

Option 3: A system for electronic access to prospectuses and related documents which also 
includes a search-functionality would provide potential investors a wealth of information and 
bring  considerable  improvements.  They  could  access  and  compare  prospectuses  across  the 
Union from a single site ensuring the reliability of the information. (Potential) issuers could 
use  the  IT-tool  as  well  to  get  a  market  overview  before  finalising  their  offer/listing 
documents.  It  could  help  them  to  identify  favourable  periods  or  Member  States  for  their 
offers. Competent authorities could use this IT-tool for enforcement purposes, e.g. to monitor 
the  passporting  of  prospectuses.  By  increasing  transparency  of  prospectuses  in  the  Union 
considerably  this  option  would  be  an  important  contribution  to  the  EU's  efforts  to  create  a 
Capital Markets Union. As the system could be built on the basis of investments already made 
by competent authorities and ESMA under the current regime and would therefore not cause 
high IT-costs.  

No such system has emerged in the past on the European market and also existing databases 
at national level are being run and provided by public authorities or institutions. It is therefore 
not  to  be  expected  that  the  installation  of  such  a  system  at  ESMA  would  preclude  an 
immanent  private  market  initiative.  This  might  be  due  to  the  necessary  up-front  investment 
before a database would become operational and could potentially generate revenue. It would 
also be difficult for a private provider to get access to all relevant prospectus material as they 
could not source it directly from ESMA or national authorities and would not have any means 
to ensure to get it from issuers. Therefore, there would be a great risk that the database would 
be incomplete or not up-to-date. Furthermore, as ESMA is already receiving all prospectuses 
and  runs  or  is  setting  up  databases  for  similar  purposes  locating  such  an  access  system  at 
ESMA would benefit from considerable synergies.  

Impacts by stakeholders:  
Option  2  would  in  particular  benefit  stakeholders  in  those  Member  States  that  do  not  have 
developed searchable tool at national level, but might not benefit cross-border investors much. 
Issuers  would  on  the  one  hand  benefit  from  increased  transparency,  resulting  potentially  in 
more investor interest in their offers. On the other hand they might face slightly higher fees if 
national competent authorities decided to shift the costs of the database updates onto issuers. 

Option 3 would benefit investors by providing a single access point to prospectuses approved 
in  the  Union.  This  would  Union-wide  searches  for  appropriate  investments  much  easier. 
National competent authorities and ESMA would face some costs which they might shift to 
issuers. For issuers the costs and benefits would be similar to those under option 2 with the 
additional benefit of a greater likelihood to attract investors from other Member States. 

Table 16: System for the electronic access to prospectuses - Impacts on stakeholders relative to 
option 1 ('do nothing') 

Impacted  
parties: 

Options: 

Larger 
issuers/ 
offerors 
+ 
+ 

Small 
issuers/ 
offerors* 
++ 
++ 

Option 2: 
Option 3: 

- 
+ 
*Falling under the exemptions for SMEs and companies with a reduced market capitalisation 
++: major improvements; +: some improvement; 0: no or marginal impacts; –: some deterioration; – –: 
significant deterioration  

++ 
++ 

+ 
+ 

Wholesale  
investors 

Retail  
investors 

Competent 
authorities 

43 

 
 
 
Comparison of options: 

While option 2 would only improve access to prospectuses at national level, option 3 would 
do so at Union level. The additional costs of the latter option would be relatively limited as it 
would  build  on  existing  infrastructure  and  would  not  require  the  creation  of  28  searchable 
databases at national level. Therefore, while it would be an improvement vis-à-vis the status 
quo  (option  1),  option  2  would  be  inferior  to  option  3.  Option  3  would  be  about  as  cost-
efficient  as  option  2  but  would  be  much  more  effective  in  achieving  the  objectives  of  the 
review,  namely  to  empower  investors  to  assess  investment  offers  and  to  contribute  to  the 
creation of a single market for capital in the Union. It would therefore be the preferred option. 

Table 17: System for the electronic access to prospectuses - Achievement of objectives relative to 
option 1 ('do nothing') 

Impact on: 

Options: 

Option 2: 
Option 3: 

Administrative 
burden 
0 
+ 

SME access to 
capital markets 
+ 
+ 

Investor  
protection 
+ 
+ 

Efficiency 

Effectiveness 

0 
0 

- 
++ 

++:  major  improvements;  +:  some  improvement;  0:  no  or  marginal  impacts;  –  :  some  deterioration;  
– –: significant deterioration  

5.7.  Overall impact of the proposed options, compliance costs and subsidiarity 

This section analyses the impacts of the six issues discussed above as a package. The reason 
for doing so is that each of the preferred options might impact on the others in a positive or 
adverse manner.  

The  package  of  preferred  options  should  ensure  that  companies  in  general,  and  the  larger 
listed  SMEs  in  particular,  benefit  from  significant  alleviations  when  preparing  their 
prospectuses  and  that  European  start-ups  are  able  to  carry  out  small  offers  through 
crowdfunding  with  the  benefit  of  a  prospectus  exemption.  This  should  help  financing 
innovative activities in the Union.  

Summary table on the preferred package of measures and their anticipated impacts 

Table 18 provides a holistic view of all the preferred options and how they complement each 
other. For example, the URD for frequent issuers is complementary to the PDR for secondary 
issuances and the two options in combination could yield savings that are not captured by the 
analysis in this impact assessment (which looks at both options in isolation). Equally, due to 
its cross-cutting nature, the prospectus summary in the form of a KID+ would reinforce the 
two proposed PDRs and especially the "Pro SMEs" PDR: for example, an SME carrying out a 
public  offer  on  an  SME  Growth  market  could  enjoy  the  cumulative  benefits  of  a  MAP–
prospectus in "question and answer form" and of the KID + summary. 

In  addition,  the  cross-cutting  initiative  concerning  denomination  sizes  for  non-equity 
(essentially  bond)  issuances  benefits  all  issuers  as  it  could  foster  a  deeper  and  more  liquid 
secondary market for corporate debt. Again, SMEs and frequent issuers stand to benefit from 
the 'KID+' summary, their respective PDRs and the issuance of debt securities in significantly 
lower  denominations  per  unit  as  a  consequence  of  the  abolition  of  the  specific  treatment 
currently reserved to issuances in denomination of EUR 100 000 and above.    

44 

 
 
 
Table 18: Summary of expected impacts of the proposed measures 

Preferred policy options 

Cost impact on stakeholders 

Increase prospectus 
exemption threshold to 
EUR 500 000  

Decrease scope of 
prospectus to issuances 
above EUR 10 million  

Simplified disclosure 
regime for secondary 
issuances 

Raise dilution threshold 
for prospectus exemption 
in case of admission to 
trading (Article 1(4)(a)) 
Universal registration 
document (URD) for 
frequent issuers on 
regulated markets or 
MTFs 

Uniform prospectus for 
non-equity securities 
listed on regulated 
markets (abolition of the 
wholesale / retail dual 
regime) 

Abolish the EUR 100 000 
exemption for offers of 
non-equity securities to 
the public  

No prospectus for capital raisings 
above the current threshold of 
EUR 100 000. Useful extension as 
for example, the average 
crowdfunding project amounts to 
around EUR 220 000.  
Approximately 100 prospectuses 
(around 3% of annually approved 
prospectuses) would no longer be 
obliged to draw up an EU 
prospectus. Member States are at 
liberty and can continue to impose or 
introduce national disclosure 
requirements for offers below EUR 
10 million. 
Very significant market potential as 
approximately 70% of all equity 
prospectuses approved annually 
concern "secondary issuances", 
meaning around 700 out of 935 
equity prospectuses could benefit. 
Overall annual savings are estimated 
at about EUR 130 million.  
Cost savings of up to 1 million per 
prospectus if admission of less than 
20% of outstanding securities. 

Significant market potential as 
currently only 20% of equity 
prospectuses and 32% of non-equity 
prospectuses benefit from approval 
periods inferior to 10 days. Taking 
the example of France, where a 
similar system has been in place for 
nearly two decades, the URD could 
increase this percentage to 50% for 
equity (= 370 prospectuses/year) and 
55% (= 838 prospectuses/year for 
non-equity issuances).  
Slight increase resulting from the 
need to produce an admission 
prospectus including a summary for 
non-equity securities. Increase can be 
appropriately mitigated in the design 
of the uniform non-equity prospectus 
template in the delegated acts.  
Increase resulting from the need to 
produce a public offer prospectus for 
non-equity securities. Likely to be 
compensated by the availability of 
other exemptions (qualified investors 
/ minimum commitment of EUR 100 
000). Balanced against the benefit of 

45 

Impact on relevant 
markets/sectors 

Impact mainly focused on 
crowdfunding platforms that 
currently operate with average 
project sizes below 
EUR 500 000.  

Cost savings depend on whether 
Member States prospectuses 
would apply in the range of 
EUR 5 to EUR 10 million.  

Impact on equity markets: 
increase in secondary issuances 
facilitates raising equity capital 
after successful IPOs, a major 
plank of the ongoing effort to 
build a capital markets union 
(CMU).  

Impact on equity markets: 
increase in secondary issuance 
facilitates raising of equity 
capital in line with CMU 
Fast track approval brings 
benefits to frequent issuers of 
equity and non-equity securities. 
The reduced prospectus 
approval time of 5 days will 
save cost and allow frequent 
issuers to exploit market 
windows to raise capital or debt. 

Lower denominations result in 
more buying and selling interest 
which enhances liquidity and 
investor base in EU bond 
markets. Investors benefit from 
diversification of portfolios.  

Lower denominations result in 
more buying and selling interest 
which enhances liquidity in EU 
on MTFs. Investor benefit from 
diversification of portfolios.  

 
 
Preferred policy options 

Cost impact on stakeholders 

Simplified disclosure 
regime for SMES and 
companies with reduced 
market capitalisation 

New prospectus summary 
modelled after the 
PRIIPS KID 

Electronic publication 
(centralised storage 
mechanism at ESMA) 

a larger market for corporate bonds.  
Potentially 320 SME prospectuses 
would benefit from the new 
simplified prospectus resulting in 
expected annual savings of EUR 45 
million. Additional savings above 
those indicated above could arise if 
the "question and answer" format 
takes off.  
Equity and non-equity issuers benefit 
from the flexibility to draft brief 
narratives and assemble material 
information from the prospectus 
under accessible headings. Issuers 
would also benefit by reusing 
existing PRIIPS KID material in the 
prospectus summary. 
Single access point facilitates 
research, enforcement and increases 
the efficiency of prospectus pass-
porting. 

Impact on relevant 
markets/sectors 

With a less costly and more 
user-friendly simplified 
prospectus, more SMEs would 
be able to list on MTFs/SME 
Growth markets. More SME 
listings facilitate investor 
portfolio diversification.  

Retail investors benefit from the 
redesign of the summary with 
maximum page limit. 
Predetermined/user-friendly 
headings inspired by PRIIPS 
allow for easier comparison of 
investment opportunities.  

Essential tool for online access 
to prospectuses enabling 
comparability and fostering 
CMU objectives. 

The abolishment of the prospectus exemption for offers in denomination of EUR 100 000 or 
more  is  the  second  measure  with  a  potential  adverse  impact  as  it  will  lead  to  a  higher 
administrative burden for such offers. However, this impact will be mitigated to some extent 
by the reformed disclosure regime for secondary issuances which should make such issuances 
both  more  flexible  and  less  costly,  two  arguments  brought  forward  by  stakeholders  for 
making use of the exemption. Besides, issuers may avail themselves of other exemptions to 
the  prospectus  requirement,  which  will  remain  available  (offer  addressed  to  qualified 
investors only, minimum commitment of EUR 100 000). Lastly, as it is unlikely that bonds in 
denominations exceeding EUR 100 000 are issued by SMEs or issuers with reduced market 
capitalisation,  the  additional  costs  of  compliance  with  the  Directive  will  be  relatively  small 
compared to the amount of capital raised. 

It  can  therefore  be  expected  that  the  overall  package  will  result  in  a  reduction  in  the 
administrative  burden  for  issuers,  make  access  to  capital  markets  for  SMEs  easier  and 
cheaper,  safeguard  investor  protection  by  improving  the  appropriateness  of  the  disclosure 
documents  and  ultimately  enlarge  choice  of  prospectus-based  financial  instruments.  This 
should  then  translate  into  further  integration  of  capital  markets  in  the  Union  in  the  form  of 
more  prospectus-based  financial  instruments  being  offered  across  borders  and  greater 
transparency  and  comparability.  It  should  be  noted,  however,  that  the  Prospectus  Directive 
only covers a fraction of the financial instruments traded in the Union and is only one factor 
among many that influence the functioning of capital markets. The proposed measures should 
therefore  be  seen  in  the  context  of  the  broader  forthcoming  Capital  Markets  Action  Plan  of 
which it forms part.  

Quantification of some of the impacts 

As has already been explained there is only little data available on the issues addressed in 
this report. While this prohibits any sound reliable quantification of the potential impacts of 
the  various  options  discussed  above,  an  effort  was  nevertheless  made  to  provide  to  the 

46 

 
 
 
extent possible at least some indications of the order of magnitude of the impacts for some 
of the options for some of the issues.  

Regarding  the  threshold  above  which  a  prospectus  in  accordance  with  the  Directive  is 
obligatory  the  calculations  show  that  if  this  threshold  was  at  10  million  euro  in  the  years 
2013-2014 about 3% of approved prospectuses in these years would not have been required, 
i.e.  their  total  consideration  was  between  5  and  10  million  euro.  A  threshold  set  at  20 
million euro would have reduced the number of approved prospectuses in 2013-2014 only 
by about 6%.  

Calculations  based  on  statistical  data  provided  by  Member  States  and  anecdotal  evidence 
from  the  public  consultation  show  that  around  130  million  euro  per  year  could  be  saved 
collectively  by  issuers  drawing  up  a  prospectus  under  the  proportionate  regime  for 
secondary issuances as proposed in the preferred option. Furthermore, the number of equity 
prospectuses and non-equity prospectuses approved by competent authorities in less than 10 
working days could increase by about 150% and 70% in every year, respectively. 

The  use  of  the  proportionate  regime  for  SMEs  proposed  above  could  result  in  45  to  67 
million euro per year saved collectively by SMEs. 

These  rough  estimates  show  that  the  review  should  result  in  a  sizable  reduction  in 
administrative burden for issuers.  

Besides the reduction in administrative burden the review should result in a prospectus that is 
more user-friendly for  retail  investors thanks to the  reform  of the format and content  of  the 
prospectus  summary,  its  shortening  and  alignment  with  the  approach  and  spirit  of  the  key 
information document under PRIIPs. The limitation that only the five main risk factors are to 
be  discussed  in  the  prospectus  summary  should  also  help  investors  to  better  assess  the 
appropriateness of the respective offer for their needs. This list will allow investors to better 
assess  the  importance  of  any  additional  risk  factors  issuers  might  still  want  to  list  in  the 
prospectus in order to avoid legal liability risks, 

Considerably reduced administrative burden and greater interest from the (retail) investor side 
should make capital markets an interesting venue to raise capital for many companies and in 
particular for SMEs which so far have shied away from these markets and had to rely on bank 
financing.  This  should  have  a  positive  impact  on  the  cost  of  financing  of  SMEs  and  other 
companies in the Union.  

The  unification  of  the  prospectus  content  for  non-equity  securities  admitted  to  trading  on  a 
regulated  market  should  remove  some  of  the  incentives  of  issuers  (in  particular  issuers  of 
corporate  debt)  to  denominate  their  securities  at  EUR  100  000  or  more,  thus  resulting  in  a 
higher participation of retail investors in investment-grade corporate debt and contributing to 
enhanced  liquidity  on  the  secondary  market.  The  incremental  increase  in  administrative 
burden  for  those  non-equity  issuers  should  be  seen  in  the  context  of  the  overall  package  of 
alleviations to the prospectus requirements proposed in parallel and should be balanced with 
the above benefits for the investors. 

As the different measures do not overlap in what they address, there are no direct synergies 
but  also  no  risk  of  measures  mutually  offsetting  each  other.  The  package  is  therefore 
consistent and coherent.  

Greater interest from and activity  on both sides  of  the  market,  issuers and investors, should 
result in more liquid, broader and deeper securities markets, a feature which, in turn, should 
increase  the  attractiveness  of  EU  capital  markets  and  thus  promote  jobs  and  growth.  This 
could  result  in  the  re-location  of  some  offers  which  are  currently  placed  in  third  countries, 

47 

 
 
notably  the  United  States,  to  trading  venues  in  the  Union.  However,  in  view  of  the  size  of 
those foreign markets no significant impact on third countries is to be expected. 

As  the  number  of  companies  concerned  by  the  prospectus  regime  is  very  limited,  no 
distributional impacts on sectorial or regional level are to be expected.  

No environmental or social impacts are to be expected from these measures. 

5.8.  Choice of legal instrument, compliance costs and subsidiarity 

Bearing  in  mind  that  the  Prospectus  Directive  dates  back  to  2003,  to  reduce  significant 
differences  in  implementation  and  application  among  Member  States,  thus  to  reduce 
administrative and supervisory burden and enhance legal clarity, a more modern way of legal 
drafting is now necessary. In addition, the non-negligible number of EU Pilot63 cases that the 
Commission  had  to  open  concerning  the  implementation  of  the  prospectus  regime  in  many 
Member States reinforces the need to create a single rulebook.  

Transforming the Prospectus Directive into a Regulation would rule out such problems which 
arise  in  the  transposition  of  a  Directive  and  would  enhance  coherence  and  integration 
throughout the internal market. 

A  single  rule  book  will  also  eliminate  the  problem  that  even  relatively  minor  divergences 
between  national  laws,  potential  or  actual  ones,  require  issuers  and  investors  who  are 
interested in raising or investing capital across borders to compare national rules in order to 
ensure that they have fully understood the underlying law. With the use of a Regulation such 
unproductive search costs could be avoided. The adaptation of national laws which transposed 
the current Prospectus Directive to the proposed Regulation should be facilitated by the fact 
that  the  implementing  measures  currently  in  place  already  take  the  form  of  a  Regulation. 
Therefore, the preferred option is to transform the Prospectus Directive into a Regulation.  

The choice of the legal instrument should not have a relevant impact on the compliance costs 
for  issuers  and  enforcement  costs  for  competent  authorities.  The  impact  of  the  proposed 
measures on compliance costs and enforcement costs can be summarised as follows:  

•  Raising the threshold below which no prospectus can be required from 100 000 Euro 
to 500 000 Euro will reduce compliance costs for issuers who issue in this range and 
reduce resource needs at the respective competent authorities.  

•  The amendments to the proportionate disclosure regimes for secondary issuances and 
SMEs should both result in considerably lower compliance costs for issuers and also 
reduce  the  work  load  of  competent  authorities  as  less  information  will  have  to  be 
disclosed and examined. This reduction in costs would apply even more to issuers that 
could  not  benefit  from  the  proportionate  regimes  so  far  but  will  be  eligible  in  the 
future.  There  would,  however,  be  a  certain  cost  for  those  issuers  that  are  using  the 
current  schedules  as  they  might  have  to  adapt  their  IT  software  and  to  familiarise 
themselves with the new rules. 

•  The  stakeholders  that  would  face  higher  compliance  costs  would  be  issuers  that 
currently  benefit  from  the  prospectus  exemption  and  alleviations  for  offers  in 

63 EU Pilot is an on-line information-exchange and problem solving network between the European Commission 

and Member States. 

48 

 
 
                                                 
denominations of EUR 100 000 or more. Those of them that cannot benefit from any 
of the exemptions would have to prepare a prospectus either under the standard regime 
or the proportionate disclosure regime.  

•  Transforming  the  prospectus  summary  in  a  document  similar  to  the  key  investor 
information  document  (KID+)  would  also  mean  a  considerable  reduction  in 
compliance  costs  as  the  summary  would  be  much  less  extensive  and  therefore  less 
expensive to produce. 

•  The creation of a central database for prospectuses at ESMA would reduce the search 
costs  for  investors  and  others  interested  in  prospectuses  considerably.  There  would, 
however,  be  implementation  costs  for  ESMA  and  national  competent  authorities  as 
well as marginal costs of managing the database. These costs would either be borne by 
the  supervisors  or  by  issuers.  The  latter  would  benefit  from  the  greater  transparency 
given to their prospectuses. This should translate to slightly lower financing costs for 
them. 

If  the  review  leads  to  the  expected  increase  in  the  number  of  prospectuses  to  be  approved, 
national  competent  authorities  might  have  to  invest  more  resources  in  the  approval  and 
monitoring  of  prospectuses,  this  however  could  be  mitigated  by  the  fact  that  national 
competent authorities will also generate more approval fees. 

The current Prospectus Directive already aims at maximum harmonisation, which means that 
Member  States  cannot  impose  more  onerous  provisions  than  those  set  out  in  the  Directive. 
Therefore  choice  of  the  Regulation  as  the  legal  instrument  does  not  impact  Member  States' 
discretion  much.  The  subsidiarity  principle  was  primarily  respected  through  the  5 000 000 
Euro threshold which allows Member States to regulate offers of a total consideration below 
this  value  at  national  level.  This  should  enable  them  to  take  into  consideration  the 
circumstances  of  their  domestic  markets  for  smaller  issuances  which  are  usually  focussed 
entirely  on  the  national  market.  With  a  higher  threshold  of  10 000 000  Euro  respect  of  this 
principle will be reinforced. 

What  would  be  amended,  however,  is  the  threshold  below  which  Member  States  would  no 
longer  be  free  to  require  a  prospectus  in  national  law.  Raising  the  threshold  from  EUR 
100 000 to EUR 500 000 will reduce Member States' discretion somewhat. However, only a 
minority  of  Member  States  currently  actually  requires  prospectuses  for  offers  below 
EUR 500 000, and in the consultation of Member States via the Expert Group of the European 
Securities Committee in September 2015 no Member State opposed this option. Furthermore, 
raising the threshold seems proportionate in light of the objective to build a European market 
for crowdfunding platforms.  

6.  MONITORING AND EVALUATION 

The revised Directive should be evaluated and potentially reviewed again about 5 years after 
it entered into application in order to see whether the objectives have been achieved and no 
unintended  side-effects  occurred.  Furthermore,  the  implementation  of  the  revised  Directive 
should be permanently monitored with regard to the extent to which the objectives (reduction 
of administrative burden, better access to capital markets for SMEs, investor protection) have 
been achieved. Indicators for this monitoring would be, for example:  

• 

the  number  of  prospectuses  approved  annually  under  the  two  simplified  disclosure 
rules  for  secondary  issuances  and  for  SMEs  and  companies  with  reduced  market 

49 

 
 
capitalisation;  success  will  be  measured  against  the  estimates  on  take-up  as  set  out 
above and in the accompanying impact assessment; 
the  number  of  prospectuses  that  have  benefitted  from  the  universal  registration 
document as described above to obtain a fast-track approval;  
the  overall  reduction  in  approval  times  that  results  from  the  introduction  of  the 
universal registration document;  
the  share  of  retail  investors  among  the  investors  in  non-equity  debt  issuances 
(yardstick of success is a decrease in denomination sizes for non-equity issuances);  
the cost of preparing and getting a prospectus approved compared to the current costs; 
the share of prospectuses that have been passported to other Member States. 

• 

• 

• 

• 
• 

Most  of  the  data  should  be  available  from  ESMA  and  trading  venues.  Information  on  the 
liquidity  of  secondary  markets  should  become  available  from  a  study  and  monitoring  work 
stream launched recently by DG FISMA. A study or survey will have to be launched to gather 
formation on the cost of preparing and getting a prospectus approved compared to the current 
costs. 

50 

 
 
ANNEXES  

ANNEX 1: GLOSSARY 

(Note: This glossary is for explanation only it does not define terms in any legally binding 
way.) 

Admission  to  trading:  the  decision  by  the  operator  of  a  regulated  market,  a  multilateral 
trading facility, or an organised trading facility to allow a financial instrument to be traded on 
its systems. 

Alternative  Investment  Funds  (AIFs):  collective  investment  undertakings,  including 
investment compartments thereof, which raise capital from a number of investors, with a view 
to investing in accordance with a defined investment policy for the benefit of those investors 
and do not require an authorisation pursuant to the UCITS IV Directive.  

Base prospectus: a prospectus containing all relevant information concerning the issuer and 
the securities to be offered to the public or admitted to trading, and, at the choice of the issuer, 
the final terms of the offering. 

Capital Markets Union (CMU): the CMU is a plan of the European Commission that aims 
to create deeper and more integrated capital markets in the EU. The objectives of CMU are 
to  help  businesses  tap  into  more  diverse  sources  of  capital  from  anywhere  within  the  EU, 
make markets work more efficiently and offer investors and savers additional opportunities to 
put their money to working in order to enhance growth and create jobs.  

Companies  with  reduced  market  capitalisation:  a  concept  introduced  by  the  amending 
Directive 2010/73/EU, it covers companies listed on a regulated market that had an average 
market capitalisation of less than EUR 100 000  000 on  the basis of end-year quotes for  the 
previous three calendar years. 

Crowdfunding: the practice of funding a project or a venture by raising money from a large 
number of people who each contribute a relatively small amount, typically via the Internet. 

Denomination: face value of financial instruments. 

Dilution: a reduction in the ownership percentage of a share of stock caused by the issuance 
of  new  stock.  Dilution  can  also  occur  when  holders  of  stock  options  exercise  their  options. 
When  the  number  of  shares  outstanding  increases,  each  existing  stockholder  will  own  a 
smaller, or diluted, percentage of the company, making each share less valuable.  

Directive:  a  directive  is  a  legislative  act  of  the  European  Union,  which  requires  Member 
States  to  achieve  a  particular  result  without  dictating  the  means  of  achieving  that  result.  A 
Directive  therefore  needs  to  be  transposed  into  national  law  contrary  to  regulation  that  has 
direct applicability. 

The  European  Economic  Area  (EEA):  The  European  Economic  Area  unites  the  EU 
Member States and the three EEA/EFTA States (Iceland, Liechtenstein, and Norway) into an 
Internal Market governed by the same basic rules. These rules aim to enable goods, services, 
capital, and persons to move freely about the EEA in an open and competitive environment, a 
concept referred to as the four freedoms. 

EN 

  EN 

 
 
 
 
European  long  term  investments  funds  (ELTIF):  a  type  of  collective  investment  scheme 
that  focuses  on  investing  in  various  types  of  alternative  asset  classes  such  as  infrastructure, 
small and medium sized enterprises and real assets. 

European  Securities  and  Markets  Authority  (ESMA):  the  European  Securities  and 
Markets Authority ESMA is an independent EU Authority that contributes to safeguarding the 
stability  of  the  European  Union's  financial  system  by  ensuring  the  integrity,  transparency, 
efficiency  and  orderly  functioning  of  securities  markets,  as  well  as  enhancing  investor 
protection.  In  particular,  ESMA  fosters  supervisory  convergence  both  amongst  securities 
regulators  and  across  financial  sectors  by  working  closely  with  the  other  European 
Supervisory Authorities. 

Employee  share  scheme:  an  offer  addressed  by  a  company  to  its  own  employees  or 
associates. The offer can consist of shares, stapled securities, or rights (including options) to 
acquire other securities. 

European social entrepreneurship funds (EuSEF): an investment scheme that focuses on 
all kinds of enterprises that achieve proven social impacts. 

European  venture  capital  funds  (EuVECA):  an  EuVECA  is  a  subcategory  of  alternative 
investment schemes that focus on start-up companies.  

Expert group of the European Securities Committee: The Expert Group is a consultative 
entity composed of experts from the 28 Member States. The Commission Services (Internal 
Market  and  Services)  have  set  it  up  in  order  to  provide  advice,  expertise  and  to  exchange 
views, in the area of the securities law. It has a particular role in the preparation of delegated 
acts in the area of securities law.  

Fungible  securities:  securities  or 
therefore, 
instruments 
interchangeable. They consist of many identical parts which can be easily replaced by other 
and if they are attributed with an ISIN (International Security Identification Number) fungible 
securities bear the same ISIN. 

that  are  equivalent  and, 

High  net  worth  individuals:  individuals  or  families  with  high  net  worth  that  qualify  for 
separately managed investment accounts and do not fall within the scope of application of the 
framework reserved to retail investor protection. 

High Yield securities: security (generally a bond) that offers a higher rate of interest because 
of its higher risk of default. 

Initial Public offering (IPO): The first sale of stock by a private company to the public.  

Key Information Document (KID): KIDs are short, plainly-worded documents – no more 
than a few pages long – that provide investors with answers to the key questions they have 
about  the  features, risks, and costs  of investment products. They  are designed for the retail 
investor rather than the professional. So the investor can better compare investment products, 
every KID will follow the same structure. They answer a standard set of questions,  

Liquidity:  liquidity  is  a  complex  concept  that  is  used  to  qualify  market  and  instruments 
traded on these markets. It aims at reflecting how easy or difficult it is to buy or sell an asset, 
usually  without  affecting  the  price  significantly.  Liquidity  is  a  function  of  both  volume  and 
volatility. Liquidity is positively correlated to volume and negatively correlated to volatility. 
A  stock  is  said  to  be  liquid  if  an  investor  can  move  a  high  volume  in  or  out  of  the  market 
without  materially  moving  the  price  of  that  stock.  If  the  stock  price  moves  in  response  to 
investment or disinvestments, the stock becomes more volatile. 

- 2 - 

 
Market Abuse Regulation (MAR): Regulation No 596/2014 on market abuse will enter into 
application in July 2016. The new rules on market abuse update and strengthen the existing 
framework to ensure market integrity and investor protection provided by the existing Market 
Abuse Directive (2003/6/EC) which will now be repealed. 

Market  in  Financial  Instruments  Directive  (MiFID):  Directive  2014/65/EU  of  the 
European Parliament and of the Council of 15 May 2014 on markets in financial instruments 
and amending Directive 2002/92/EC and Directive 2011/61/EU. 

Multilateral Trading Facility (MTF):  an MTF is a system, or "venue", defined by MiFID 
(Article 4) which brings together multiple third party buying and selling interests in financial 
instruments in a way that results in a contract. MTFs can be operated by investment firms or 
market operators and are subject to broadly the same overarching regulatory requirements as 
regulated  markets  (e.g.  fair  and  orderly  trading)  and  the  same  detailed  transparency 
requirements as regulated markets. 

National  Competent  Authority:  a  competent  authority  is  any  organisation  that  has  the 
legally delegated or invested authority, capacity, or power to perform a designated function.  

OECD:  the  Organisation  for  Economic  Co-operation  and  Development  is  an  international 
economic organisation of 34 countries, founded in 1961 to stimulate economic progress and 
world trade. It is a forum of countries describing themselves as committed to democracy and 
the market economy, providing a platform to compare policy experiences, seeking answers to 
common problems, identify good practices and coordinate domestic and international policies 
of its members.  

Offer to the public: 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.  

Organised Trading Facility (OTF): any facility or system operated by an investment firm or 
a market operator that on an organised basis brings together multiple third party buying and 
selling  interests  or  orders  relating  to  financial  instruments.  It  excludes  facilities  or  systems 
that  are  already  regulated  as  a  regulated  market  and  MTF.  Examples  of  organised  trading 
facilities  would  include  broker  crossing  systems  and  inter-dealer  broker  systems  bringing 
together  third-party  interests  and  orders  by  way  of  voice  and/or  hybrid  voice/electronic 
execution. 

Non-equity  securities:  all  securities  that  are  non-equity.  Equity  securities  are  shares  and 
other  transferable  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. 

Packaged  retail  and  insurance  based  investment  products  (PRIIPS):  packaged  retail 
investment products cover a range of investment products that are marketed to retail investors. 
They  are  the  investment  products  retail  investors  would  typically  be  offered  by  their  bank 
when  they  want  to  make  an  investment.  They  take  a  variety  of  legal  forms;  they  can  be 
distinguished  by  the  broadly  comparable  functions  they  perform  for  retail  investors.  They 
typically combine exposures to multiple underlying assets; they are designed to deliver capital 
accumulation  over  a  medium-  to  long-term  investment  period;  they  entail  a  degree  of 
investment  risk,  although  some  provide  capital  guarantees;  and  they  are  normally  marketed 
directly  to  retail  investors.  Broadly  speaking,  they  can  be  categorised  into  four  groups: 
investment  funds,  insurance-based  investment  products,  retail  structured  securities  and 
structured term deposits. 

- 3 - 

 
PRIIPs Regulation: Regulation (EU) No 1286/2014 of the European Parliament and of the 
Council  of  26  November  2014  on  key  information  documents  for  packaged  retail  and 
insurance-based investment products (PRIIPs). 

Private equity: equity capital that is not quoted on a public exchange. Retail and institutional 
investors raise capital that can be used to make investments directly into private companies or 
conduct buyouts of public companies, thus funding new technologies, expand working capital 
within an owned company, make acquisitions, or strengthen a balance sheet. 

Professional  clients:  a  professional  client  is  a  client  who  possesses  the  experience, 
knowledge and expertise to make its own investment decisions and properly assess the risks 
that it incurs. Criteria defining a professional client can be found in Annex II of MiFID. 

Proportionate disclosure regime: alleviated version of the full blown prospectus presenting 
a reduced level of information and reserved to rights issues and SMEs issues. 

Prospectus Directive: Directive 2003/71/EC of the European Parliament and of the Council, 
which lays down rules for information to be made publicly available when offering financial 
instruments to the public as amended  

Prospectus Directive II: Directive 2010/73/EU revising Directive 2003/71/EC in substance.  

Prospectus  Regulation:  Commission  Regulation  (EC)  No  809/2004  of  29  April  2004 
implementing Directive 2003/71/EC of the European Parliament and of the Council as regards 
information  contained  in  prospectuses  as  well as the  format,  incorporation  by reference and 
publication of such prospectuses and dissemination of advertisements. 

Prospectus summary: a disclosure document accompanying a financial product, provided to 
investors  by  the  issuers  before  the  offer  to  the  public  or  admission  to  trading.  The  written 
document  is  a  concentrated  version  of  the  prospectus  and  allows  investors  to  read  the  most 
important information regarding the investment. 

Regulated Market: A regulated market is a multilateral system, defined by MiFID (Article 
4), which brings together or facilitates the bringing together of multiple third party buying and 
selling  interests  in  financial  instruments  in  a  way  that  results  in  a  contract.  Examples  are 
traditional stock exchanges such as the London Stock Exchange. 

Regulation: a regulation is a form of legislation that has direct legal effect on being passed in 
the Union. 

Retail cascade: a term that describes methods of non-exempt retail distribution of securities. 
An issuer is selling the securities to investment banks underwriting the issue which, in turn, 
sell  the  securities  on  to  retail  distributors,  thereby  creating  a  distribution  chain.  The  retail 
distributors  then  sell  the  securities  to  their  clients  at  prices  that  may  vary  from  sale  to  sale, 
reflecting market conditions at the time of sale. 

Retail investor/client: a person investing his own money on a non-professional basis. Retail 
client is defined by MiFID as a non-professional client and is one of the three categories of 
investors set by this Directive besides professional clients and eligible counterparties. 

Rights  issues:  secondary  issuances  addressed  to  existing  shareholders  where  the  statutory 
pre-emption rights are not disapplied. 

Secondary  issuance:  the  issuance  of  new  securities  for  public  sale  by  a  company  that  has 
already made its initial public offering. 

Secondary Market: the trading of securities already issued and admitted to trading after the 
original issuance.  

- 4 - 

 
Securities: a financial instrument representing either the ownership of a corporation (share), 
the  credit  with  a  governmental  body  or  a  corporation  (bond),  or  the  right  to  ownership 
(option). A security is generally fungible and negotiable, representing some sort of financial 
value.  

Small and medium-sized enterprises (SMEs): Recommendation 2003/361/EC defines small 
and medium-sized enterprises as 'enterprises which employ fewer than 250 persons and which 
have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total 
not  exceeding  EUR  43  million'.  In  the  context  of  financial  services  SMEs  are  defined  in 
MiFID II with regard to their market capitalisation: "‘small and medium-sized enterprises’ for 
the purposes of this Directive, means companies that had an average market capitalisation of 
less  than  EUR  200  000  000  on  the  basis  of  end-year  quotes  for  the  previous  three  calendar 
years"; 

SME Growth Markets: Have been established in MiFID II. In order to qualify as an SME 
Growth  Market  at  least  50  %  of  the  issuers  whose  financial  instruments  are  admitted  to 
trading  on  the  MTF  have  to  be  SMEs  at  the  time  when  the  MTF  is  registered  as  an  SME 
growth market and in any calendar year thereafter. In addition, the MTF has to comply with a 
number of other criteria set out in Article 33 of MiFID II. 

Synthetic risk indicator: a visual indicator with a risk scale of 1-7.  On the left hand of the 
scale is 1, noted “lower risk” and “typically lower rewards”. On the right side of the scale is 7, 
noted “higher risk” and “typically higher rewards”. 

Trading  venue:  a  trading  venue  is  an  official  venue  where  securities  are  exchanged.  In 
MiFID it consists of MTFs and regulated markets. 

Transparency  Directive:  Directive  2004/109/EC  of  the  European  Parliament  and  of  the 
Council  which  lays  down  rules  for  the  publication  of  financial  information  and  major 
holdings. 

Tripartite prospectus: a prospectus drawn up as three separate documents (the registration 
document, the securities note and the summary) approved separately and at different points in 
time by the competent authority. 

UCITS IV Directive: Directive 2009/65/EC of the European Parliament and of the Council 
of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating 
to undertakings for collective investment in transferable securities. 

Underwriting:  underwriting  refers  to  the  process  of  taking  responsibility  for  selling  an 
allotment of a public offering. 

- 5 - 

 
 
ANNEX 3: BACKGROUND ON CAPITAL MARKETS UNION 

The  Capital  Markets  Union  ("CMU")  project  is  one  of  the  flagship  projects  of  this 
Commission  and  ties  in  with  the  ambition  to  expand  and  diversify  alternative  sources  of 
funding to bank lending to help EU companies to better finance their expansion and therefore 
to contribute to creating jobs and growth. While banks will continue to play a central role in 
financing  the  EU  economy,  the  CMU  will  seek  to  develop  market-based  finance  so  that 
businesses and long-term projects such as infrastructure easier access to funding opportunities 
and  a  greater  range  of  financing  options.  These  range  from  equity  markets,  securitisation, 
business angels, venture capital, bond markets, private placement and crowdfunding. This is 
particularly needed in those Member States where the banking system is still under repair.  

The CMU aims at creating a single market for capital by 2019 for all 28 Member States by 
removing barriers to cross-border investment and lower costs of funding within the EU. This 
project should be built on firm foundations of financial stability, with consistent and effective 
implementation of the financial regulation that has been passed after the 2008 crisis. It should 
also ensure an effective level of consumer and investor protection. 

On  18  February  2015,  the  Commission  adopted  the  Green  Paper  on  "Building  a  Capital 
Markets Union" which launched a broad debate on the difficulties that businesses face today 
in  terms  of  financing  their  growth,  the  extent  of  the  problems  on  both  the  supply  and  the 
demand  side,  and  the  elements  that  should  constitute  the  building  blocks  of  the  CMU.  The 
Commission  have  received  more  than  420  responses  to  the  public  consultation  from  all 
corners  of  Europe  (25  Member  States)  and  beyond.  The  Commission  will  set  out  a 
comprehensive  roadmap  for  the  CMU  in  its  Action  Plan  to  be  published  in  late  September 
2015.  The  Action  Plan  will  consider  a  broad  set  of  approaches  ranging  from  market-driven 
solutions,  sharing  of  best  practices  amongst  Member  States,  EU  legislation  and  supervisory 
convergence. 

A  key  objective  of  CMU  is  notably  facilitating  capital  raising  on  public  markets.  Public 
markets are vital to mid-sized firms and large companies. They offer access to a wide set of 
funding  providers  and  provide  an  exit  opportunity  for  private  equity  and  business  angels, 
which invest in companies at an earlier stage of their development.  

In this regard, the revision of the Prospectus Directive is viewed as an important first step to 
build a CMU. The prospectus is the gateway into capital markets for firms seeking funding, 
especially  on  public  markets.  Prospectuses  are  legally  required  documents  presenting  all 
information  about  the  company  on  which  investors  can  make  information  about  whether  to 
invest.  However, it is crucial that the prospectus does not act as an unnecessary barrier to the 
capital  markets.  For  instance,  medium-sized  companies  can  be  deterred  from  offering 
securities to the public simply because of the paperwork involved and the high costs incurred. 
It should become easier for firms to fulfil their administrative obligations, but in a way that 
investors are still well informed about the products they are investing in. 

- 6 - 

 
 
ANNEX 4: SHORT DESCRIPTION OF THE PROSPECTUS DIRECTIVE 

1. 

INTRODUCTION 

The  Prospectus  Directive  (2003/71/EC,  "the  Directive")  was  adopted  in  November  2003  in 
the context of the Financial Services Action Plan proposed by the European Commission in 
May 1999. It was revised once in 2010 by Directive 2010/73/EU64. This amending Directive 
contains a review clause whereby the Commission must assess the application of the Directive 
and prepare a report and proposal to European Parliament and Council by 1 January 2016 on a 
number of areas addressed by the 2010 review.  

2.  PURPOSE AND SCOPE  

A  prospectus  shall  contain  all  the  necessary  information  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. The 
Prospectus  Directive  aims  to  harmonise  requirements  for  the  drawing  up,  approval  and 
distribution  of  prospectuses  to  be  made  available  to  the  public  in  case  a  public  offer  or  an 
admission to trading of transferable securities on a regulated market takes place in the EU. 

Two major principles underpin the Directive: investor protection and market efficiency. The 
latter  is  linked  to  the  "passporting  mechanism":  the  Directive  facilitates  public  offers  and 
admissions  to  trading  across  Member  States  by  granting  a  EU-passport  for  prospectuses 
approved  by  any  national  competent  authority  and  thus  removes  regulatory  obstacles  in  the 
form of varying disclosure requirements in different jurisdictions. As a result, the prospectus 
framework increases confidence in securities which contributes to the proper functioning and 
development of capital markets. 
The  Directive  applies  only  to  transferable  securities  as  defined  in  Article  2(1)(a).65  Thus, 
securities  which  do  not  fall  under  that  definition  are  subject  to  either  no  or  national,  non-
harmonised prospectus requirements. The scope of the Directive is currently determined by a 
number of exemptions from the obligation to publish a prospectus which cover certain types 
of securities and offers such as: 

•  EUR  5  000  000:  any  offer  of  securities  with  a  total  consideration  in  the  EU  below  this 
amount  calculated  over  a  period  of  12  months  falls  outside  the  scope  of  the  Directive 
(Article 1(2)(h)).  

64The Directive was amended in November 2010 with the following objectives: (i) strengthen investor protection 
was by improving the quality and effectiveness of disclosures and by facilitating comparison between products 
through  the  summary;  (ii)  increase  efficiency  by  reducing  administrative  burdens  for  issuers  through 
proportionate disclosure regimes (for SMEs and companies with reduced market capitalisation as well as rights 
issues),  a  recalibration  of  the  thresholds  below  which  no  prospectus  is  required  and  some  further  technical 
harmonisation. 

65Transferable securities as defined by Article 4(1)(44) of Directive 2014/65/EU of the European Parliament and of 
the  Council  of  15  May  2014  on  markets  in  financial  instruments,  with  the  exception  of  money  market 
instruments having a maturity of less than 12 months.  

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•  EUR  75  000  000:  any  offer  of  non-equity  securities,  issued  in  a  continuous  or  repeated 
manner by credit institutions, with a total consideration in the EU below this amount falls 
outside the scope of the Directive (Article 1(2)(j)).  

•  150 persons: any offer of securities addressed to a number of natural or legal persons per 
Member  State  below  this  number,  other  than  qualified  investors  is  exempted  from  the 
requirement to produce a prospectus (Article 3(2)(b)). 

•  Qualified  investors:  Offers  which  are  addressed  solely  to  qualified  investors  (i.e. 
"professional  clients"  under  Directive  2014/65/EU66  on  markets  in  financial  instruments 
("MiFID II") are also exempted (Article 3(2)(a)).   

•  EUR 100 000: any offer of securities whose denomination per unit is equal or above this 
value, or where investors are subject to a minimum individual investment equal or above 
this value, is exempted from the requirement to produce a prospectus (Article 3(2)(c) and 
(d)). 

3.  CONTENT OF THE PROSPECTUS  

A prospectus consists of (i) a registration document containing the information relating to the 
issuer,  (ii)  a  securities  note  containing  the  information  concerning  the  securities  and  (iii)  a 
summary  note  which,  in  a  concise  manner  and  in  non-technical  language,  provides  key 
information on the securities concerned in order to aid investors when considering whether to 
invest  in  such  securities.  A  summary  should  be  a  key  source  of  information  relating  to  the 
company, its securities and the offering. The summary is drawn up in a prescribed format in 
order to facilitate comparability of the summaries of similar securities.67   

The general  provisions of  the Directive provide  empowerments  for implementing  measures. 
Thus, the Prospectus Regulation 809/2004/EC as amended determines further the information 
contained in prospectuses as well as the format, incorporation by reference and publication of 
such  prospectuses  and  dissemination  of  advertisements,  most  importantly  in  the  form  of 
specific Annexes addressing different types or denominations of issuers and securities.  

4.  APPROVAL OF THE PROSPECTUS  

The approval of the prospectus is the positive act whereby, before a public offer or admission 
to  trading  takes  place,  the  competent  authority  scrutinises  the  prospectus,  in  line  with  the 
requirements of the Directive, to assess the completeness and consistency of the information 
given and its comprehensibility. The competent authority does not review the correctness of 
the information, as this is the sole responsibility of the person seeking the approval. 

The publication of a prospectus cannot take place until it has been approved. Once approved 
by the competent authority of one Member State (the "home Member State") the prospectus 
can  be  passported  to  all  EU  and  EEA  Member  States  without  additional  scrutiny  by  the 
authorities of the other Member State (the "host Member States"). 

A  prospectus  is  potentially  valid  for  up  to  12  months  after  its  publication  for  offers  to  the 
public  or  admissions  to  trading  on  a  regulated  market,  provided  that  the  prospectus  is 
completed  by  any  required  supplement.  In  particular,  every  significant  new  factor,  material 

66 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial 

instruments, Article 4(1)(11). 
67 Prospectus Directive Article 5 (2). 

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mistake or inaccuracy relating to the information included in the prospectus which is capable 
of  affecting  the  assessment  of  the  securities  and  which  arises  between  the  time  when  the 
prospectus  is  approved  and  the  final  closing  of  the  offer  to  the  public  or,  the  time  when 
trading on a regulated market begins, shall be mentioned in a supplement to the prospectus.  

5.  LIABILITY AND SANCTIONS REGIME  

The  Directive  aligns  liability  and  sanctions  only  to  a  limited  degree.68  It  contains  some 
specific provisions on civil liability attaching to the prospectus which attaches at least to the 
issuer or its administrative, management or supervisory bodies, the offeror, the person asking 
for the admission to trading on a regulated market or the guarantor, as the case may be.69 

Without  prejudice  to  the  right  of  Member  States  to  impose  criminal  sanctions  and  without 
prejudice to their civil liability regime, Member States are required to 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 there is a breach 
of  the  national  rules  implementing  the  Directive.  Member  States  shall  ensure  that  these 
measures are effective, proportionate and dissuasive.  

68 See for further information ESMA's report on "Comparison of liability regimes in Member States in relation to 

the Prospectus Directive" (ESMA/2013/619). 

69 A specific liability regime exists for summaries: namely  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, or  it  does not  provide,  when read  together  with the  other 
parts  of  the  prospectus,  key  information  in  order  to  aid  investors  when  considering  whether  to  invest  in  such 
securities. 

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ANNEX 5: EVALUATION OF THE PROSPECTUS DIRECTIVE 2003/71/EC, AS AMENDED  

In  June  2014  the  Prospectus  Directive  has  been  included  in  the  European  Commission's 
Regulatory Fitness and Performance programme (REFIT). Inclusion in the REFIT programme 
was justified as stakeholders had expressed concerns regarding the high costs of preparing a 
prospectus  and  getting  it  approved  by  the  competent  authority.  A  particular  emphasis  on 
simplification and a reduction of the administrative burden seemed therefore appropriate. The 
first review of the Directive which led to the amending Directive 2010/73/EU did not aim at 
reforming  the  Directive  thoroughly,  but  rather  to  focus  on  specific  requirements  that  were 
deemed  to  cause  particularly  high  administrative  burden  and  which  would  only  require 
marginal  changes  to  the  Directive.  However,  despite  some  positive  achievements,  these 
changes were not sufficient to materially reduce the cost of capital raising using a prospectus 
and thus to improve access to capital markets for smaller companies who traditionally have 
relied  on  bank  financing.  An  evaluation  of  the  Directive  was  then  scheduled  for  2015  to 
ensure  that  the  results  would  be  available  in  time  for  the  report  on  the  application  of  the 
Directive  which  the  European  Commission  has  to  send  to  the  European  Parliament  and  the 
Council  by  1  January  2016  at  the  latest  (Article  4  of  the  Prospectus  Directive  II 
(2010/73/EU)).  Where  appropriate,  this  report  should  be  accompanied  with  proposals  to 
amend the Directive. 

As  it  seemed  very  likely  at  an  early  stage  that  such  amendments  would  be  necessary,  the 
incoming Commission decided at the end of 2015 to speed up the process and, exceptionally, 
to launch the work on an impact assessment in parallel with the evaluation. As the evaluation 
overlaps to some extent with the impact assessment it has been decided to prepare only one 
report  on  the  results  of  the  two  exercises.  For  this  reason  and  because  an  external  study70 
commissioned by the European Commission in 2009 had analysed in detail to what extent the 
original Prospectus Directive had achieved its objectives, this evaluation report is not a fully-
fledged evaluation. Nevertheless, it has been decided to conduct an evaluation at this stage as 
the Commission has been tasked with a review of the application of this Directive five years 
after the date of entry into force, i.e. by December 2015. In addition, stakeholders, both from 
the  market  side  as  well  as  from  the  regulators'  side,  had  repeatedly  expressed  the  view  that 
some  of  the  amendments  introduced  by  Prospectus  Directive  II  (Directive  2010/73/EU)  in 
particular seemed not to have achieved their intended objectives.  

1. 

INTRODUCTION: SCOPE, METHODOLOGY AND INPUT 

The  scope  of  this  evaluation  is  the  Prospectus  Directive,  with  a  specific  focus  on  the 
amendments introduced by the Prospectus Directive II (Directive 2010/73/EU), and on those 
provisions  which  are  considered  to  generate  a  significant  administrative  burden  for  issuers. 
Accordingly,  it  focuses  on  the  period  since  July  2012,  when  the  Prospectus  Directive  II 
(Directive 2010/73/EU) entered into application. It covers all 28 Member States. 

70 http://ec.europa.eu/finance/securities/docs/prospectus/cses_report_en.pdf  

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This  evaluation  is  based  primarily  on  desk  research  of  Commission  services71.  A  literature 
research  revealed  that  not  much  academic  or  other  publicly  available  research  on  the 
functioning of the Directive exists. Therefore, besides this relatively scarce publicly available 
material  the  information  used  in  this  evaluation  stems  primarily  from  a  public  online 
consultation  the  Commission  services  conducted  from  18  February  to  13  May  2015.  182 
responses were received from various categories of stakeholders so that the consultation can 
be  regarded  as  fairly  representative  of  the  relevant  stakeholder  groups  in  the  relevant 
market72. The issues addressed in the consultation were also discussed in two meetings of the 
Expert  Group  of  the  European  Securities  Committee  (EG  ESC)  in  April  and  July  2015.  A 
separate  questionnaire  about  the  application  of  the  Directive  was  addressed  to  national 
competent authorities via the European Securities Markets Authority (ESMA) in March 2015; 
replies  were  received  in  May  2015  from  almost  all  Member  States.  Furthermore,  numerous 
bilateral meetings have been held between the Commission services and stakeholders. Data, 
in  particular  more  granular  data  about  the  costs  of  preparing  a  prospectus  and  of  getting  it 
approved, is very scarce. Similarly, there is no comprehensive information available about the 
funding of SMEs in capital markets. Therefore, this evaluation makes only very cautious use 
of such data and it should be rather understood as 'anecdotal evidence' than as comprehensive 
and/or representative.  

2.  BACKGROUND:  OBJECTIVES  AND  INTERVENTION  LOGIC  OF  THE  PROSPECTUS 

DIRECTIVE 

The  Prospectus  Directive  regulates  the  information  to  be  disclosed  to  investors  when 
transferable securities are offered to the public or admitted to trading on a regulated market. 
The  Directive  and  its  implementing  Regulation  (Regulation  (EC)  No  809/2004)  define  the 
minimum  disclosure  requirements  which  issuers,  offerors  and  persons  seeking  admission  to 
trading  (thereafter  together  referred  to  as  "issuers"  for  the  sake  of  simplicity)  need  to  fulfil, 
depending on the particular nature of the issuer and of the securities offered to the public or 
admitted to trading on a regulated market.  

The Prospectus Directive entered into force on 31 December 2003. Member States (MS) were 
required  to  implement  it  in  their  jurisdictions  no  later  than  1  July  2005.  The  current 
framework is based on the consolidation of the original Prospectus Directive73 as amended.  

Recital (10) of the Prospectus Directive states its objectives: 

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

Its purpose is described in Article 1(1):  

The purpose of this Directive is to harmonise requirements for the drawing up, 
approval  and  distribution  of  the  prospectus  to  be  published  when  securities 

71 The Directorate General for Financial Stability, Financial Services and Capital Markets Union was in charge of 
this  evaluation.  It  was  supported  by  the  Directorates  General  and  services  which  participated  in  the  steering 
group  for  the  impact  assessment,  in  particular  the  Secretariat  General  and  Directorate  General  for  Internal 
Market, Industry, Entrepreneurship and SMEs.  

72  Annex  5  provides  more  detail  about  the  population  of  respondents  and  further  information  about  this 

consultation. 

73 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:345:0064:0089:EN:PDF  

- 11 - 

 
                                                 
are offered to the public or admitted to trading on a regulated market situated 
or operating within a Member State. 

These  quotes  make  clear  that  the  intervention  logic  of  the  Directive  has  to  be  seen  in  the 
overall  context  of  financial  market  regulation  at  EU  and  national  level.  The  Prospectus 
Directive addresses only a very limited part of the activities of the actors in financial markets 
and of the products traded in these markets, namely the raising of capital through the offering 
of transferable securities to the public or through seeking admission for them to be traded on a 
regulated  market  situated  or  operating  within  a  Member  State.  It  does  not  deal  with  issues 
such as on-going reporting requirements or conduct of business of issuers which are regulated 
in other EU laws such as the Transparency Directive.  

Recital (18) explains how investor protection should be achieved:  

The  provision  of  full  information  concerning  securities  and  issuers  of  those 
securities  promotes  the  protection  of  investors.  Moreover,  such  information 
provides an effective means of increasing confidence in securities and thus of 
contributing to the proper functioning and development of securities markets. 
The  appropriate  way  to  make  this  information  available  is  to  publish  a 
prospectus. 

However,  it  is  stated  in  the  Prospectus  Directive  that  appropriate  investor  protection  should 
take account of the different requirements for protection of the various categories of investors 
and their level of expertise. In other words, when adopting the Directive, legislators saw less 
of a need for investor protection measures for qualified investors74 as they are assumed to be 
capable of protecting themselves. This is why no prospectus is required by the Directive for 
offers  that  are  addressed  solely  to  qualified  investors.  In  contrast,  the  publication  of  a 
prospectus is required for any sale or resale to the public or public trading through admission 
to  trading  on  a  regulated  market.  This  clause  is  intended  to  avoid  any  (intentional  or 
unintentional)  circumvention  of  the  requirements  of  the  Directive  resulting  from  restricting 
the original offer to qualified investors who would then resell the securities to non-qualified 
investors  (the  so-called  'retail  cascade').  Extensive  coverage  of  equity  and  non-equity 
securities offered to  the public or admitted to trading  on  regulated  markets  was  regarded as 
necessary to ensure investor protection.  

According to Article 5(1) of the Prospectus Directive, the prospectus itself is to "contain all 
information  which,  according  to  the  particular  nature  of  the  issuer  and  of  the  securities 
offered  to  the  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." 

In addition, the prospectus should include a summary, written in a concise manner and in non-
technical  language,  which  provides  key  information  in  order  to  aid  investors  when 
considering whether to invest in securities. The summary should be drawn up in a common 
format in order to facilitate comparability of the summaries of similar securities (Article 5(2) 
of  the  Prospectus  Directive).  Details  on  the  format  and  content  of  the  prospectus  and  the 
summary  for  the  various  types  of  securities,  offers  and  admissions  to  trading  etc.  are  laid 

74 Qualified investors are professionals in all investment services and activities and financial instruments as defined 

in Annex II of Directive 2004/39/EC. All other investors are regarded as 'non-qualified investors'. 

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down  in  the  Implementing  Regulation  (Regulation  (EC)  809/2004)  and  its  annexes,  the  so-
called "level 2". 

The  second  objective  of  market  efficiency  is  primarily  addressed  through  granting  issuers 
whose prospectuses have been approved by the national competent authority with the benefit 
of a single passport to offer the respective securities in any host Member States. That is to say 
that a prospectus approved by the home Member State and any  supplements thereto will 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 accordingly and, 
if  requested  by  the  host  Member  State,  the  summary  is  translated  into  its  (their)  official 
language(s)75. 

Additional provisions of the Directive regarding the responsibility attached to the prospectus 
and  the  powers  of  competent  authorities  aim  at  harmonising  the  conditions  under  which 
prospectuses are being prepared in the different Member States. This should help to create a 
level-playing field among issuers in the Union and provide investors with confidence in the 
enforcement of the provisions of the Directive so that they are willing to participate in public 
offers carried out by issuers from other Member States.  

In  summary,  the  Prospectus  Directive  seeks  to  achieve  the  objective  to  ensure  investor 
protection by requiring issuers to provide potential investors with all relevant information on 
the  securities  and  their  issuers  in  a  comprehensible  language.  The  harmonisation  of  the 
prospectus  requirements  across  the  Union  should  increase  market  efficiency  by  allowing 
investors  to  have  confidence  in  prospectuses  approved  in  other  Member  States  and  by 
enabling  issuers  to  offer  their  securities,  under  certain  conditions,  in  other  Member  States 
once the prospectus has been approved in one Member State.  

The 2010 review of the Prospectus Directive  

The  'Prospectus  Directive'  was  amended  several  times  since  2003.  The  most  important  and 
substantial  amendments  took  place  in  November  2010  with  the  adoption  of  the  amending 
Directive 2010/73/EU which was part of a simplification exercise within the "Action Program 
for  the  reduction  of  administrative  burdens  in  the  EU",  launched  in  January  2007  (going 
forward, the review which led to the adoption of Directive 2010/73/EU is referred to as "the 
2010 review").  

Back  then,  the  general  feedback  from  stakeholders  on  the  Directive  was  very  positive  and 
market  participants  were  generally  satisfied  with  the  regime,  in  particular  as  regarded  the 
passporting  and  language  regimes76.  The  prospectus  was  deemed  to  be  far  superior  in  its 
functioning  to  the  previous  system  of  mutual  recognition  in  force  until  July  2005,  and  the 
Directive was felt to have had a positive effect on the Single Market overall. Therefore, the 
general approach of the review was not to reform the Directive thoroughly, but rather to focus 
on  a  limited  list  of  areas  where  the  administrative  burden  could  be  alleviated.  The  review 

75 It is worth noting that the competent authority scrutinises the prospectus, in line with the requirements of the 
Prospectus  Directive,  only  to  assess  the  completeness,  consistency  and  comprehensibility  of  the  information 
given.  It  does  not  review  the  correctness  of  the  information,  as  this  is  the  sole  responsibility  of  the  person 
seeking the approval. 

76 In its report on Directive 2003/71/EC (September 2007), the European Securities Markets Expert Group (ESME) 
noted  that  "the  Prospectus  Directive  could  be  considered  as  a  mile-stone  in  the  construction  of  a  single 
European securities market. The new system of notification, the common rules for the contents of a prospectus, 
the language regime, and other basic principles represent step forwards towards this objective which, despite a 
lot of hurdles, has been achieved to a major extent." 

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focused on specific requirements that were deemed to be particularly burdensome and which 
would only require marginal changes to the Directive.  

The approach taken by the 2010 review was therefore to amend the Directive only with regard 
to  those  identified  areas  where  there  was  a  need  for  (i)  "increasing  legal  clarity  and 
effectiveness in the prospectus regime; and (ii) reducing the burdens for EU companies when 
raising capital in the European securities markets"77. Policy options in these areas were then 
assessed  against  the  overall  objective  of  "maintaining  and,  when  necessary,  enhancing  the 
level  of  investor  protection  envisaged  in  the  Directive  and  ensuring  that  the  information 
provided is sufficient and adequate to cover the needs of retail investors". 
The main areas addressed by the 2010 review are as follows78: 

(i) amendments aimed at addressing the lack of clarity of the Directive: 

•  Retail cascade (Article  3(2))  –  the  obligations  in  case  of  a  placement  of  securities 
through financial intermediaries were clarified: when placing or subsequently reselling 
securities,  investors  are  entitled  to  rely  upon  the  initial  prospectus  published  by  the 
issuer (subject to consent) as long as this is valid and duly supplemented. 

•  Definition  of  qualified  investors  (Article  2(1)(e),  2(2),  2(3))  -  the  definition  of 
'qualified investors' in the Prospectus Directive was aligned with that for 'professional 
clients'  as  defined  in  the  Directive  on  markets  in  financial  instruments  (MiFID)  and 
the system of central registers of qualified investors was removed. 

•  Supplements and withdrawal rights (Article 16) - the period of time when withdrawal 
rights may be exercised was harmonized (2 days) with possibility for issuers to grant 
longer time. 

•  Summary  of  the  prospectus  (Article  5(2))  -  the  2500  word  limit  was  removed  and 
replaced by the obligation that the summary length not exceed the maximum of 7% of 
the  prospectus  or  15  pages,  whichever  is  the  longer  (Article  24  Prospectus 
Regulation). The content of the summary was standardised. 

(ii) amendments aimed at removing requirements perceived as burdensome: 

•  Exemption  for  Employee  Shares  Schemes  ("ESS")  (Article  4(1)(e),  4(2)(f))  -  the 
prospectus exemption was extended to ESS launched by EU companies that are listed 
on  a  non-regulated  market  or  that  are  not  listed,  and  to  ESS  launched  by  non-EU 
issuers subject to an equivalence decision. 

•  Redundancy  with  the  Transparency  Directive79-  Article  10  was  removed  to  avoid 

overlapping disclosure obligations with TD. 

•  "Proportionate  disclosure  regime"  (Article  7(2)(e)  and  (g))  -  for  some  types  of 
securities  issues  less  comprehensive  disclosure  requirements  were  introduced  (small 
companies, credit institutions, rights issues and government guarantee schemes). 

•  Exemption  thresholds  -  the  threshold  of  Article  1(2)(h)  was  raised  from  EUR 
2 500 000 to EUR 5 000 000 and the threshold of Article 1(2)(j) was raised from EUR 
50 000 000  to EUR  75  000  000. 

77  Commission  Staff  working  document  accompanying  the  Proposal  for  a  Directive  amending  Directive 

2003/71/EC. Impact Assessment, p.19. 

78 Unless otherwise stated, all references to articles refer to the Directive. 
79  Directive  2004/109/EC  on  the  harmonisation  of  transparency  requirements  in  relation  to  information  about 

issuers whose securities are admitted to trading on a regulated market as amended. 

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3. 

IMPLEMENTATION 

The  Prospectus  Directive  entered  into  force  on  31  December  2003  and  Member  States  had 
until 1 July 2005 to make their laws compliant with it. As regards the Prospectus Directive II 
(Directive 2010/73/EU), the respective dates were 31 December 2010 and 1 July 2012. 

The evaluation of the implementation of the Prospectus Directive II resulted in a number of 
own-initiative cases regarding incorrect transposition in an EU Pilot, an on-line information-
exchange  and  problem  solving  network  between  the  European  Commission  and  Member 
States. Most of them, however, related to the Prospectus Directive provisions and were rather 
of  a  technical,  non-substantive  nature.  Only  one  of  them  reached  the  stage  of  a  formal 
infringement procedure. No formal complaints by citizens or companies have been received.  

4.  EVALUATION QUESTIONS AND ANSWERS  

This evaluation addresses seven questions with regard to the Prospectus Directive.   

4.1.  Effectiveness 

1.  To what extent have the objectives of the Directive been achieved? 

2.  What are the main drivers for not achieving the desired outcomes? What are the 

unexpected outcomes? 

In 2014, 3,838 prospectuses were approved by national competent authorities of the EU/EEA 
(down  by  4.4%  compared  to  2013)80.  In  terms  of  overall  trend,  following  a  strong  decrease 
between  2007  (10,389  prospectuses  approved)  and  2009  (4,912  prospectuses,  i.e.  a  53% 
contraction in two years), the prospectus activity has undergone a slow and steady decrease to 
the  extent  that  the  level  in  2014  corresponds  to  just  37%  of  the  peak  level  amount  of 
prospectuses in 2007. While this trend seems essentially attributable to the overall economic 
conditions  in  Europe,  it  seems  that  the  Prospectus  Directive  II  (Directive  2010/73/EU)  has 
had no impact on the continuing decrease in prospectus activity in the EU.  

Figure 5: Annual number of prospectus approvals from 2006 to 2014 (total EEA) 

Source: ESMA Report: EEA prospectus activity in 2014, 23 July 2015 | ESMA/2015/113681 

In  terms  of  passporting  activity,  931  prospectuses  were  passported  in  2014  (992  in  2013), 
representing  24.3%  of  the  total  number  of  prospectuses  approved82.  This  proportion  is 

80 All data in this paragraph is taken from ESMA's report "EEA prospectus activity in 2014". 
81 http://www.esma.europa.eu/system/files/2015-1136_eea_prospectus_activity_in_2014.pdf 
82 Those prospectuses for which a passport has been requested addressed on average three other Member States. 

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relatively stable over time, around 24-25%, since 2011. Although one notes a 16% decrease, 
in  absolute  terms,  in  the  number  of  passported  prospectuses  between  2011  and  2012,  it  is 
difficult  to  trace  any  obvious  link  with  the  Prospectus  Directive  II  (Directive  2010/73/EU), 
which entered into application on 1 July 2012 only.  

Figure 6: Evolution of the number of prospectuses passported out between 2011 and 2014 (total 
EEA) 

2014

2013

2012

2011

Prospectuses passported out
Total number of prospectuses approved
%

Source : ESMA

931
3,838

1,151
4,453
24.3% 24.7% 23.5% 25.8%

992
4,014

967
4,113

Overall,  these  figures  do  not  reveal  any  significant  impact  of  the  2010  review  on  the 
prospectus activity. 

It must be acknowledged that statistics gathered by ESMA are not granular enough to allow 
for  an  analysis  of  the  impact  of  the  2010  revision  on  such  parameters  like  the  total 
consideration  of  the  offers  (amounts  raised),  the  average  length  of  prospectuses  and  their 
summaries  or  the  number  of  offers  of  securities  to  the  public  which  became  "prospectus-
exempt"  following  some  of  the  Directive's  higher  exemption  thresholds  in  2010.  Some 
specific  data  on  the  use  of  the  proportionate  disclosure  regimes  introduced  in  2010  could 
however  be  gathered  from  competent  authorities  and  are  presented  below.  Yet,  overall,  the 
effects of the 2010 revision are more of a qualitative nature and can only be assessed based on 
the  feedback  received  from  stakeholders.  This  is  why  the  responses  to  the  2015  public 
consultation are used extensively in this evaluation.  

The  level  of  achievement  of  the  2010  revision  must  be  assessed  against  the  two  major 
objectives  of  investor  protection  and  market  efficiency.  While  there  is  no  evidence  that  the 
investor  protection  provided  by  the  Prospectus  Directive  was  not  sufficient,  there  are 
indications that it had not been achieved in the most efficient and effective way. This criticism 
primarily relates to the length of the prospectus, the format of its summaries and the way the 
latter  are  drafted.  As  regards  market  efficiency,  the  assessment  is  similar.  It  is  widely 
acknowledged that the Directive has contributed to market efficiency thanks to its passporting 
mechanism: indeed around a quarter of all prospectuses approved every year are passported to 
at  least  one  host  Member  State,  meaning  that  issuers  make  use  of  the  prospectus  to  offer 
securities across borders in the EU/EEA, which was simply impossible prior to the Prospectus 
Directive.  Still,  there  are  a  number  of  issues  which  suggest  that  this  objective  has  not  been 
achieved to the fullest extent possible. These issues include in particular the cost of preparing 
a  prospectus,  which  is  often  considered  disproportionate  for  small  issuers,  as  well  as  the 
regulatory  burden  that  the  prospectus  represents  for  issuers  listed  on  regulated  markets  and 
already subject to ongoing disclosure requirements. Although it tried to tackle them through 
the  "proportionate  disclosure  regime",  the  2010  review  seems  not  to  have  been  entirely 
successful. 

Investor protection  

The  length  of  prospectuses  and  the  fact  that  they  are  often  drafted  with  the  objective  to 
address  any  potential  legal  liability  rather  than  to  inform  investors  in  a  suitable  way 
undermine the objective to provide investors with appropriate protection. In its 2007 report on 
the  Directive,  the  European  Securities  Market  expert  Group  (ESME)  highlighted  that  "the 

- 16 - 

 
 
 
length  and  complexity  of  prospectuses  make  them  more  a  sort  of  'liability  shield'  for  the 
persons  involved  in  the  preparation  (issuers,  intermediaries,  auditors,  law  firms  and 
competent  authorities), effective ex post in minimizing the risk of potential litigation, rather 
than a document to be used ex ante by an investor when making investment decisions". This 
assertion still holds today. Because issuers generally task specialised lawyers with preparing 
the  prospectus  in  order  to  minimise  liability  risks  and  because  the  disclosure  test  of  Article 
5(1)  of  the  Directive  is  particularly  demanding  (a  prospectus  must  contain  "all  information 
which is necessary to enable investors to make an informed assessment"), prospectuses have 
grown  in  size  over  time  and  generally  have  a length  of  several  hundred  to  even  a  thousand 
pages.  Due  to  their  length  and  complexity,  most  investors  do  not  use  the  prospectus  as  a 
means of information prior to taking an investment decision and prefer to refer to marketing 
materials instead. 

The tendency to use prospectuses as liability shields is nowhere more evident than in the "risk 
factors" section. Risk factors are defined by the Prospectus Regulation (Article 2(3)) as "risks 
which are specific to the situation of the issuer and/or the securities and which are material 
for  taking  investment  decisions"  (emphasis  added).  Despite  the  specificity  and  materiality 
tests  contained  in  that  definition,  market  practice  has  developed  in  such  a  way  that  issuers, 
partly  driven  by  liability  concerns,  often  overload  their  prospectus  with  many  generic  or 
boiler-plate  risk  factors.  This  increases  investor  risk  by  obscuring  the  most  important  or 
specific  risks  that  they  should  be  aware  of,  and  also  increases  the  overall  length  of  the 
document. 

Stakeholders  also  claim  that  the  Directive  has  not  achieved  a  sufficient  degree  of 
harmonisation as it leaves Member States with considerable discretion in its implementation 
and  application.  This  is  particularly  true  with  regard  to  prospectus  approval  procedures 
which  are  in  practice  handled  differently  between  Member  States.  Respondents  to  the 
consultation pointed out material differences in the way national competent authorities assess 
the completeness, consistency and comprehensibility of the draft prospectuses. In particular, 
these  relate  to  the  speed  of  responses  by  competent  authorities,  the  transparency  of  the 
scrutiny timetable, and the magnitude and focus of the scrutiny. Overall, it creates a lack of a 
level playing field within the EU, and encourages regulatory arbitrage by issuers seeking to 
have their prospectus approved by the least demanding competent authority. Besides, as the 
Prospectus  Directive  allows  issuers  of  certain  types  of  non-equity  securities  to  choose  their 
home Member State – i.e. which  national competent authority will approve its prospectus – 
such  divergent  application  of  the  Directive  lays  the  ground  for  practices  of  NCA  forum 
shopping and can eventually give rise to concerns related to investor protection. 

Market efficiency 

An  unintended  outcome  of  both  the  Prospectus  Directive  (2003/71/EC)  and  the  Prospectus 
Directive II (2010/73/EU) concerns the treatment  of securities with  a high denomination 
per unit. Under the Directive, a system of exemption thresholds currently creates incentives 
for issuers to issue debt securities with a high denomination per unit, namely above EUR 100 
000  (a  threshold  raised  from  EUR  50  000  by  the  Prospectus  Directive  II  (Directive 
2010/73/EU))83. From the outset, this threshold was meant as a delineation between the retail 

83 Art. 3(2)(d) of the Prospectus Directive exempts public offers of securities (debt or equity) with a denomination 
per unit  of  at  least  EUR  100 000. The Directive  alleviates  the  prospectus  requirements  for  admission  of  these 
securities to trading on a regulated market from certain requirements: the disclosure requirements are lighter than 
those for debt securities with a denomination per unit below EUR 100 000, they are not required to provide a 
summary and benefit from a more flexible language regime.  

- 17 - 

 
                                                 
 
and  wholesale  markets,  the  rationale  being  that  securities  with  such  a  high  denomination 
would  be  de  facto  inaccessible  to  non-qualified  investors  and  that  their  issuers  could 
consequently  be  spared  with  all  or  part  of  the  burden  of  a  prospectus.  However,  this  high 
threshold  has  created  an  incentive  for  non-equity  issuers  to  only  issue  in  larger 
denominations, which, as a consequence, contributes to inhibiting liquidity on the secondary 
market for bonds and limit the issuance of debt securities in smaller denominations. 

That issuers reacted to these incentives was demonstrated twice quite clearly, first when the 
Directive entered into application in 2005 and again when the threshold was raised from EUR 
50 000 to EUR 100 000 by the Prospectus Directive II (Directive 2010/73/EU)(in application 
from July 2012). The following chart (source: OECD) shows that first the share of EU bonds 
with a denomination between EUR 50 000 and EUR 100 000 went up from about 15% in the 
first  half  of  2005  to  around  50%  in  the  following  years.  In  2011,  after  adoption  of  the 
Prospectus Directive II (Directive 2010/73/EU), the share of EU bonds with a denomination 
above  EUR  100  000  suddenly  grew  from  about  10%  to  almost  70%  while  the  share  of 
denominations between EUR 50 000 and EUR 100 000 collapsed. It is interesting to note that 
the  share  of  EU  bonds  with  a  denomination  below  EUR  50  000  decreased  from  about  70% 
before the Prospectus Directive entered into application, to less than 30% in 2013.  

Figure 7: Percentage of EU bonds with a denomination between EUR 50 000 and 
EUR 100 000 and above EUR 100 000 

Source: OECD84 

It has been argued, including by respondents to the consultation, that the favourable treatment 
granted by the Directive to non-equity securities with a high denomination has resulted in an 
unintended  adverse  impact  on  the  liquidity  of  the  bond  market  as  there  are  fewer  investors 
which  are  willing  to  invest  in  bonds  of  such  high  denominations  and  at  the  same  time  the 
market in lower denominations is smaller than it otherwise would be. While the intention of 
the  threshold  was  to  protect  retail  investors,  it  might  therefore  have  led  to  a  considerably 
limited choice for them.  

The lack of harmonisation between Member States with regard to the Directive also impacts 
market  efficiency  as  illustrated  by  the  divergent  approaches  taken  by  Member  States  when 
regulating the offers of securities with a consideration below the exemption threshold of EUR 
5 000 000. The Directive leaves Member States with the discretion to implement national 

84  Çelik,  S.,  G.  Demirtaş  and  M.  Isaksson  (2015),  "Corporate  Bonds,  Bondholders  and  Corporate  Governance",  OECD 

Corporate Governance Working Papers, No. 16, OECD Publishing, Paris. 

- 18 - 

 
                                                 
regimes for offers with a total consideration below EUR 5 000 000, and only requires that 
no prospectus be required for offers with a consideration below EUR 100 000. In effect, an 
offer whose total consideration falls in the range of EUR 100,000 to EUR 5 000 000 will be 
treated  differently  depending  on  the  Member  State  where  it  takes  place  and  depending  on 
whether and how this Member State has extended the prospectus obligation to considerations 
below EUR 5 000 000. The table below displays the extent to which EU Member States have 
extended the prospectus requirement below EUR 5 000 000. 

Figure  8:  Threshold  above  which  Member  States  require  a  prospectus  to  be  drawn  up 
(expressed as the total consideration of the offer in the EU over 12 months) 

Threshold 

Member 
States 

EUR 
100,000  
BE, BG, 
DE, FR(1), 
HU, LV, 
SK, SI 

EUR 
250,000  

EUR 
1,000,000 

EUR  
1,500,000 

EUR 
2,500,000 

EUR 
5,000,000 

AT 

CZ, DK, 
RO(2) 

FI(3), LU 

NL, SE, PL 

HR, EL, IE, 
IT, LT, MT, 
PT, ES, UK 

Source: ESMA. Note: Data not available for CY, EE. (1) Only for offers representing more than 50% of the share capital of the issuer. (2) EUR 
200,000 for debt instruments. (3) FI is in the process of raising this threshold to EUR 2 500 000.  

3.  What is the early assessment of the impact of the previous revision? Has the revision 

achieved its objectives? 

Of all the amendments introduced by the Prospectus Directive II (Directive 2010/73/EU), two 
in particular have raised criticisms to the extent that it can reasonably be considered that the 
revision failed to achieve their objectives: the prospectus summary and the proportionate 
disclosure regimes.  

The prospectus summary, although it was reformed by the Prospectus Directive II (Directive 
2010/73/EU), is still not deemed fit for purpose. The reform introduced by the last review was 
intended to harmonise disclosure to make information of different issuers easier to compare 
for  investors,  by  way  of  a  prescriptive  modular  approach  set  out  in  Annex  XXII  of 
Implementing  Regulation  No  809/2004.  Yet,  the  public  consultation  showed  widespread 
dissatisfaction  of  most  respondents.  The  general  view  is  that  the  prospectus  summary  falls 
short  of  its  objective  to  provide  investors  with  concise  and  easy-to-understand  information 
about  the  securities  on  offer.  Almost  unanimously,  respondents  consider  that  the  summary 
format requirements introduced by the Prospectus Directive II (Directive 2010/73/EU) are not 
helpful  and  do  not  give  enough  flexibility  to  issuers  to  focus  their  summary  on  the  key 
information  retail  investors  really  need.  As  a  result,  the  prospectus  summary,  as  it  exists 
today, is blamed for being too long (it can easily comprise 20 to 30 pages, as Article 24(1) of 
the Prospectus Regulation provides that "the length of the summary (…) shall not exceed 7 % 
of the length of a prospectus or 15 pages, whichever is the longer"), unwieldy and unreadable. 
As was highlighted already at the time of the 2010 review85, the summary is most of the time 
just  a  “cut  and  paste”  exercise  of  various  parts  of  the  prospectus  without  any  attempt  to 
simplify  the  language  and  avoid  legal  jargon.  As  a  result,  retail  investors  do  not  read  the 
summaries and tend to rely instead on the marketing material prepared in connection with the 
offering. Because they do not focus enough on the key aspects of a transaction and are usually 
written  in  legal  language,  summaries  fail  to  achieve  their  objective,  which  is  to  summarise 

85 See ESME's report on Directive 2003/71/EC of September 2007 

(http://ec.europa.eu/internal_market/securities/docs/esme/05092007_report_en.pdf). Pages 10-11 

- 19 - 

 
 
                                                 
key information in a way that is understandable for the average retail investor. This reduces 
the effectiveness of the prospectus in delivering investor protection. 

Before  the  2010  review,  the  Prospectus  Directive  was  largely  based  on  the  concept  of  one 
single prospectus applying for every type of issuer, regardless of its size, as well as for both 
public  offers  and  admission  to  trading  on  a  regulated  market  alike  (no  distinction  made 
between  new  listings  and  further  offers  by  issuers  already  listed)86.  The  2010  review 
somehow  challenged  that  approach  and  introduced  some  differentiation  between  different 
types  of  issuers  by  establishing  proportionate  disclosure  regimes  (i)  for  SMEs  and 
companies with a reduced market capitalisation, (ii) for credit institutions issuing certain types 
of non-equity securities for a consideration below EUR 75M and (iii) for companies admitted 
to trading on a regulated market or on an MTF offering shares as part of a rights issue. The 
rationale underpinning these regimes was that such companies – either because of their size 
and  shorter  track-record,  or  because  they  are  already  subject  to  ongoing  disclosure 
requirements87 – could be allowed to disclose less information in their prospectus.  

As regards SMEs and companies with a reduced market capitalisation, this relative alleviation 
of  the  minimum  disclosure  contents  was  driven  by  the  concern  that  the  high  cost  of 
compliance with the Directive could deter such companies from raising funds on the capital 
markets.  According  to  estimates  from  stakeholders,  the  average  costs  for  SMEs  and 
companies  with  reduced  market  capitalisation88  to  draw  up  a  prospectus  were  estimated 
between EUR 100 000 and EUR 300 000 at the time of the adoption of the delegated acts of 
the  Prospectus  Directive  II  (Directive  2010/73/EU)  in  201289.  The  proportionate  disclosure 
regime  for  SMEs  and  Small  Caps  introduced  by  Directive  2010/73/EU  (which  entered  into 
application in July 2012) was therefore an attempt to reduce those costs for these companies 
in order to make them more proportionate to the amounts raised. The following chart displays 
the number of prospectuses drawn up by an SME or a Small Cap, approved in each Member 
State in 2013 and 2014, which used the proportionate schedules set out in the Annexes XXV 
to XXVIII of Regulation (EC) n°809/2004. 

Figure  9:  Number  of  prospectuses  drawn  up  using  the  proportionate  schedules  of 
Annexes XXV to XXVIII (SMEs & Small Caps) 

AT  BE  DE

EL  ES  FR IT LT LU LV NL PL SE SI  SK 

Total 

1 
2 

2013 
2014 

2  13 
3 
- 

- 
1 
Source:  National  competent  authorities  of  EU/EEA  States.  No  prospectuses  were  drawn  up  using  the  proportionate  disclosure  regime  for 
SMEs and Small Caps in 2013 and 2014 in the following Member States and EEA States: HR, CY, CZ, ES, IE, PT, RO, IS. No data was 
provided by BG, EE, MT, FI, HU, LI, NO (although, for the latter, a "handful" of prospectuses were mentioned). 

1 
2 
-  10 

-  n/a
-  14

2  17
7  42

49 
94 

1 
2 

6 
6 

3 
2 

- 
2 

- 
- 

U
K 
1 
- 

D
K 
- 
1 

In  total,  94  approved  prospectuses  were  drawn  up  in  2014  (49  in  2013)  according  to  the 
proportionate disclosure regime for SMEs and companies with a reduced capitalisation. These 
figures should be compared with the total number of prospectuses approved in 2013 and 2014, 

86 However, from the outset, the Directive and its Implement Regulation had provided for a lighter-touch regime for financial 

institutions and public issuers, in the form of lighter disclosure contents. 

87 See Recital 18 of Directive 2010/73/EU. 
88 For ease of reference, companies with reduced market capitalisation, as defined in article 2(1)(t) of the Directive will be 

referred to as "Small Caps" in this document. 

89 See the Impact assessment of Commission Delegated Regulation (EU) No 486/2012 of 30 March 2012 amending Regulation 
(EC)  No  809/2004  (page  29).  The  2015  public  consultation  sought  input  from  respondents  on  the  costs  of  preparing  a 
prospectus (see infra) but the estimates submitted were not specific to SMEs and Small Caps. 

- 20 - 

 
 
  
 
                                                 
of  respectively  4,014  and  3,838  (source:  ESMA).  With  the  exception  of  a  small  group  of 
Member  States  where  SMEs  have  made  use  of  the  proportionate  disclosure  regime  rather 
frequently (SE, FR, SK, LU, PL), the regime is hardly ever used at all in all other Member 
States, where it is often observed that issuers who are eligible to it choose to prepare a full-
blown  prospectus  instead.  This  indicates  that  the  proportionate  disclosure  regime  for  SMEs 
and  Small  Caps  introduced  by  the  Prospectus  Directive  II  (Directive  2010/73/EU)  has  not 
fully met its objectives and is still considered unattractive, as confirmed by the feedback from 
the public consultation. Respondents pointed out in particular that the disclosure schedules of 
the  regime  introduced  very  little  alleviation  for  SMEs,  compared  to  the  normal  disclosure 
regime. 

A  similar  diagnosis  can  be  made  for  the  other  two  proportionate  disclosure  regimes.  The 
regime for credit institutions (Annex XXIX of Regulation (EC) n°809/2004) was never used 
in  any  Member  State  in  2013  and  2014,  and  the  regime  for  rights  issues  (Annex  XXIII  & 
XXIV  of  Regulation  (EC)  n°809/2004)  only  on  very limited occasions, as illustrated by the 
figure below. Respondents to the consultation considered that the regime for rights issues is 
not  used  because  the  alleviations  it  provides  compared  to  the  standard  disclosure  are  too 
limited to make any real difference in time or cost. They highlighted also that its scope is too 
limited, as it does not apply to all secondary issues, and that its coexistence with the general 
disclosure test of Article 5(1) creates legal uncertainty. 

Figure  10:  Number  of  prospectuses  drawn  up  using  the  proportionate  schedules  of 
Annexes XXIII & XXIV (rights issues) 

2013 
2014 

AT  BE  DE  EL  ES 
1 
1 
1 
1 
3 
1 

IT  NL  NO  PL  RO  SE 
29 
2 
7 
6 
Source:  National  competent  authorities  of  EU/EEA  States.  No  prospectuses  were  drawn  up  using  the  proportionate  disclosure  regime  for 
rights issues in 2013 and 2014 in the following Member States and EEA States: CY, CZ, DK, FR, HR, IE, IS, LT, LU, LV, PT, SI, SK, UK. 
No data was provided by BG, EE, MT, FI, HU, LI. 

Total 
48 
49 

7 
23 

4 
3 

1 
- 

- 
4 

2 
- 

- 
1 

The fact that issuers have shunned the proportionate disclosure regimes to a large extent raises 
the  question  of  whether  the  Prospectus  Directive  II  (Directive  2010/73/EU)  and  its 
corresponding delegated acts have gone far enough in differentiating the minimum disclosure 
requirements  according  to  the  various  types  of  issuers  and  issues.  After  all,  what  was 
observed at the time of the 2010 review – that well-known frequent issuers are treated in the 
same way  as  issuers which  enter  the market for the first  time –  still  appears  valid today. In 
view of the relative failure of the proportionate disclosure regimes created by the Prospectus 
Directive  II  (Directive  2010/73/EU),  there  is  scope  for  further  work  on  the  calibration  of 
disclosure requirements for frequent issuers and SMEs/Small caps to make it easier for them 
to issue new securities. These issues are discussed further in the impact assessment above. 

4.2.  Efficiency 

4.  What are the areas where there is potential to reduce regulatory burden and simplify 

the intervention? 

The  aim  of  a  prospectus  is  to  provide  investors  with  information  necessary  to  take  an 
investment  decision.  In  order  to  ensure  that  this  information  is  complete,  consistent  and 
comprehensible,  prior  approval  of  the  prospectus  by  the  competent  authority  is  required 
before  an  offer  or  an  admission  to  trading  can  take  place.  The  regulatory  burden  cannot 
therefore be totally avoided. The majority of respondents to the public consultation supported 

- 21 - 

 
 
 
the  current  system  of  ex-ante  approval  of  prospectuses  arguing  that  it  provides  for  investor 
protection and legal certainty. 

However, as highlighted by respondents, the current system may still be improved in relation 
to those areas where the Directive produces more costs than strictly necessary. The following 
are  examples  of  areas  where  a  simplification  of  the  prospectus  regime  would  help  alleviate 
regulatory burdens:  

•  Prospectuses often contain information that investors can already have access to. This 
is  particularly  relevant  for  issuers  that  are  listed  on  regulated  markets,  as  these  are 
required  by  other  pieces  of  EU  law  (notably  the  Transparency  Directive  and  the 
Market  Abuse  Regulation)  to  publish  certain  information  (financial  statements, 
management  report)  on  an  ongoing  basis,  which  the  prospectus  will  also  need  to 
contain,  including  through  incorporation  by  reference  when  applicable.  A  recurring 
criticism of the Prospectus Directive is that it fails to adequately scale the disclosure 
requirements  to  the  situation  of  listed  issuers  seeking  financing  through  secondary 
offers, in view of the fact that significant information is already in the public domain. 
As  mentioned  before,  Directive  2010/73/EU  tried  to  address  this  issue  by  creating  a 
"proportionate disclosure regime" for offers of shares by companies whose shares of 
the same class are admitted to trading on a regulated market or a multilateral trading 
facility. However, this regime was made available to rights issues90 only, and statistics 
gathered  from  national  competent  authorities  show  that  it  has  not  been  used  much 
(only 48 and 49 prospectuses were drawn up on the basis of this regime in 2013 and 
2014 respectively). 

•  Arguably, the requirements of the Prospectus Directive are still not fully appropriate 
for SMEs. The preparation of the prospectus represents a considerable cost which can 
amount to hundreds of thousands of Euros, which can be disproportionate for SMEs 
which  typically  seek  to  raise  small  amounts  of  capital.  However,  while  Directive 
2010/73/EU  attempted  to  better  calibrate  the  disclosure  requirements  for  SMEs  and 
Small  Caps,  through  the  "proportionate  disclosure  regime",  statistics  gathered  from 
national competent authorities show that the number of prospectuses drawn up under 
that regime was not significant (1% to 2% of all prospectuses approved in 2013 and 
2014, see figures above). 

Amendments  to  the  Directive  in  the  areas  mentioned  above  could  significantly  reduce  the 
administrative and regulatory burden for issuers. 

Besides, it is worth noting that the Prospectus Directive already provides tools for issuers to 
reduce the regulatory burden, although they may not be used to their full potential. The best 
example is perhaps the so-called "tripartite regime", which gives issuers the option to draw 
up  a  prospectus  as  three  separate  documents  (the  registration  document,  the  securities  note 
and the summary) approved separately and at different points in time. The rationale behind it 
is that the information relating to the issuer in the registration document can be prepared and 
kept  up-to-date  "on  the  shelf"  and  then  completed  later  by  adding  a  securities  note  and  a 
summary  when  market  conditions  allow  the  issuer  to  raise  financing.  The  intent  of  the 
"tripartite  regime"  is  to  provide  issuers  with  an  (optional)  fast-track  procedure  since 
producing a securities note and a summary at the time of issue is much less time consuming 
that the preparation of a full-blown prospectus. Yet this fast-track regime is used in practice in 
varying  degrees  across  Member  States  and  EEA  States,  as  shown  in  the  table  below.  For 

90 Secondary offers of shares in which the issuer has not disapplied the statutory pre-emption rights. 

- 22 - 

 
 
                                                 
instance,  the  tripartite  regime  is  very  commonly  used  in  France,  Luxembourg  and  Norway, 
while in Germany, Ireland, or the UK this regime is much less used. Between 12% and 14% 
of  all  prospectuses  approved  in  2013  and  2014  were  in  the  tripartite  format,  which  is 
indicative  that  this  tool  is  probably  still  underdeveloped  and  that  there  is  room  for  creating 
incentives  for  issuers  to  use  it.  Besides,  the  Directive  does  not  currently  allow  base 
prospectuses to be drawn up under the tripartite regime. 

Figure 11: Number of "tripartite" prospectuses approved in the EU 

2013 
2014 

BE  DE  DK EL  ES  FI  FR* IE IS 
9 
21  13  130 10 13
0 
8 
5  19  1 

IT  LU NL NO  PL  SE  SK  UK  Total
2 
5 
494 
- 
539 
Source: National competent authorities of EU/EEA States. No tripartite prospectuses were drawn up in CZ, CY, HR, LT, LV, PT, RO and SI 
in 2013 and 2014. No data was provided by BG, EE, MT, HU, LI. * estimated. 

- 
1  13  14  130 19

68  13
9  16 113 4 

9  44 
13  23 

111 
112 

38 
47 

As shown in the impact assessment above, some of the policy options developed in order to 
alleviate the burden on secondary issuances are designed to promote the use of the tripartite 
regime by issuers (see option 5 of § 4.2). 

5.  What are the main cost drivers? Are there differences among types of issuers and 

issues/offers and/or among Member States? 

The public consultation invited stakeholders to provide estimates of the costs triggered by the 
Prospectus Directive. The feedback revealed that there are considerable differences in the cost 
of producing a prospectus depending on the types of securities and issuers. 
Some stakeholders provided useful information regarding the total costs of raising capital91, 
a fraction of which will be attributable to the prospectus itself. Deutsche Börse, for example, 
estimated that the average total costs for newly issued securities admitted to trading represent 
between  7.6%  and  9.7%  of  the  total  consideration  of  the  issuance,  depending  on  the  stock 
exchange  chosen.  According  to  FESE,  the  cost  of  raising  capital  through  an  initial  public 
offering  (IPO)  represents  between  3  and  15%  of  the  amount  raised,  depending  on  the 
magnitude of the IPO (see table below). This is confirmed by Euronext which estimates that 
the average costs for completing an initial public offering is 7.5% of the total amount raised 
and that the average IPO cost varies from 8.5% for less than EUR 20 million raised to 3.5% 
for more than EUR 1 billion raised. Ballpark figures for the costs of an initial public offering 
of EUR 10 million would then be EUR 850 000,  and of an initial public offering of EUR 1 
billion would be EUR 35 million.  

Figure 12: Costs of capital in initial public offerings (IPO) 

Amount raised from the IPO 

less than EUR 6 million 
between EUR 6 million and EUR 50 million 
between EUR 50 million and EUR 100 million 
more than EUR 100 million 
Source: Federation of the European Securities Exchanges (FESE) 

Cost of raising capital  
(as a % of the amount raised) 
10 to 15% 
6 to 10% 
5 to 8% 
3 to 7.5% 

However,  many  respondents  to  the  public  consultation  stressed  that  it  is  not  possible  to 
estimate  the  costs  of  producing  a  prospectus  as  there  is  no  typical  issuer  or  typical 

91 It should be noted that these cost figures have been provided by stakeholders and that the Commission is not in 

the position to verify their correctness. 

- 23 - 

 
 
                                                 
circumstances.  Therefore,  the  figures  presented  here  should  only  be  understood  as  general 
indications in order to give an idea of the amounts involved, not as precise calculations.  

When turning to the specific costs of preparing a prospectus, data becomes scarcer. Only a 
few respondents to the public consultation (less than 20) provided an estimate of these costs. 
The figures they provided diverge very widely and respondents themselves stressed that they 
should  not  be  generalised.  For  example,  the  minimum  cost  figures  for  an  equity  prospectus 
range  from  EUR 1 000  to  EUR  3  million,  with  an  average  of  almost  EUR 700 000.  The 
maximum  amounts  range  between  EUR 10 000  and  EUR  4  million,  averaging  at  EUR 1.3 
million92. Estimates  of the costs of a non-equity prospectus are considerably lower with the 
minimum  average  of  EUR 57 000  and  the  maximum  average  at  almost  EUR 500 000. 
Average cost estimates for base prospectuses were in a similar range93. The above estimates 
cannot be related to the size of an offer. 

Legal  fees  are,  by  far,  the  most  important  contributor  to  the  overall  cost  of  preparing  a 
prospectus, according to respondents to the public consultation, as they represent about 40% 
of  the  total  costs.  The  second  most  important  cost  factor  are  internal  costs  (about  23%), 
followed by audit costs and fees charged by competent authorities representing together about 
a  quarter  of  the  costs.  However,  as  for  the  total  costs,  the  figures  are  rough  estimates  and 
would vary considerably from case to case. Fees charged by the relevant national competent 
authority are well below EUR 10 000 for a (base) prospectus94. Another factor influencing the 
cost of a prospectus is the requirement to produce a prospectus summary and translate it into 
the official languages of the Member States where the offer takes place. 

All respondents (with one exception) agreed however that a substantial part of the above costs 
of  the  preparation  of  a  prospectus  would  be  incurred  by  the  issuer  anyway,  when  offering 
securities to the public or having them admitted to trading on a regulated market, even if there 
was no prospectus requirement under EU law, as investors will require a minimum standard 
of disclosure and an issuer cannot expect to raise capital from the public without providing it 
and carrying out the corresponding due diligence. No quantitative indication of this share of 
the prospectus costs was given by respondents. 

At the time of the 2010 review, the European Commission had asked the Centre for Strategy 
&  Evaluation  Services  (CSES)  for  a  study  on  the  impact  of  the  Prospectus  Regime  on  EU 
financial markets95. The main findings of this report (dated June 2008) are summarised here, 
and  appear  to  be  broadly  consistent  with  the  cost  estimates  reported  by  respondents  to  the 
consultation: 

-  CSES could not reliably isolate the effect of the Prospectus regime on the market cost of 
raising capital using available market data and explained it by the fact that it was difficult 
to  isolate  the  effect  of  the  Prospectus  Directive  from  other  influences.  CSES  concluded 
that  it  was  likely  that  the  Prospectus  Directive  had  not  significantly  altered  the 
fundamentals that determined the market cost of debt or equity capital. 

92 Estimates for initial public offerings were very similar (average minimum costs: about EUR 680 000; average 

maximum costs: almost EUR 1.6 million). 

93  There  are  many  other  reasons  for  the  wide  ranges  of  costs,  cost  differences  for  the  relevant  services  across 

Member States and service quality being probably among the most relevant.  

94  For  example,  the  German  authority  BaFin  and  the  Luxemburg  authority  CSSF  charge  administrative  fees  of 

EUR 6 500 and EUR 8 000, respectively, for the approval of a base prospectus. 

95 http://ec.europa.eu/finance/securities/docs/prospectus/cses_report_en.pdf 

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-  CSES stressed that the additional costs of preparing a prospectus vary from issue to issue 
depending on what work has already been done by the issuer and its counsels. Costs will 
include both in-house costs incurred by the issuer as a result of time spent preparing the 
document  and  dealing  with  administrative  questions  and  the  fees  of  auditors  and 
accountants, legal and financial advisers, regulatory fees, translation fees, etc. all of which 
will vary from issue to issue. 

-  CSES carried out a survey with market participants and experienced that most respondents 
found it impossible to provide clear estimates of the total costs involved in drawing up a 
prospectus  and  that,  where  estimates  were  however  given,  these  ranged  between  EUR 
200 000  and  EUR  300  000  with  the  most  significant  expense  being  accountancy  and 
auditing  fees  (since  pro-forma  financial  statements,  forward-looking  statements  and 
historical financial information must be approved by auditors).  

-  Based on the responses to its survey, CSES provided the following estimates of the total 

costs of prospectuses, by type of prospectus: 

Type of prospectus 

Equity prospectus 

Non-equity prospectus 

Average cost 

EUR 912 000 

EUR 63 000 

Base prospectus (continuous issue) 

EUR 145 000 

Supplement 

Source: CSES estimations 

EUR 19 000 

6.  To what extent are the costs of complying with the Prospectus Directive proportionate 

to the benefits achieved?  

One of the main benefits of complying with the prospectus requirement is that, once approved 
by the home competent authority, the prospectus enables an issuer to raise capital across all 
EU capital markets simultaneously thanks to the passport notification. Already at the time of 
the 2010 review, it had been acknowledged that the passporting mechanism has  delivered a 
real benefit to issuers intending to publicly offer and/or seek admission to trading in another 
Member  State.  This  conclusion  still  holds  true  today,  as  illustrated  by  data  from  ESMA 
revealing  that  3,162  prospectus  notifications  have  been  received  in  2014  by  host  Member 
States96. Compared to “mutual recognition system” which pre-existed Directive 2003/71/EC, 
there is little doubt that "the Prospectus Directive has made it easier to publicly offer and list 
securities not only in one country, but in several countries at the same time", as highlighted 
by ESME in its 2007 report on the Directive97. 

The public consultation therefore asked stakeholders whether this benefit actually outweighs 
the  additional  costs  of  preparing  a  prospectus  in  conformity  with  EU  rules  and  getting  it 
approved by the competent authority. Although there is no general consensus and the views 
expressed offer a rather mixed picture, the following opinions seem to prevail:  

96 This figure represents the total number of prospectus "received" by competent authorities of the host Member 
States, and should not to be confused with the total number of prospectus "sent" by competent authorities of the 
home Member States, which was 931 in 2014.  

97 http://ec.europa.eu/internal_market/securities/docs/esme/05092007_report_en.pdf. 

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For large-scale issuances, the benefit of an offer to many Member States definitely outweighs 
the extra cost due to the possibility of tapping additional liquidity from international investors. 
The  passport  is  also  particularly  useful  where  the  issuer  chooses  an  offering  jurisdiction  or 
listing  location  which  is  different  from  its  Home  Member  State,  or  in  rights  issues  or  open 
offers where an issuer has a significant number of existing shareholders in another Member 
State.  

Conversely, issuers of non-equity securities typically use exemptions (e.g. the EUR 100,000  
denomination  threshold)  to  avoid  the  prospectus  obligation  and  will  offer  to  qualified 
investors  only,  including  cross-border  and  through  private  placements,  which  makes  the 
passport  of  the  Directive  of  no  use  to  them.  Only  a  small  proportion  of  issuers  in  the  debt 
space see value in passporting a prospectus for public offers. Likewise wholesale prospectuses 
for  admission  to  trading  of  debt  securities  are  rarely  passported,  and  debt  securities,  when 
they are sold to retail investors, tend to be sold on a national, rather than cross-border, basis.  

Also, the feedback revealed that the passport is not used for small and mid-sized businesses 
both because of the cost of preparing a prospectus and the local focus of their capital raising. 
For  some  SMEs  the  costs  of  preparing  a  prospectus  and  getting  it  approved  can  be  so  high 
relative to the amount of capital to be raised that this form of access to capital is economically 
not viable for them. When they do decide to incur that cost and draw up a prospectus, SMEs 
usually raise funds in one Member State only. 

It  was  also  pointed  out  that  EU-harmonised  prospectuses  provide  a  benefit  for  the  wider 
investor community: the larger the pool of consistent and comparable prospectuses across the 
EU,  the  wider  the  choice  for  investors  and  the  more  analysts  can  evaluate  investment 
opportunities98. 

More generally, it is argued that the efficiency of the passporting mechanism – which relies 
on the principle that, once a certificate of approval has been notified by a home authority to a 
host  authority,  the  latter  must  accept  it  without  undertaking  any  approval  or  administrative 
procedure relating to the prospectus – is somehow diminished by an array of local practices 
which  vary  depending  on  the  host  jurisdiction.  This  includes  the  review  of  marketing 
materials  by  the  host  authority,  mandatory  tax  disclosures,  specific  compliance  statements, 
national requirements to publish an advertisement/notice in a local newspaper, or market rules 
set  by  domestic  exchanges.  Such  additional  requirements  lead  to  additional  costs,  are 
detrimental to issuers active on more than one market, and somewhat reduce the efficiency of 
the passport. 

Another barrier to the use of the passport is the fact that liability regimes are not harmonised 
across the EU: some issuers will think twice before carrying out a public offer across borders 
in  the  EU,  as  extensive  legal  due  diligence  may  be  needed  beforehand  to  assess  the 
specificities of each host jurisdiction in terms of administrative, civil and criminal liability. As 
there is no harmonised liability standard for prospectuses, the same information can be subject 
to different liability standards depending on the home Member State where the prospectus is 
approved and the host Member State where the prospectus is used.   

In conclusion, there seems to be a mixture of practical, marketing and demand considerations 
accounting for the fact that just a quarter of all approved prospectuses are actually passported 
out on average to at least one host Member State. 

98 See responses by the CFA Institute (an association of investment professionals) and ACCA Global (a body for 

professional accountants).  

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4.3.  Relevance  

7.  To what extent are the objectives of the Prospectus Directive still relevant today? Do 

they correspond to stakeholder needs? How has the economic context evolved? 

The  objectives  of  the  Prospectus  Directive,  to  increase  market  efficiency  and  to  ensure 
investor  protection,  are  still  as  relevant  as  they  were  when  the  Prospectus  Directive  was 
originally adopted in 2003. Without the prospectus it would not be ensured that investors, in 
particular retail investors, receive sufficient and appropriate information about the transferable 
securities  at  offer.  As  in  the  times  of  online  banking  and  investment  there  are  most  likely 
more retail investors investing online without advice today than there were in 2003. Similarly, 
market efficiency cannot be taken for granted. Here as well the prospectus is an important tool 
to  narrow  the  information  gap  between  investor  and  issuer.  This  is  crucial  as  information 
asymmetry is an important cause of market inefficiency. Furthermore, the prospectus provides 
comparable  information  across  Member  States,  allowing  investors  to  better  compare  offers 
from different Member States and issuers to offer their securities in other Member States. This 
helps to make capital markets more efficient and liquid, in particular in the smaller countries 
which  joined  the  Union  since  2004.  Responses  to  the  public  consultation  in  spring  2015 
showed that stakeholders broadly support the view that the Prospectus Directive still plays an 
important  role  and  is  therefore  needed.  Events  like  those  mentioned  above,  online  banking 
and enlargement, as well as the adverse impact of the economic crisis on the access to capital 
from banks for companies in some Member States increase the importance of the Prospectus 
Directive even more. 

8.  Is the prospectus still an appropriate disclosure tool for transferable securities? 

Despite  much  criticism  regarding  details,  many  respondents  to  the  public  consultation 
recognise the value and function of the prospectus as exemplified by the following statement 
by a respondent:  

"The prospectus is an indispensable instrument of investor protection. (1) The prospectus is 
an  essential  source  of  information  for  financial  experts  who  give  advice  to  retail  investors. 
Therefore  the  prospectus  is  also  indirect  but  indispensable  information  for  retail  investors. 
(2) The prospectus is a liability base and therefore a cornerstone of legal certainty. (3) The 
prospectus  is  part  of  a  selection  process  necessary  to  the  effective  functioning  of  market 
mechanisms.  The  making  and  publication  of  a  prospectus  implies  a  preliminary  and 
standardized  verification  of  the  business  project  that  is  to  be  financed.  It  is  linked  to  the 
approval by a regulating authority, which allows to partly sort out inefficient and fraudulent 
financing projects."99 

In  view  of  the  responses  to  the  public  consultation  and  other  feedback  the  European 
Commission has received, it is, however, questionable whether the Directive fully achieves its 
objective  to  provide  investor  protection  as  it  seems  that  retail  investors  are  hardly  able  to 
understand the prospectus or its summary and hardly ever read them. However, the prospectus 
fulfils  an  important  role  ex-ante  as  all  advertisement  or  marketing  material  has  to  properly 
reflect what is written in the prospectus. This provides an indirect legal protection through the 
prospectus. Instead of providing 'ex-ante investor protection' by enabling potential investors to 
take  informed  investment  decisions  on  the  basis  of  appropriate  information,  the  Directive 
provides  perhaps  at  least  'ex-post  investor  protection'  as  investors  might  refer  to  the 
prospectus if issuers made incorrect statements which resulted in losses for investors.   

99 Verbraucherzentrale Bundesverband (vzbv) 

- 27 - 

 
                                                 
9.  Are  the  instruments  and  procedures  prescribed  in  the  Directive  still  appropriate,  in 

particular in view of the technological development?  

The  Directive  allows  an  approved  prospectus  to  be  published  through  various  means  and 
leaves the issuer discretion to choose the most appropriate one. The printed form (insertion in 
a newspaper or printed copy available at the offices of the market operator, the issuer or the 
financial intermediary) is still featured among the options for making a prospectus available to 
the public. Given the advances in technology and the progress in internet access over the past 
years, this appears somehow outdated, and a simplification of the publication rules should be 
assessed,  whereby  the  publication  requirement  would  be  fulfilled  by  the  sole  posting  of  a 
prospectus on a website. 

Also, shortcomings have been identified in the current system of publication and storage of 
prospectuses. Currently, pursuant to Article 14(4a) of the Prospectus Directive, the website 
of ESMA compiles a list of prospectuses and supplements thereto on the basis of notifications 
made to it by the national competent authorities. In addition, it provides links to the national 
lists of approved prospectuses. These national lists generally only allow searches by name of 
issuer  and/or  ISIN  and  in  some  cases  by  year.  Only  a  few  of  them  offer  additional  features 
(such  as  allowing  investors  to  search  by  type  of  security,  content  type  (prospectus  or  base 
prospectus),  approval/notification  date  and  home/host  Member  State).  However,  these 
national lists do not allow for full text searches or targeted searches. It is not even clear if the 
offers  are  still  valid.  Furthermore,  in  practice,  national  lists  do  not  generally  provide  direct 
access  to  the  respective  documents.  In  some  cases  there  are  only  hyperlinks  to  the  issuer's 
general website or hyperlinks to the prospectus do not work. In short, these national lists are 
not  user-friendly  and  not  suitable  for  targeted  searches  by  investors  looking  for  investment 
opportunities.  This  can  result  in  investors  finding  it  hard  to  access  prospectuses,  compare 
issuances  or  offers.  Not  only  do  such  shortcomings  of  the  storage  system  undermine  the 
efficiency of the EU prospectus regime, but it also hinders the emergence of a truly integrated 
EU capital market. 

The ability  to incorporate documents by reference in a prospectus, as provided in Article 
11(1) of the Directive is a key tool to facilitate the procedure of drawing up a prospectus and 
to lower the costs for issuers without affecting investor protection. Yet, based on the current 
drafting of the Directive, it is widely regarded as being particularly restrictive as regards the 
nature  of  the  information  that  can  be  incorporated  by  reference  (e.g.  voluntary  filings  of 
information  required  under  the  Transparency  Directive  by  issuers  that  are  outside  its  scope 
cannot  be  incorporated  by  reference).  There  is  a  wide  consensus  that  the  mechanism  of 
incorporation by reference could be extended to other types of information that has been filed 
with a competent authority pursuant to EU laws  and is available online. This would lead to 
further  cost  reductions  without  adverse  impacts  on  investor  protection  provided  that  easy 
access to such information can be ensured at all times during the "life" of the public offer. 

Back at the time of the 2010 review, it was argued that the Prospectus Directive is based on a 
very traditional model of how securities are placed and traded. The Directive was designed at 
a time when the prevailing model was that of an issuer deciding to launch an offer of shares at 
a  determined  time  in  the  following  months,  preparing  a  prospectus,  starting  a  subscription 
period  with  a  fixed  price,  selling  all  the  shares  and  listing  them  afterwards  on  a  regulated 
market.  However,  this  model  is  no  longer  representative  and  the  market  has  long  since 
developed other kinds of flexible and innovative offering structures. For instance, already the 
2007 ESME report highlighted that "even the IPO market has become a flexible business with 
issuers deciding within days to tap the market without fixed prices or volumes, with the ability 
to interrupt the subscription if market sentiment changes. In the case of debt securities, such 
practice  is  standard  –  there  may  be  a  span  of  no  more  than  a  few  hours  between  the  first 

- 28 - 

 
discussion  of  an  idea  and  the  launch  of  the  bond  or  a  reference  pricing  when  approaching 
investors,  in  order  to  be  open  to  any  market  movement".  In  an  environment  where  issuers 
need to be able to promptly react to favourable market windows, it can be questioned whether 
the prospectus approval process, as currently designed100, offers the necessary flexibility. This 
is  why  the  impact  assessment  above  explores  certain  policy  options  designed  to  facilitate  a 
swift approval process for frequent issuers (see option 5 in § 4.2.1).     

4.4.  Consistency and coherence  

10. Are the provisions of the Prospectus Directive coherent? 

Stakeholders  were  asked  in  the  public  consultation  whether  they  could  identify  any 
incoherence in the current Directive's provisions which may cause the prospectus framework 
to  insufficiently  protect  investors.  Although  respondents  identified  a  number  of  smaller 
technical issues it can be said that the provisions are all in all coherent.  

11. Is the Prospectus Directive consistent with other EU laws and the wider EU policy? 

The objectives of the Prospectus Directive are consistent with the wider EU policy and their 
full achievement would be an important step to build a Capital Markets Union (CMU). This is 
because the harmonised EU prospectus is the "gateway" for issuers in need of finance to gain 
access to European capital markets. Stronger European capital markets are an important part 
of  the  Commission's  response  to  the  pressing  challenge  of  boosting  Europe's  economy  and 
stimulating investment to create jobs. 

However,  in  the  public  consultation  and  other  feedback  the  European  Commission  received 
some  comments  regarding  inconsistencies,  or  rather  inefficiencies  in  the  alignment  of  the 
Prospectus  Directive  with  other  EU  laws.  They  refer  in  particular  to  overlaps  in  reporting 
requirements between the Directive and the Transparency Directive, the Markets in Financial 
Instruments  Directive,  the  Market  Abuse  Regulation  and  European  investment  fund 
legislation.  

The  following  are  two  examples  of  insufficient  alignment  of  the  Prospectus  Directive  with 
other pieces of EU law (some more recent than the Directive itself) which would likely hinder 
market efficiency in the future unless amendments are introduced through the current review 
of the Directive: 

• 

the  creation  of  SME  growth  markets,  as  a  subset  of  multilateral  trading  facilities,  by 
Directive  2014/65/EU  (MiFID  II).  There  is  a  misalignment  between  the  definition  of 
"SMEs" under MiFID II (defined as companies with an average market capitalisation of 
EUR  200  000  000  or  below)  and  the  definition  of  "companies  with  reduced  market 
capitalisation"  introduced  by  Directive  2010/73/EU  (companies  traded  on  a  regulated 
market with an average market capitalisation of EUR 100 000 000 or below). To illustrate 
the consequence of the above, a company traded on an SME growth market, with a market 
capitalisation of EUR 150 000 000, but which does not meet the criteria defining an SME 
according  to  Article  2(1)(f)  of  the  Prospectus  Directive  will  be  deemed  an  SME  for  the 
purpose  of  MiFID  II  (Directive  2014/65/EU),  but  not  for  the  purpose  of  the  Prospectus 

100 The timeframe allocated to competent authorities to carry out their review of a prospectus, from the moment a 
complete draft prospectus is submitted by the issuer is either 10 days (for regular submissions) or 20 days (for 
IPO submissions). 

- 29 - 

 
 
 
                                                 
Directive. Nor will it qualify as a "company with reduced market capitalisation" under the 
Prospectus  Directive.  Hence  it  will  not  be  eligible  to  use  the  proportionate  disclosure 
regime. According to data gathered from national competent authorities, there were about 
600 companies traded on a regulated market or an MTF in the EU/EEA as of end 2014, 
with  a  market  capitalisation  between  EUR  100  000  000  and  EUR  200  000  000.  Unless 
thresholds  of  market  capitalisation  are  harmonised  between  the  two  directives,  these 
companies are likely to suffer from the abovementioned misalignment.  

• 

the  introduction  of  key  information  documents  for  packaged  retail  and  insurance-based 
investment products (PRIIPs) under Regulation (EU) No 1286/2014. For certain types of 
securities,  the  prospectus  summary  will  overlap  to  a  certain  degree  with  the  key 
information document (KID) required by the PRIIPS Regulation when the latter becomes 
applicable on 31 December 2016. Both documents serve the same objectives, although (i) 
their  contents  are  not  fully  aligned,  (ii)  their  authors  may  differ  and  (iii)  KIDs  are  not 
subject  to  approval  by  national  competent  authorities  while  prospectus  summaries  are. 
This  will  inevitably  lead  to  a  duplication  of  the  same  information  in  a  KID  and  the 
corresponding prospectus summary. 

These issues have been discussed further in the impact assessment above. 

4.5.  Added value of the Prospectus Directive 

12. What changes can be reasonably argued to be attributed to the Prospectus Directive? 

Why the same outcomes cannot be achieved at the Member State level? 

Given the wide range of factors that influence a company’s decision to seek funding through 
capital markets, banks or other channels, it is not possible to link any direct economic impact 
to the Directive or to estimate its overall added value. The analysis presented in section 4.2 
above  shows  that  the  number  or  prospectuses  and  the  capital  raised  through  them  are 
relatively low compared to the size of company financing in the EU in general.  

Notwithstanding  the  limited  economic  impact,  the  evaluation  suggests  that  the  Directive 
certainly  lowered  the  barriers  for  raising  capital  across  borders  and  contributed  to  market 
efficiency.  For  example,  around  a  quarter  of  all  prospectuses  approved  every  year  are 
passported to at least one host Member State, meaning that issuers make use of the prospectus 
to offer securities across borders in the EU/EEA, the cost of which were prohibitive in most 
cases prior to the Prospectus Directive. 

In addition, the qualitative evidence shows that the Directive established a clear standard for 
the  information  that  has  to  go  with  it.  This  'signalling  effect'  certainly  goes  beyond  the 
prospectuses  approved  under  the  Directive  but  also  influenced  the  standards  for  other 
disclosure documents for public offerings and listings. It is reasonable to assume that it would 
have  been  difficult,  if  not  impossible,  to  achieve  this  opening  of  national  markets  to  offers 
from other Member States through national measures. 

4.6.  Conclusions 

When  Directive  2003/71/EC  was  adopted  in  2003,  it  replaced  two  directives  on  listing 
particulars  (1980)  and  prospectuses  (1989)  which  had  faced  strong  criticisms  from 
stakeholders because they allowed widely varying practices across the Union and were based 
on  a  system  of  mutual  recognition  with  significant  discretion  left  to  the  host  Member  State 
authorities (including for instance that of requiring the translation of the full prospectus into 
the host Member State official languages).  

- 30 - 

 
 
In comparison, the Prospectus Directive can be credited  for  having facilitated the raising of 
capital across borders in Europe, thanks to the application of the "single passport" principle 
which  implied  that  only  one  set  of  disclosure  documents  could  be  approved  by  the  home 
country authority and accepted throughout the EU for public offer and/or admission to trading 
on  regulated  markets.  The  contribution  of  the  Prospectus  Directive  for  building  up  a  single 
European securities market can therefore not be underestimated and it may be considered as a 
mile-stone in that regard. 

Still, the 2010 review rightly identified a number of shortcomings in Directive 2003/71/EC, 
affecting  the  legal  clarity  of  some  of  its  concepts  and  undermining  its  efficiency  in 
establishing  the  right  balance  between  market  efficiency  (areas  of  excessive  regulatory 
burden) and investor protection (quality, readability and materiality of disclosures). Directive 
2010/73/EU introduced targeted changes to address them.   

Three years after Directive 2010/73/EU entered into application, the evaluation shows that the 
diagnosis made during the previous review is still very much valid today and that the revised 
Directive  has  only  partially  met  its  objectives  of  investor  protection  and  market  efficiency. 
Indeed,  it  seems  that  the  trends  identified  back then  (prospectus  used  as  a  "liability  shield", 
retail  investors  shunning  prospectuses  and  their  summaries,  inappropriate  scaling  of  the 
disclosure  requirements  between  IPOs  and  secondary  issuances)  have  continued,  and  even 
worsened,  arguably  because  the  remedies  proposed  by  the  amending  Directive  were  either 
inappropriate  (the  prospectus  summary)  or  not  bold  enough  (the  proportionate  disclosure 
regimes), or because Directive 2010/73/EU did not contain measures to address them.   

The  evaluation  has  also  identified  certain  issues  related  to  the  coherence  of  the  Prospectus 
Directive  with  other  EU  laws.  Despite  much  criticism  regarding  the  efficiency  and 
effectiveness of the Directive, feedback from stakeholders clearly shows that the objectives of 
the Prospectus Directive are still relevant today. 

Within the REFIT context, the evaluation identifies unnecessary regulatory burdens related to 
the Prospectus Directive. These issues include in particular the cost of preparing a prospectus, 
which is often considered disproportionate for small issuers, as well as the regulatory burden 
that  the  prospectus  represents  for  issuers  listed  on  regulated  markets  and  already  subject  to 
ongoing disclosure requirements. 

In view of the shortcomings identified in this evaluation it is appropriate to thoroughly review 
the Prospectus Directive. In particular, with respect to the amendments performed by the 2010 
review,  it  is  appropriate  to  readdress  the  "proportionate  disclosure  regimes"  (for  SMEs  and 
Small Caps and for rights issues) and the prospectus summary as the amendments introduced 
by Directive 2010/73/EU have failed to reach their objectives.  

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ANNEX 6: SUMMARY OF PUBLIC CONSULTATION 

Feedback from the online public consultation on the review of the Prospectus Directive, 
18/02-2015 – 13/05/2015 
I. SYNOPSIS OF THE RESPONSES TO THE ISSUES DISCUSSED IN THE IMPACT ASSESSMENT:101 

1. Exemption thresholds 

Concerning  the  EUR  5  000  000  threshold  of  Article  1(2)(h),  the  majority  of  respondents 
believe  that  the  exemption  threshold  should  remain  unchanged  because  it  already  strikes  an 
appropriate balance between investor protection and alleviating the administrative burden on 
small  issuers  and  small  offers,  or  because  there  is  no  indication  that  an  adjustment  is 
necessary.  According  to  them,  reducing  barriers  to  access  capital  markets  can  be  better 
achieved by means other than raising the EUR 5 000 000 threshold. Besides, the diversity of 
national  capital  markets  across  EU,  including  in  terms  of  the  typical  size  of  offers  to  the 
public,  represents  a  challenge  to  setting  a  one-size-fits-all  exemption  threshold:  In  many 
Member  States  with  small  financial  markets,  if  the  EUR  5 000 000  threshold  were  to  be 
increased,  a  considerable  number  of  offers  of  securities  might  fall  outside  the  scope  of  the 
Prospectus Directive and this might affect investor protection if these Member States did not 
have in place national disclosure regimes. Many respondents also stress that the benefits that 
an  upward  adjustment  of  the  threshold  would  provide  to  issuers  would  not  outweigh  the 
negative effects for retail investors (prospectus burden for smaller issuers and smaller offers 
increases the risk of financial scandals). Lastly, many contend that the problem is not the EUR 
5  000  000  threshold  in  itself,  but  the  lack  of  harmonisation  throughout  the  EU  and  the 
flexibility given to the Member States to require a prospectus for offers below that threshold.  

A  minority  group  of  respondents  (essentially  trade  associations  and  some  market  operators) 
supports  raising  the  threshold  to  considerations  between  EUR  7  500  000  and  EUR 
50 000 000, with EUR 10 000 000 most frequently cited as appropriate. Their main argument 
is  the  disproportion  of  the  costs  to  prepare  a  prospectus  as  a  percentage  of  the  size  of  the 
offering, for offerings of small size. Below EUR 10 000 000 or EUR 20 000 000, a significant 
percentage of the total proceeds of the offering are used to pay transaction costs as opposed to 
growing the business. The time and costs involved in preparing a prospectus are prohibitive 
for  small  companies  precluding  them  from  seeking  capital  from  the  public  and  leaving  no 
alternative  but  to  seek  funding  from  banks  or  private  equity  funds.  A  relatively  modest 
increase in the threshold would give these companies greater flexibility. Some highlight the 
fact that if more and larger offerings/issues can be made without a prospectus being required, 
the need for other forms of investor protection (such as the suitability test, minimum financial 
commitment  per  retail  investor)  will  become  more  important  to  ensure  that  investors  are 
adequately protected. National legislation could provide investors with such protection. 

101  Please  note  that  when  referring  to  the  "majority"  or  "most  respondents"  when  analysing  the  "stakeholder 
views", reference is made only to the respondents from each category of stakeholders. It should be noted that, in 
most  of  the  questions  of  the  consultation,  only  half  of  the  respondents  expressed  a  view  on  the  respective 
questions. Therefore, these "largest numbers" are far from being an absolute majority of respondents. 

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Concerning the 150 persons threshold of Article 3(2)(b), more than half of respondents is 
in favour of the status quo. According to some respondents, 150 persons is already a large, in 
view of the underlying concept of "restricted circle of non-qualified investors", and increasing 
the threshold would seem arbitrary. Less than half of respondents is in favour of raising the 
threshold to a higher number of persons, with 300 or 500 persons being the most frequently 
cited thresholds. As the current threshold may limit many issuers willing to conduct private 
placements, an increase to 300 people is perceived as helpful while being modest enough not 
to  undermine  the  characteristics  of  a  private  placement.  A  higher  threshold  of  300  to  500 
persons could  also benefit the development of crowdfunding as  the  number of investors on 
some  of  the  most  popular  platforms  in  the  EU  can  range  from  50  to  400  persons.    Among 
supporters of a higher threshold, some highlight that the appropriateness of the current "150 
persons"  threshold  differs  according  to  the  type  of  securities  concerned.  As  an  example,  it 
may be perceived as sufficient for an equity offering as the number of investors concerned is 
generally less than 150 when the transaction is not intended to be an offer to the public. The 
situation is quite different when it comes to the distribution of structured products (other than 
to the public) which generally concerns a much larger number of investors. 

Concerning the ability of Member States to extend the Prospectus Directive requirement 
to  offers  of  a  consideration  below  EUR  5  000  000  (subject  to  the  threshold  of  Article 
3(2)(e)),  a  clear  majority  of  respondents  support  the  introduction  of  harmonisation  in  those 
areas currently left to Member States' discretion, and would support removing the flexibility 
given  to  Member  States  to  require  a  prospectus  for  offers  of  securities  with  a  total 
consideration below EUR 5 000 000. The view often expressed is that instead of seeking to 
raise  the  EUR  5  000  000  threshold  higher,  there  would  be  greater  merits  in  ensuring 
harmonisation below it. The existing divergences are seen as an impediment to cross-border 
financing  and  to  the  development  of  crowdfunding  in  the  EU.  They  are  considered  to  be 
contrary  to  the  Capital  Markets  Union  objectives.  Ensuring  maximum  harmonisation  of  the 
prospectus  regime  is  a  prerequisite  for  further  development  of  the  Capital  Markets  Union. 
Removing the current ability of Member States to require a prospectus below EUR 5 000 000 
will ensure a consistent application of the exemption across all Member States, and will allow 
issuers from each jurisdiction to operate on a level playing field.  

Conversely,  a  minority  of  respondents  is  of  the  view  that  Member  States  should  retain  the 
ability to adjust the exemption threshold of the Directive to local circumstances. Market sizes 
vary  between  Member  States  and  consideration  must  be  given  to  proportionality  concerns, 
and hence the minimum harmonisation level of the Directive should be maintained. Member 
State  discretion  below  the  EUR  5  000  000  threshold  is  a  recognition  that  retail  markets  are 
essentially national markets with their own characteristics. Member States should be left with 
the flexibility to deal with the protection of retail investors for offers below EUR 5 000 000 as 
they are best placed to find the correct balance between investor protection and market access 
nationally, and such offers are never made on a pan-EU basis. 

Stakeholder views as expressed by different interest groups:  

Regulatory  and  Supervisory  authorities:  Most  competent  authorities  are  in  favour  of 
keeping the thresholds of Article 1(2)(h) (EUR 5 000 000 ) and Article 3(2)(b) (150 persons) 
unchanged. This option is claimed to be the most favourable since there are divergent markets 
in different Member States and the current threshold strikes an appropriate balance between 
investor protection and alleviating the administrative burden on small issuers and small offers.  

Concerning the 150 persons threshold of Article 3(2)(b), some competent authorities note that 
this threshold is difficult to monitor in practice, particularly, in the debt capital markets space. 
It is impractical as it is hard to prove that the offer was addressed to fewer than 150 persons. 

- 33 - 

 
For that reason, issuers rely more on the ability to use the exemptions set out in Article 3(2)(c) 
and (d) due to the difficulty in determining whether or not the threshold of 150 persons has 
been exceeded.  

Most competent authorities consider that Member States should retain the ability to adjust the 
exemption  threshold  of  the  Directive  to  local  circumstances.  Market  sizes  vary  between 
Member  States  and  consideration  must  be  given  to  proportionality  concerns,  and  hence  the 
minimum harmonisation level of the Directive should be maintained. Member State discretion 
below the EUR 5 000 000 threshold is a recognition that retail markets are essentially national 
markets  with  their  own  characteristics.  Member  States  should  be  left  with  the  flexibility  to 
deal with the protection of retail investors for offers below EUR 5 000 000 as they are best 
placed to find the correct balance between investor protection and market access nationally, 
and such offers are never made on a pan-EU basis. ESMA considers that "[the] flexibility to 
treat smaller offers in a more tailored manner at the national level benefits both issuers and 
investors alike".  

Crowdfunding  organisations:  A  majority  of  crowdfunding  organisations  consider  that  the 
EUR 5 000 000 threshold of Article 1(2)(h) should remain unchanged. There is a very strong 
support  for  this  threshold  within  crowdfunding  professionals,  as  it  is  consider  to  be  well-
calibrated  for  crowdfunding  due  to  the  fact  that  the  size  of  the  offers  on  these  platforms  is 
usually between EUR 50 000 and EUR 1 500 000.  

A number of crowdfunding organisations favoured repealing considerably increasing the "150 
persons" exemption. A higher threshold of 300 to 500 people could benefit the development 
of crowdfunding as the number of  investors  on  some  of  the  most  popular  platforms  usually 
ranges from 50 to 400 persons. 

Almost  all  contributors  recognize  the  importance  of  harmonisation  of  the  prospectus 
requirement for offers of securities below EUR 5 000 000 according Article 1(2)(h). A strong 
emphasis  was  made  on  the  existing  divergences  across  Member  States  which  constitute  an 
impediment  to  cross-border  financing,  and  are  contrary  to  the  Capital  Markets  Union 
objectives. This is especially true for crowdfunding as the diversity of domestic regulations is 
a  barrier  to  the  development  of  crowdfunding  equity  and  non-equity  within  Europe,  as 
platforms  and  SMEs  are  obliged  to  consider  each  Member  State  as  a  domestic  market  in 
respect of the Prospectus requirements and to carry out a case-by-case analysis to expand their 
activity to issuers based in another host country. The key point to harmonize and unleash the 
potential  of  crowdfunding  in  the  European  Union  is  that  all  countries  adopt  the  same 
prospectus requirement. 
Non-governmental organisations102: Most of respondents supported raising the threshold to 
considerations,  with  EUR  10  000  000  as  most  frequently  cited  as  appropriate.  A  relatively 
modest increase in the threshold would give greater flexibility.  

Stock  exchanges:  A  majority  of  stock  exchanges  were  in  favour  of  raising  the  EUR 
5 000 000  million  threshold  to  EUR  10  000  000  and  the  150  persons  threshold  up  to  300 
persons.  Opinions  on  whether  Member  States  discretion  should  be  reduced  were  divergent. 
Some  contributors  highlighted  that  more  harmonisation  would  promote  cross  border  SME 
listings.  Conversely,  some  stock  exchanges  argued  that  discretionary  powers  of  Member 
States should be kept as flexibility is desired. 

102 This interest group includes different stakeholders associations ranging from employee representation to public 

accountants representation. 

- 34 - 

 
                                                 
Investors' associations: A majority of investors' associations (including FSUG) consider that 
an  adjustment  of  the  thresholds  is  not  necessary.  Their  approach  is  that  the  benefits  that  an 
upward adjustment of the threshold would provide to issuers would not outweigh the negative 
effects for retail investors. Some respondents warn against raising the threshold further as it 
could  negatively  affect  the  credibility  of  financial  markets  as  alleviation  of  the  prospectus 
burden for smaller issuers and smaller offers increases the risk of financial scandals.  

As  regards  to  harmonisation,  a  majority  of  respondents  support  the  introduction  of 
harmonisation  in  those  areas  currently  left  to  Member  States'  discretion  as  the  existing 
divergences  are  seen  as  an  impediment  to  cross-border  financing,  and  are  contrary  to  the 
Capital Markets Union objectives.  

Consultancies and law firms: A vast majority of respondents supports raising the thresholds 
up  to  EUR  10  000  000  and  250  persons  respectively.  This  would  remove  the  prospectus 
requirement for many more SMEs without being of detriment to investors on a macro level 
across the EU. Some stakeholders also support option 3 (reducing Member State discretion) 
claiming  that  a  common  approach  should  be  applied  across  the  EU  to  operate  on  a  level 
playing field. 

Companies,  SMEs,  micro-enterprises,  sole  traders:  The  respondents'  views  are  divided: 
some express the view that the threshold should remain unchanged because it already strikes 
an appropriate balance between investor protection and alleviating the administrative burden 
on  small  issuers  and  small  offers,  or  because  there  is  no  indication  that  an  adjustment  is 
necessary and some are in favour of raising the thresholds. Between those in favour of raising 
the thresholds, a majority supports the introduction of harmonisation in those areas currently 
left to Member States' discretion.  They consider that removing the current ability of Member 
States to require a prospectus below EUR 5 000 000 would ensure a consistent application of 
the exemption across all EU Member States, and would allow issuers from each jurisdiction to 
operate on a level playing field. 

According to one contributor, competent authorities should not be allowed to introduce gold 
platting  provisions  or  additional  disclosure  requirements  for  the  offering  of  securities  or 
admission  to  regulated  markets.    The  divergent  national  provisions,  such  as  domestic 
regulations to require a (simplified) prospectus for offers of securities below the EUR 5 000 
000 threshold, have had a negative effect on the access to capital for companies in general and 
SMEs in particular. 

Financial  industry:  the  opinions  are  divergent  between  the  first  three  options.  However, 
there  is  a  large  support  for  raising  the  thresholds  considerably,  from  150  persons  to  500  or 
even 1000 persons and from EUR 5 000 000 to EUR 10 000 000, EUR 50 000 000 or even 
more (option 2). Opinions are also split regarding reducing MS discretion (option 3).  

As  some  competent  authorities,  most  industry  associations  note  that  the  150  persons' 
threshold is difficult to monitor in practice, particularly, in the debt capital markets space. It is 
impractical as it is hard to prove that the offer was addressed to fewer than 150 persons. For 
that  reason,  issuers  rely  more  on  the  ability  to  use  the  exemptions  set  out  in  Article  3(2)(c) 
and (d) due to the difficulty in policing whether or not the threshold of 150 persons has been 
exceeded. 

2. Exemption for "secondary issuances" under certain conditions 

A  very  large  majority  of  respondents  agreed  that  while  an  initial  public  offer  of  securities 
requires a full-blown prospectus, the obligation to draw up a prospectus could be mitigated or 
lifted  for  any  subsequent  secondary  issuances  of  the  same  securities,  providing  relevant 

- 35 - 

 
information updates are made available by the issuer. The rationale is that respondents do not 
see a need for full-blown prospectus for secondary issuances of securities listed on a regulated 
market,  if  the  Market  Abuse  Regulation  and  the  Transparency  Directive  information  are 
published and important information is thus easily accessible to potential investors. Some are 
of the opinion that no listing prospectus should be required at all for secondary issuances, and 
for  public  offers  a  lighter  proportionate  disclosure  regime  should  be  available.  However, 
many respondents do not want to lift requirements to disclose the relevant information on the 
transaction,  its  impact  on  the  issuer  and  the  relevant  risk  factors;  also  the  requirement  to 
incorporate a reference to recent announcements made by the issuer to the market should be 
retained in their view. Existing, more flexible regimes in Member States as France and third 
countries  such  as  the  United  States,  Canada  and  Australia  are  mentioned  as  best  practice 
example  by  respondents,  allowing  issuers/offerors  to  prepare  better  for  upcoming  issuances 
and so to gain access to markets faster when they see the need for it. 

Overall,  a  majority  of  respondents  was  in  favour  of  altering  Article  4(2)(a)  Prospectus 
Directive  to  broaden  the  exemption:  the  option  preferred  by  respondents  was  that  the 
exemption should apply to all secondary issuances of fungible securities, regardless of their 
proportion  with  respect  to  those  already  issued,  alternatively  respondents  argued  for  raising 
the threshold of 10% to 20% (fewer supported 25%). Respondents also raised the issue that in 
a capital increase, the issuer should have to provide information about the use of proceeds and 
the expense of the offering as this information cannot be obtained by potential investors from 
other  sources.  On  the  question  whether  an  exemption  for  secondary  issuances  were  to  be 
made conditional to a full-blown prospectus having been approved within a certain period of 
time, most respondents do not think such a requirement is necessary. Those respondents who 
are in favour suggested time frames from one to five years; on average to 2.5 years. 

Stakeholder views as expressed by different interest groups:  

Regulatory and Supervisory authorities: All contributors agree that the obligation to draw 
up a prospectus should be mitigated or lifted for "secondary issuances" of the same securities. 
A majority of them is in favour of modifying Article 4(2)(a) of the Prospectus Directive by 
raising  the  threshold  of  10%  to  20%,  some  even  mentioned  50%.  Several  contributors' 
mention that the regime for secondary issuances should be simplified taking into account the 
Market Abuse Regulation and the Transparency Directive.  

Crowdfunding  organisations:  This 
organisations.  

issue  was  hardly  addressed  by  crowdfunding 

Non-governmental  organisations:  Almost  all  contributors  favour  the  introduction  of  a 
lighter regime for subsequent secondary issuances. Only one respondent do not favour as such 
regime  may  be  used  as  a  vehicle  to  benefit  intentionally  from  reduced  prospectus 
requirements.  

The  most  favoured  option  to  amend  Article  4(2)(a)  of  the  Prospectus  Directive  is  that  the 
exemption should apply to all secondary issuances of fungible securities, regardless of their 
proportion with respect to those already issued.  

Stock exchanges: Most stock exchange operators agree on the creation of a lighter regime for 
secondary  issuances.  In  order  to  amend  Article  4(2)(a)  of  the  Prospectus  Directive,  many 
favour  the  option  to  raise  the  dilution  threshold  from  10%  to  20%  or  even  up  to  33%  to 
provide listed companies with more flexibility.  The most elaborated proposals are as follows: 

-  Some argued that in a capital increase, the issuer should have to provide information 
about the use of proceeds and the expense of the offering as this information cannot be 
obtained  by  potential  investors  from  other  sources  or  specific  information  about  the 

- 36 - 

 
offer, the essential characteristics of the securities, and the major risks associated with 
the investment. 

-  Canada is mentioned as a good practice example. The Toronto Stock Exchange does 
impose certain rules relating to the listing of securities issued without a prospectus (i.e. 
by  private  placement)  for  example,  relating  to  market  price  discounts  and  the 
requirement  to  obtain  shareholder  approval  if  the  aggregate  number  of  shares  to  be 
listed  is  greater  than  25%  of  the  shares  outstanding  (the  "25%  anti-dilution  limit"); 
however,  no  prospectus  or  prospectus  exemption  is  required.  In  certain  Member 
States, the 25% anti-dilution limit is likely not required because company law restricts 
the number of shares that can be allotted without shareholder approval and grants pre-
emption rights. 

-  Several  contributors  mention  the  need  to  streamline  the  Prospectus  Directive  in  this 

respect, with the Market Abuse Regulation and the Transparency Directive.  

-  One  respondent  encourages  ESMA  to  work  with  the  International  Organization  of 
Securities  Commissions  (IOSCO)  to  further  promote  such  approach  internationally, 
especially  with  the  US  authorities,  where  many  issuers  also  chose  to  offer  their 
securities as part of their further issues. 

Investors' associations: This issue was hardly addressed by investors' associations.  

-  One  contributor  believes  that  it  is  not  necessary  to  publish  a  new  prospectus  for 
secondary  issuances  which  take  place  within  3  years  after  the  Initial  Public  offering 
(IPO) and do not involve more than 10% of the shares that have already been issued. 
However,  in  any  case,  relevant  information  updates  should  be  made  available  and  if 
any (positive or negative) material changes have taken place that might have an impact 
on  the  (retail)  investor’s  investment  decision  or  meet  the  standard  of  price-sensitive 
information, a new prospectus should nevertheless be published and approved ex ante. 
A  proportionate  disclosure  regime  might  be  applied  to  this  new  prospectus  and 
incorporation by reference should be facilitated. 

Consultancies  and  law  firms:  A  large  majority  of  respondents  support  the  proposal  to 
mitigate or lift the obligation to draw up a prospectus for secondary issuances. Amongst those 
in favour of amending Article 4(2)(a) there is almost no support for raising the threshold.  

-  A  number  of  contributors  mentioned  the  US  Well-known  Seasoned  Issuer  (WKSI) 
system  as  a  good  practice  for  a  lighter  regime,  but  highlighting  that  no  mandatory 
annual registration document should be introduced in the EU.   

-  Prospectus Directive should further strengthen the concept of incorporation of already 
published information by reference and adopt an EU-wide electronic filing system for 
such information (similar to the EDGAR filing system in the US). This should make 
prospectuses shorter, easier to understand and less repetitive.  

-  Provided  that  an  issuer  has  complied  with  its  ongoing  filing/disclosure  obligations 
under  the  Prospectus  Directive/Transparency  Directive,  shareholders  should  have 
sufficient publicly available information on the issuer for a secondary issuance without 
the  need  for  a  full  prospectus.  A  shorter  prospectus,  perhaps  with  risk  factors  and 
working capital may suffice. 

Companies,  SMEs,  micro-enterprises,  sole  traders:  Most  of  respondents  agree  that  the 
obligation to draw up a prospectus could be mitigated or lifted for any subsequent secondary 
issuances of the same securities, providing relevant information updates are made available by 
the issuer. One respondent mentions Canada as a good practice example for the creation of a 

- 37 - 

 
lighter  regime.  In  Canada,  the  review  period  for  a  short  form  prospectus  is  generally  three 
working days and an offering can generally be completed in approximately three weeks.  

There  is  however  a  very  small  minority  of  respondents  against  creating  an  exemption/  a 
lighter regime. 

Financial industry: A large majority of industry associations favours the creation of a lighter 
regime  for  secondary  issuances.  Many  contributors  do  not  see  the  need  for  a  full-blown 
prospectus  for  secondary  issuances  of  securities  listed  on  a  regulated  market,  if  the  same 
information is already published according to the Market Abuse Regulation and Transparency 
Directive.  Some  consider  that a  prospectus  should  not  be  required  at  all  for  such  secondary 
issuances.  Alternatively,  some  contributors  also  support  raising  the  dilution  threshold  up  to 
20% to broaden the exemption. 

3. Treatment of issuers of debt securities with a high denomination per unit 

About  two-thirds  of  respondents  who  expressed  a  view  on  the  issue  considered  that  the 
favourable  treatment  for  high  denomination  bonds  is  detrimental  to  liquidity  on  the 
corporate  bond  secondary  market.  According  to  them,  it  leads  to  reduced  participation  of 
retail  and  high-net-worth  investors  in  the  bond  market.  It  has  resulted  in  excluding  retail 
investors from participating in a significant part of the market, thus depriving the market from 
participants who could otherwise be significant providers of liquidity. In particular, the high 
threshold denies retail investors the opportunity to invest in vanilla debt securities issued by 
established,  investment-grade  companies  that  might  otherwise  be  suitable  for  them.  Fund 
managers highlighted also that the minimum denomination acts as a significant impediment 
when allocating a limited amount of newly issued bonds across a range of funds 

Those disagreeing with any detrimental effect of the EUR 100,000 threshold argued that the 
high  denomination  per  unit  plays  an  insignificant  role  in  the  lack  of  liquidity  of  corporate 
bonds:  a  multitude  of  other  parameters  explain  it,  including  the  “buy  and  hold"  strategy  of 
most  investors  and  the  decreasing  participation  of  market  makers  whose  role  is  critical  to 
support liquidity and the overall functioning of the secondary market. They also highlight that 
in practice institutional investors who do trade in these debt securities will generally trade in 
large  amounts  (most  will  transact  in  transactions  of  EUR  2,000,000  or  above),  so  that  the 
EUR  100,000  denomination  is  of  no  importance  to  them.  The  main  purpose  of  the  EUR 
100 000  threshold  is  to  create  a  practical  distinction  between  retail  and  institutional 
investors.  It  is  designed  to  keep  retail  investors  out  of  these  markets,  otherwise  the 
volatility  of  the  bonds  especially  the  lower  grade  ones  would  increase  litigation  costs  for 
underwriters and issuers. 

The  public  consultation  tested  three  possible  policy  actions  with  a  view  to  mitigating  the 
effects of the EUR 100 000 threshold103. 

a) Lowering the EUR 100 000 threshold 

The issue of a possible change to the EUR 100,000 threshold of Article 3(2)(d) was raised in 
two  different  parts  of  the  consultation  (Questions  4.d  and  15.a).  The  feedback  from 
respondents  to  these  two  questions  displays  some  incoherence  and  therefore  an  analysis  of 
responses  does  not  provide  a  clear  picture.  Under  Question  15.a,  a  clear  majority  of 
respondents favoured lowering the 100,000 threshold. Yet, it is worth noting that half of the 

103 Note that for each policy option, respondents were given the choice between Yes, No and No Opinion, and that 

they were not obliged to support just one option out of the three.   

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respondents  who  supported  this  option  were  individuals.  Conversely,  under  Question  4.d,  a 
clear majority of respondents expressed a preference for leaving the EUR 100,000 threshold 
unchanged.  This  includes  all  Member  States  and  national  competent  authorities,  as  well  as 
investors'  associations.  None  of  the  individuals  who  answered  Question  4d)  answered 
Question 15a). 

Respondents who favour the status quo argued that lowering the EUR 100,000 threshold (e.g. 
back to EUR 50,000 as under Directive 2010/73/EU) would likely create detriment to investor 
protection and would be unlikely to bring about any notable improvement of the liquidity of 
the  secondary  bond  market.  They  consider  the  EUR  100,000  threshold  to  be  a  proper  and 
well-calibrated divider between the institutional and retail bond market, as it helps to ensure 
that complex debt securities such as asset-backed securities and hybrid debt securities such as 
‘contingent convertibles’ are not easily accessible to retail investors. If the threshold were to 
be  lowered,  investor  protection  would  be  affected  as  there  are  individual  investors  who  can 
afford  to  make  investments  of  more  than  EUR  50,000  in  a  single  transaction.  A  general 
feedback  is  that  this  exemption  is  one  that  offers  the  best  legal  certainty  to  debt  securities 
issuers as there is no uncertainty on its scope of application. The prevailing view among that 
group is that EUR 100,000 already strikes an appropriate balance between investor protection 
and  administrative  burden  on  issuer  and  market  liquidity,  and  should  therefore  not  lowered 
nor deleted. 

Those  respondents  who  favour  lowering  the  threshold  back  to  its  EUR  50,000  level  pre-
Directive  2010/73/EC  highlight  that  the  EUR  100,000  denomination  has  proved  harmful  to 
liquidity  in  secondary  markets  and  makes  certain  deals  more  difficult  to  allocate  among 
investors  (for  example  mid-sized  funds  and  private  banking  clients)  due  to  the  high 
denomination.  Most  importantly,  it  results  in  large  groups  of  investors  being  effectively 
excluded  from  participating  in  certain  debt  issues.  A  reduction  will  encourage  investment 
from a broader base of investors, and hence increase liquidity. It will encourage investors to 
join the market and provide savers an option to join the investment market at a lower level of 
financial  exposure.  They  mention  that  EUR  50,000  would  facilitate  the  marketing  of  debt 
products to high net worth individuals, who are closer to the institutional investors than to the 
basic retail investors: they mostly invest through portfolio managers and a prospectus is not of 
much  use  to  them.  Advocates  of  this  move  are  mainly  stakeholders  from  the  asset 
management and banking sectors. There is no significant support from public authorities. 

b)  Removing  some  or  all  of  the  favourable  treatments  granted  to  the  issuers  of  high 
denomination non-equity securities 

This option is supported essentially by individual investors (who do not however provide any 
rationale)  while  banks  and  banking  associations  make  up  most  of  the  group  of  respondents 
who oppose it.  

Opponents  provide  several  rationales  for  not  removing  the  favourable  treatment  of  high-
denomination bonds. The wholesale exemption allows bank to offer securities throughout the 
EU, without the burdens of a prospectus. Removing it would increase the regulatory burden 
for a significant proportion of issuers who currently issue those securities. It would therefore 
increase costs for them and be counter to the aims of the Capital Markets Union initiative. It 
may result in a reduction of issuance levels, with some large issuers choosing to access capital 
markets in the EU and third countries. This would significantly decrease liquidity in European 
capital  markets.  Also,  institutional  investors  do  not  need  the  increased  levels  of  disclosure 
currently required for securities with a denomination below EUR 100 000 (indeed they may 
find it unhelpful to have prospectuses cluttered with information they do not require). Were 

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the favourable treatment to be removed, market efficiency would suffer while no benefit for 
investor protection would be achieved. 

Incidentally, some highlight that the EUR 100 000 exemption is one that offers the best legal 
certainty to debt securities issuers are there is no uncertainties on its scope of application. It is 
widely used by issuers and allows for reduced costs and administrative burdens. 

c) Removing the EUR 100 000 threshold altogether and granting the current exemptions to all 
debt issuers, regardless of the denomination per unit of their debt securities 

There  is  a  broad  support  for  a  simplification  of  the  disclosure  regime  and  a  removal  of  the 
arbitrary  EUR  100  000  threshold  for  disclosure  purpose,  including  from  individual 
respondents.  

Respondents stress that given the costs and burdens of running a "retail compliant" prospectus 
(which for the most part are not read by retail investors), there is an over reliance on the EUR 
100 000 exemption which leads to reduced investment choice for investors. The removal of 
the  EUR  100  000  threshold  is  perceived  as  a  meaningful  tool  to  increase  participation  of 
retail and high net worth investors in the EU corporate bond market. Supporters argue 
that  debt  issues  that  would  otherwise  be  suitable  for  retail  are  regularly  made  in 
denominations of EUR 100 000 or more, in order to benefit from the Article 3(2) exemption 
that  reduces  cost,  and  so  are  inaccessible  to  private  investors.  This  distorts  the  market  in 
favour of the institutional side and starves retail investors of a key asset category. It has led to 
reduced  retail  liquidity  and  company  funding  via  the  bond  medium.  Rather  than  protecting 
retail investors, the EUR 100 000 threshold has deprived them of the opportunity to invest in 
high  rate  corporate  debt  securities  at  the  time  when  it  is  crucial  for  investors  to  be  able  to 
invest in bonds in preparation for the retirement. The removal of the 100 000 threshold would 
therefore end the bias against retail investors in corporate bond issues and free up the flow of 
retail capital into this vital investment category. 

Those respondents call for a unified retail and wholesale market in plain vanilla bonds with a 
single prospectus in the same way as for equities.  

The  view  is  often  expressed  that  while  the  minimum  denomination  should  be  eliminated, 
policy-makers  should  seek  alternative  measures  to  protect  unsophisticated  investors. 
Instead of an arbitrary quantitative threshold, more qualitative measures need to be developed 
to  give  an  appropriate  level  of  protection  to  retail  investors  accessing  bond  markets,  if  the 
threshold  is  eliminated.  Retail  protection  will  be  more  effectively  obtained  through  means 
other  than  the  minimum  denomination  per  unit,  for  instance  through  MiFID  II  investor 
protection measures. 

Stakeholder views as expressed by different interest groups:  

Regulatory and Supervisory authorities: A vast majority of national competent authorities 
were  in  favour  of  keeping  the  current  threshold  as  there  is  no  evidence  that  lowering  the 
threshold  would  lead  to  any  notable  improvement  of  the  liquidity  of  the  secondary  bond 
market. One NCA expressed that the threshold was raised to EUR 100,000 by the Prospectus 
Directive  2  because  of  investor  protection  reasons,  in  particular,  the  evidence  that  the  EUR 
50,000 threshold no longer reflected the distinction between retail and professional investor in 
terms of investment capacity. 

However,  some  respondents  favoured  the  lowering  of  the  threshold  or  even  its  removal.  In 
particular, one NCA strongly favoured the removal of the dual-standard of disclosure in bond 
prospectuses altogether and granting the current exemptions to all debt issuers, regardless of 
the denomination per unit of their debt securities.  

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Crowdfunding  organisations:  This  issue  was  not  addressed  by  any  crowdfunding 
organisation. 

Non-governmental  organisations:  This 
governmental organisations.  

issue  was  hardly  addressed  among  non-

Stock  exchanges:  Some  contributors  expressed  the  view  that  the  threshold  should  be 
maintained  as  it  is  considered  not  detrimental  by  some  stock  exchange  operators.  Some 
contributors from those denying any detrimental effect of the EUR 100,000 threshold consider 
that the high denomination per unit of debt securities play an insignificant role in the lack of 
liquidity  of  corporate  bonds:  a  multitude  of  other  parameters  explain  it,  including  the  “buy 
and  hold"  strategy  of  most  investors  in  the  debt  market  and  the  decreasing  participation  of 
market  makers  whose  role  is  critical  to  support  liquidity  and  the  overall  functioning  of  the 
secondary markets, due to their reduced willingness to maintain inventory and take positions 
for  their  own  risk.  The  problem  of  liquidity  in  the  bond  market  has  to  do  mainly  with  the 
dispersion of the bonds at issuance: the traditional process involves a few large underwriters 
and their clients, which then pass them on (with a cut) to their clients. 

On  the  contrary,  some  contributors  consider  that  the  threshold  should  be  removed.  If 
removed, will most likely increase participation of retail investors in corporate bonds markets, 
and then in turn this would also increase liquidity. 

Investors'  associations:  The  few  investor'  associations  who  expressed  a  view  on  this  issue 
contended  that  the  only  option  to  increase  liquidity  and  maintain  a  high  level  of  investor 
protection  is  to  remove  the  EUR  100.000  exemption  and  make  it  mandatory  to  publish  a 
prospectus for debt securities with denomination per unit of below and above EUR  100,000. 
The  proportionate  disclosure  regime  could  be  applied  to  debt  securities  denominated  above 
EUR  100,000.  Issuers  of  debt  securities  above  a  denomination  per  unit  of  EUR  100,000 
should publish annual and half-yearly financial reports under the Transparency Directive. 

Consultancies and law firms: This issue was hardly addressed. 

Companies, SMEs, micro-enterprises, sole traders: Views are split between those rejecting 
the  view  that  the  exemption  might  have  a  detrimental  effect  and  those  acknowledging  that 
such a detrimental  effect on bond liquidity might exist.  A  majority  is  in  favour  of  lowering 
threshold.  Moreover,  the  option  to  remove  the  threshold  was  not  supported  by  any 
respondents within this category. 

Financial  industries:  The  views  of  associations  were  almost  equally  split  between  the 
different options. Many did not see any link between the high denominations and liquidity and 
therefore  not  need  for  change.  Others  argued  for  a  lower  threshold  not  only  to  improve  the 
liquidity of the securities offered but also because mid-sized funds and private banking clients 
have  problems  accessing  these  securities.  Others  again  argued  to  remove  the  threshold 
altogether  because  rather  than  protecting  investors,  the  existing  threshold  has  reduced 
drastically the investment options for investors that cannot trade in big sizes.  

4. Reforming the proportionate disclosure regime 

A large majority of respondents consider that the proportionate disclosure regime for SMEs 
has not met its original purpose. In practise, issuers who would eligible to it choose to prepare 
a  full-blown  prospectus  instead.  Respondents  interpret  this  choice  as  an  indication  that  the 
benefits of applying the proportionate disclosure regime are too limited and do not outweigh 
the disadvantage of being perceived by investors as providing more limited information when 
compared to large companies. The alleviations the proportionate disclosure regime brings to 
SMEs  are  insufficient  and  do  not  depart  sufficiently  from  the  standard  disclosure  regime  to 

- 41 - 

 
make  any  meaningful  difference  in  terms  of  compliance  cost.  Also,  the  reduction  in 
disclosures does not translate into a faster approval by the competent authority.   

The  choice  to  forego  the  proportionate  disclosure  regime  may  also  result  from  a  perception 
that investors investing in SMEs prefer to receive full disclosure (the market often requires a 
degree  of  disclosure  that  goes  beyond  what  is  strictly  required  by  EU  law).  Providing 
proportionate disclosure may therefore have an adverse effect on the marketability of SMEs' 
securities. Some SMEs therefore choose the full disclosure regime in order to give investors 
information that is comparable to that available for other non-SME issuers. 

The  proportionate  disclosure  regime  is  also  perceived  as  raising  liability  concerns  as  the 
proportionate  disclosure  is  still  required  to  meet  the  stringent  disclosure  test  of  Article  5(1) 
and SMEs are not comfortable with the  risk  of  not  making  full  disclosure. Because of such 
liability issues, banks involved in transactions require that full disclosure is provided. Lastly, 
some respondents consider that some national competent authorities have not adhered to the 
principle of the proportionate disclosure regime and have generally not been favourable to it, 
which may explain why it is not used. 

Some respondents continue to take a positive view on the main principles of this regime, i.e. 
that  there  should  be  proportionality  between  the  company  size  and  the  cost  of  producing  a 
prospectus. Just because the regime has been used only scarcely by issuers, if at all, does not 
necessarily mean  that the  regime is ill-designed  fundamentally. They acknowledge however 
the difficulty in reconciling the proportionate disclosure regime with the fact that SMEs are 
generally associated with a higher degree of risk, which would normally require more, rather 
than less, information to be disclosed to investors. 

Respondents who are supportive of the concept of this regime for SMEs propose a number of 
measures  to  reform  it.  Some  of  them  believe  that  it  can  be  simplified  further  without 
endangering  investor  protection.  There  is  scope  for  avoiding  the  duplication  of  the 
information (on financial performance for instance), promoting a shorter presentation of some 
sections  (e.g.  a  more  tailored  presentation  of  the  governance  section)  and  enhancing  the 
"materiality  filter"  issuers  should  use  for  instance  in  the  business  model  and  risk  factors 
sections. There is a need to bring coherence to transparency requirements and to allow for a 
systematic  incorporation  by  reference  of  available  financial  information.  The  proportionate 
disclosure  regime  will  be  enhanced  if  the  ability  to  incorporate  documents  by  reference  is 
extended  to  issuers  traded  on  MTFs.  Others  argue  that  it  is  not  so  much  the  scope  of 
information which should be reduced but rather the content which should be less detailed. An 
in-depth  work  should  be  undertaken  to  reach  a  more  concise  approach  to  information.  The 
result should be a shorter document,  focused on material items, which would be considered 
useful by retail investors.  

Conversely, other respondents are sceptical about the principles of this regime and therefore 
unsure  whether lightening it further  is the  right approach. They argue that SMEs  are higher 
risk  investments  than  large  issuers  and  as  such  should  be  subject  to  greater  standards  of 
disclosure.  It  is  counterintuitive  to  reduce  the  disclosure  requirements  for  these  companies. 
Due  to  the  lack  of  information  available  in  the  market  concerning  them,  one  should  be 
cautious  about  further  eliminating  disclosure  requirements  for  these  companies.  Some  fear 
that  the  proportionate  disclosure  regime  could  encourage  a  kind  of  negative  selection:  the 
riskiest SMEs which are unable to obtain funding from banks, may use the more permissive 
disclosure standard of the proportionate disclosure regime to tap capital markets instead and 
get funded by retail investors. Lastly, some reckon that due to the local bias of SMEs (deeply 
rooted in local business environments and more dependent on local investors), there is limited 
benefit in developing EU-wide rules, including an amended proportionate disclosure regime, 

- 42 - 

 
and  that  future  regulation  should  leave  Member  States  with  the  latitude  to  address  investor 
protection issues as they see fit. 

Those sceptical about the proportionate disclosure regime express a preference for exploring a 
disclosure  regime  that  falls  outside  of  the  Prospectus  Directive  (a  new  regime  not  derived 
from the full-blown prospectus regime but requiring instead publication of  easy-to-read and 
more  accessible  documents)  or  even  restricting  the  scope  of  the  proportionate  disclosure 
regime, which is currently too wide. The proportionate disclosure regime should not apply if 
an  SME  is  seeking  admission  to  a  regulated  market,  in  which  case  it  should  produce  a  full 
prospectus. The proportionate disclosure regime should only apply to unlisted SMEs or SMEs 
listed  on  an  MTF  which  undertake  an  offer  to  the  public.  Others  advise  to  focus  efforts  on 
alleviating  secondary  issuances  for  all  issuers  (not  just  SMEs)  instead  of  modifying  the 
regime. 

Lastly, one notes a strong divergence between those who contend that eligibility to the regime 
should be venue-neutral, i.e. should not depend on the market on which the issuer is traded, 
but on the characteristics of the issuer (whether it is an SME or not), and those who argue on 
the  contrary  that  there  is  no  justification  for  a  two-tier  disclosure  regime  depending  on 
whether the issuer is an SME or not. 

Stakeholder views as expressed by different interest groups:  

Regulatory  and  Supervisory  authorities:  national  competent  authorities  hardly  addressed 
this issue. Some of the few proposals are:   

- 

Instead  of  trying  (again)  to  reduce  the  disclosure  requirements  for  SMEs,  a  more 
useful exercise for ESMA could be to explore the possibility of standardising further 
the schedules for SMEs (i.e. clarifying what should be the minimum content for each 
item). 

-  The proportionate disclosure regime should become more lighter in order to improve 
its efficiency especially for SMEs without prejudice to investor protection. This could 
be achieved by avoiding duplication of disclosure information already in the Financial 
Statements and in proportionate prospectus schedules under Annexes XXIII and XIV 
of the Prospectus Regulation. This task could be achieved under Level 2.  

Crowdfunding organisations: This issue was not addressed. 

Non-governmental organisations: This issue was hardly addressed. 

Stock  exchanges:  Not  many  views  expressed.  Some  contributors  consider  that  the 
proportionate  disclosure  regime  could  be  enhanced  further  to  make  the  prospectus  regime 
more  workable  for  SMEs  and  companies  with  reduced  market  capitalisation.  They  believe 
that  there  is  scope  for  revising  the  disclosure  requirements  without  impacting  investor 
protection. 

Investors'  associations:  The  few  respondents  to  this  question  consider  that  a  proportionate 
disclosure  regime  should  be  applied  to  SMEs  and  companies  with  reduced  capitalisation 
regardless of whether they are offered or admitted to trading on regular markets, Multilateral 
Trading Facilities (including SME growth markets) or Organised Trading Facilities. 

The Financial Service User Group (FSUG) is supportive of a proportionate disclosure regime 
according to the risks associated with the envisaged commitment or investment. While these 
companies  should  not  be  exempted  from  the  obligation  to  publish  a  prospectus  because  of 
their high risk profile, the disclosure requirements can be lowered (i.e. proportionate) in order 
to facilitate their access to capital market financing and reduce the proportionally very high 
respective costs for SMEs. 

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Consultancies  and  law  firms:  The  majority  of  respondents  support  the  option  of  further 
simplification as the prospectus is still too heavy for very small enterprises. Some contributors 
mention  that  the  proportionate  disclosure  regime  is  not  very  often  used  and  issuers  do  not 
consider it to be very helpful.  

Companies, SMEs, micro-enterprises, sole traders: This issue was hardly addressed. One 
contributor considers that the benefits of the regime are too limited, and its application does 
not  outweight  the  disadvantage  of  being  perceived  by  investors  as  providing  more  limited 
information when compared to large companies.  They suggest a simplification of the content 
requirements,  including  Regulation  (EC)  809/2004.  For  e.g.  the  3-year  historical  financial 
statements  requirement  and  the  risk  factors  paragraph  should  be  reviewed.  The  risk  factors 
paragraph  should  provide  investors  with  concrete  risks  specific  to  the  company,  instead  of 
being  too  long  with  essentially  standardised  paragraphs  merely  serving  as  a  form  of 
disclaimer.  

Financial industry: This issue is hardly addressed by industry associations. Some supported 
further simplification (option 2) while others did not see a need for amendments. 

5. Prospectus summary and the Key Investor Information Document under the 
Packaged Retail and Insurance-Based Investment Products Regulation 

There  is  a  clear  support  for  reassessing  the  rules  applying  to  the  prospectus  summary,  in 
particular regarding the concept of key information and its usefulness for retail investors, as 
more  than  80%  of  respondents  consider  that  there  is  scope  for  improvement  of  the  current 
prospectus summaries and that rules regarding the summary should now be evaluated against 
the  Packaged  Retail  and  Insurance-Based  Investment  Products  Regulation  (PRIIPs) 
Regulation. Many underline the usefulness of the prospectus summary for retail investors, as 
it  is  the  (only)  part  of  the  prospectus  which  they  are  most  likely  to  read.  The  summary,  if 
effective, is considered an essential instrument of protection of investors. 

There  is  clearly  a  widespread  dissatisfaction  from  most  respondents  about  the  current 
summary.  Almost  unanimously,  they  consider  that  the  summary  format  requirements 
introduced by Directive 2010/73/EU have not been helpful, and that the prescriptive modular 
approach  of  Annex  XXII  of  Regulation  No  809/2004  does  not  give  enough  flexibility  to 
issuers to focus their summary on the key information retail investors really need. As a result, 
the  prospectus  summary,  as  it  exists  today,  is  blamed  for  being  too  long,  unwieldy,  too 
comprehensive and unreadable. It looks too much like a mini-prospectus and it is written in 
legal language that is not intelligible for the vast majority of individual investors. Overall, it 
adds costs for companies (incl. translation costs) without any meaningful benefit for investors. 

There  is  therefore  a  wide  support  in  favour  of  a  significant  revamping  of  the  summary 
requirements.  Instead  of  a  compilation  of  legalistic  information  (as  is  the  case  today),  it 
should  become  a  more  qualitative  and  accessible  source  of  information.  The  information 
provided  needs  to  be  relevant,  meaningful,  written  in  plain  language,  otherwise  potential 
investors will not read it. Issuers have demonstrated their ability to draft marketing materials 
that are accessible and reader-friendly: they should adopt the same approach in the prospectus 
summary, while being subject to the overarching principle that the key information about the 
company, its operations,  risks  and the offering information are presented  in  a  fair,  balanced 
and understandable way. 

Many  ideas  are  put  forward  on  how  the  regime  could  be  amended  in  order  to  make  the 
summary fit for purpose: 

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-  Summary  length  –  The  summary  should  be  made  shorter  and  this  could  be  achieved  by 
various means (e.g. providing that the maximum length of the summary shall be 7% of the 
prospectus or 15 pages, whichever is shorter, instead of “whichever is longer” currently; 
returning to a maximum word limit (e.g. 3-4,000 words), as was the case before Directive 
2010/73/EU). 

-  Materiality  and  Risk  factors  –  Increased  emphasis  on  materiality  is  called  for  and 
management should use professional judgement in determining where and in what order 
information is presented in the summary. Provisions should be introduced to stem the rise 
in  generic  risk  factors  that  are  currently  prevalent  in  prospectuses  and  their  summaries. 
Their presentation in the summary should be limited to the top 10 specific risks (i.e. the 
most "material" ones, based on the issuer's judgement). Risk factors with no contingency 
and which are in effect just disclaimers should be banned.  

-  Writing  style  -  The  summary  must  be  written  in  such  a  way  as  to  be  understood  by  the 
least specialist. The writing style must be understood by all (plain language). According to 
journalistic  principles,  each  paragraph  or  sub-part  must  have  an  informative  title.  The 
drafting  of  each  paragraph  should  commence  with  the  principal  information  and  be 
followed by the details. Acronyms, legalese or over-technical terms should be replaced by 
simple terms, or be accompanied by a glossary. 

Cross-referencing  the  prospectus  in  the  summary  should  be  allowed.  It  would  allow 
investors to refer to specific sections of the whole prospectus if they wish so, for a proper 
in-depth assessment. 

The summary should not be required to be in a rigid specified format any more. Issuers should 
be free to draft a narrative they think is a fair summary of the prospectus, based on their own 
judgement. This approach should help to ensure that the summary does not become formulaic 
and  hard  to  understand  for  retail  investors.  They  advocate  a free  form  summary  required  to 
address pre-determined key issues, in a way similar to the PRIIPS key information document 
(KID). It would contain a small number of headings with a mandatory order, but without any 
imposed sub-headings. The summary content should only be subject to a high level principle 
that the information it contains offer a fair, balanced and understandable overview of the key 
information about the company, its operations, risks and the offering information. 

Another group of respondents supports a similar approach, but present the PRIIPS KID as the 
model  to  replicate,  albeit  with  some  variations.  They  call  for  simplifying  and  standardizing 
the summary to transform it into some kind of equivalent of a PRIIPS KID providing retail 
investors with key information about the securities and their issuer in a concise manner and in 
plain, non-technical language. If properly inspired from the KID, a summary should be based 
on  an  easy-to-follow  format,  where  a  certain  number  of  relevant  topics  providing  essential 
information on the issuer would be mentioned. Repetition of information should be avoided as 
much as possible, in particular in relation to financial information. They warn that a simple 
"copy/paste"  of  the  PRIIPS  KID  would  not  be  appropriate.  Applying  the  PRIIPs  KID  to 
shares  and  plain  bonds  would  create  some  difficulties  because  the  PRIIPS  KID  contains 
certain features which make it inappropriate for shares and bonds (the performance scenarios, 
the  summary  risk  indicator  and  the  requirements  to  keep  documentation  up  to  date).  The 
summary,  if  revamped  along  a  KID-like  approach  should  absolutely  avoid  these  features 
which  would  be  inapplicable  for  simple  securities.  Besides,  some  warn  that,  contrary  to  the 
PRIIPS KID, the prospectus summary should contain also information on the issuer and the 
offer terms and conditions. Some also point at the fact that  acknowledge that the respective 
authors of a prospectus summary and KID may be different and that KIDs are not subject to 
approval by national competent authorities.  

- 45 - 

 
Lastly,  on  a  sub-issue,  a  number  of  respondents  suggest  revisiting  the  contents  of  the  base 
prospectus summaries and the issue specific summaries in base prospectuses. The coexistence 
of these two summaries (one included in the base prospectuses and another one, annexed to 
the final terms, for the individual issue) is criticised for putting excessive burdens on issuers, 
making  final  terms  over-complicated  and  summaries  in  base  prospectuses  unreadable  by 
investors. In the non-equity space, for securities issued under a base prospectus, respondents 
support the elimination of the issue specific summary in relation to any product for which a 
KID is available.  

Stakeholder views as expressed by different interest groups:  

Regulatory and Supervisory authorities: The majority of contributors consider that there is 
scope  for  improvement  of  the  current  prospectus  summaries.  Some  of  the  most  frequent 
suggestions are: 

-  Summary length – More adjustments or improvements can be made in terms of length 
and format in order to ensure a more investor friendly document by introducing more 
flexibility.  The  length  of  the  summary  should  be  reconsidered,  i.e.  7%  of  the 
prospectus  or  15  pages,  whichever  is  shorter,  rather  than  the  current  “whichever  is 
longer”.  That  could  be  done  through  (i)  decreasing  of  the  percentage  allowed  in 
comparison to  the prospectus  as  a whole,  (ii)  excluding  the  financial  statement  from 
the calculation of this percentage and (iii) a “ban” of “copy and paste” from the main 
body of the prospectus. 

-  Strong emphasis on the importance of information provided being relevant, written in 
plain language, timely and meaningful. Summary should be short,  simple,  clear, and 
understandable  for  average  retail  investor.  In  reality  summaries  tend  to  be  lengthy, 
generic, technical, not very user friendly and sometimes it seems like smaller version 
of the registration document and securities note. 

-  A  KID  should  not  be  required  where  there  is  an  obligation  to  publish  a  prospectus 
summary.  The  KID  cannot  substitute  the  prospectus  summary  (or  part  of  the 
prospectus summary). The problem of trying to combine both documents is that there 
are  material  differences  between  the  two,  not  only  regarding  the  detail  of  the 
disclosures  (which  is  already  a  very  significant  difference)  but  also  in  terms  of  the 
responsible  person  (intermediary  for  KID;  issuer  for  the  prospectus  summary), 
approval by competent authority (not envisaged in PRIIPS Regulation; mandatory by 
the  Prospectus  Directive);  liability  regimes;  publication  requirements.  Another 
suggestion is to align the format and content of the prospectus summary with those of 
the KID required under the PRIIPS Regulation. Conversely, one contributor does not 
agree to replace the prospectus summary with the key information document required 
under the PRIIPs Regulation. The views are that these two documents are prepared in 
different  way  and  contained  different  set  of  information.  Moreover  the  key 
information document is not approved by the national competent authority. 

-  The  possible  solution  could  be  creation  of  the  Prospectus  Directive  specific  key 
information document containing information on both issuer and securities, this kind 
of  document  would  be  longer  than  key  information  document  prepared  according  to 
PRIIPS  but  shorter  than  current  prospectus  summary  and  it  should  contain  all 
information  which  are  included  in  PRIIPS  key  information  document  to  be 
comparable.  

Crowdfunding  organisations:  The  vast  majority  of  respondents  supported  the  introduction 
of  a  specific  disclosure  document,  referred  to  as  a  standardisation  of  the  KID;  this  would 

- 46 - 

 
represent  an  important  step  towards  market  harmonisation.  Several  contributors  made  a 
proposal according to which SMEs using crowdfunding platforms shall have obligations and 
responsibilities. They consider necessary to harmonize within Europe a template of optional 
information to be sent under the responsibility of the issuer. The template should aim at given 
a harmonized way to present each category of information. Some platforms expect that such 
an  information  document  (as  referred  to  as  “KIID”)  provides  a  level  of  detail  that  would 
enable investors to gauge appropriateness of valuations and the associated risks. In addition, it 
should  also  take  into  account  the  level  of  experience/expertise  of  the  retail  investors,  so 
complexity of such prospectus should aim to provide conceptually simple examples. 

Non-governmental  organisations:  Very  few  and  divergent  opinions  expressed.  Several 
respondents  express  concerns  regarding  the  quality  of  summaries.  The  Federal  Chamber  of 
Labour of Austria conducted a survey on the quality of information of key investor documents 
(UCITS)  in  2013:  The  KID-regulation  requires  (COMMISSION  REGULATION  (EU)  No. 
583/2010 of 1 July 2010) a set of risk warnings which have to an obligatory part of the KID. 
They  stated  that  those  risk  warnings  are  too  general  and  reflect  only  the  given  phrases  laid 
down  in  KID-regulation.  Thus,  both  the  KID  and  the  prospectus  should  contain  a  set  of 
individual risk warnings.  

Conversely, another  respondent  suggests that the  summary  should  be  eliminated  as  the  new 
KID  in  PRIIPs-regulation  should  be  sufficient  for  retail  investors  to  understand  the  main 
features  and  risks  of  the  product.  Therefore,  the  proposal  consists  in  eliminating  the 
prospectus  summary  for  those  securities  falling  under  the  scope  of  the  packaged  retail  and 
insurance-based investment products (PRIIPS) Regulation. 

Stock  exchanges:  Most  contributors  consider  that  where  securities  fall  under  the  scope  of 
PRIIPS  regulation  and  the  prospectus  regime  a  duplication  of  information  contained  in  the 
KID  and  in  the  prospectus  summary  should  be  avoided.  Investors  can  make  an  informed 
investment decision using the information contained in the KID along with the prospectus and 
the issuer related information published according to the Transparency Directive. 

The  highlighted  benefits  deriving  from  the  alignment  of  the  format  and  content  of  the 
prospectus  summary  with  those  of  the  KIID  are  costs  reduction  and  promotion  of 
comparability of products. 

Nevertheless,  some  respondents  are  concerned  with  the  fact  that  as  issuers  are  liable  for  all 
information  that  is  included  in  the  prospectus,  the  use  of  only  a  KID  may  present  liability 
problems.  

Investors'  Associations:  All  contributors  present  concerns regarding  the  current  prospectus 
summary  regime  and  therefore  favour  its  revision.  Most  frequently  suggestions  for  its 
improvement are: 

-  The prospectus summary should be replaced by a ‘Key Information Document’ (KID) 
under the PRIIPs Regulation where both pieces of legislation, but it would go further 
and suggest that a three page maximum KID should be the required form of summary 
for all prospectuses. The Commission should  undertake detailed consumer  testing of 
the  prospectus  summary  to  identify  how  consumers  interact  with  this  document  and 
how it influences their decision-making. Such research should occur before any formal 
legislative proposal is issued to alter, or abolish, the prospectus summary.  

-  The  summary  prospectus  should,  read  on  its  own,  provide  the  investor  with  an 
overview  of all the  material  risks  associated with a certain investment decision. It is 
the responsibility of the issuer to judge the materiality of the risks associated with the 
investment  and  to  make  sure  that  the  summary  prospectus  provides  a  true  and  fair 

- 47 - 

 
view  of  the  risks.  The  issuer  should  be  liable  on  the  basis  of  the  revised  summary 
prospectus. Value-enhancing measures should moreover include a requirement for an 
adequate readability of the (summary) prospectus accompanied by the introduction of 
a  risk-weighting  model  that  shows  (potential)  investors  the  probability  of  risk 
occurrence and the risk impact. One respondent fully supports the development of risk 
labels for financial products which indicates the risk level of savings and investment 
products in a highly standardised format. It is intended to enable retail clients to gain 
an initial insight into the risk associated with such products. They also refer to good 
practices existing in Belgium. 

-  Some respondents propose to attach liability to the summary prospectus. The summary 
prospectus  should  provide  the  investor  with  an  overview  of  all  the  material  risks 
associated  with  a  certain  investment  decision.  It  is  the  responsibility  of  the  issuer  to 
judge  the  materiality  of  the  risks  associated  and  to  make  sure  that  the  summary 
prospectus  provides  a  true  and  fair  view.  The  risks  should  be  ordered  according  to 
their degree of materiality (from high to low).  

Most respondents agree that the length should be limited to 10 pages. 

Consultancies  and  law  firms:  Not  many  contributors  answered  this  question.  One 
contributor  supports  the  legislative  developments  on  key  information  documents  and 
welcomes the efforts to simplify the disclosure requirements for PRIIPs whilst maintaining a 
high standard of investor protection. The combination of a prospectus and a KID for packaged 
products  provides  sufficient  information  for  prospective  retail  investors  and  an  additional 
disclosure requirement in the form of a summary prospectus is not necessary. 

Companies, SMEs, micro-enterprises, sole traders: Several contributors consider that any 
duplication of information should be avoided as it creates market inefficiency and increases 
costs.  Therefore,  any  securities  that  are  the  subject  of  a  prospectus  prepared  in  accordance 
with the Prospectus Directive should be exempted from the scope of the PRIPs regulation and 
vice versa. 

Financial industry: The vast majority of industry associations are in favour of aligning the 
prospectus  summary  with  a  KID+.  Most  contributors  consider  that  the  summary  should  be 
eliminated  for  those  securities  falling  under  the  PRIIPS  Regulation.  This  would  reduce 
unnecessary costs and also streamlining administrative burdens. 

One contributor considers that for retail investors, the PRIIPs KID offers the best disclosure 
mechanism given as (a) it is the shorter document and more likely to be read; (b) it aims to 
enhance  comparability  across  a  wide  range  of  different  instrument  types,  not  just  securities 
which  require  a  prospectus;  and  (c)  the  PRIIPs  Regulation  allows  the  KID  to  cross-refer  to 
other documents. 

6. System for the electronic publication of prospectuses 

In view of the example of the Transparency Directive it was asked in the public consultation, 
whether a single, centralised, EU database should be created for prospectuses as well. Such a 
database could operate as a unique entry point for both investors and persons producing and 
filing  prospectuses  across  the  28  Member  States  and  could  facilitate  effective  cross-border 
access to information. Depending on its design it could even help streamlining the process of 
prospectus filing by issuers. 

- 48 - 

 
71 of the 88 respondents to the question supported the suggestion (7 regulators/governments, 
58  companies/associations,  6  individuals);  17  were  against  such  a  system  (3  regulators,  13 
companies/associations, 1 individual). 

Arguments  in  favour  were  lower  costs  for  issuers,  easier  and  speedier  submissions  and 
approval  processes  and  greater  transparency.  An  integrated  system  should  also  facilitate 
harmonisation  and  the  spread  of  best  practices  which,  in  turn,  should  enhance  investor 
protection. A one-stop-shop for all relevant information (Prospectus Directive, Transparency 
Directive,  Market  Abuse  Regulation/Directive)  would  avoid  the  duplication  of  information 
provision, would be a natural part of the Capital Market Union and would improve the global 
competitiveness of EU markets. Investors would benefit from easier access and comparison of 
documents  and  wider  choice  across  borders.  Supervisors  could  enhance  their  monitoring  of 
the  passporting  of  prospectuses  and  benefit  from  cooperation  /  best  practices.  In  the  end, 
separate national databases in all Member States would be more expensive.  

Opponents argue that national competent authorities would be and should remain the natural 
contact points; the more so as most prospectuses were only relevant nationally. Links from an 
ESMA  web  portal  as  under  the  Transparency  Directive  to  the  national  databases  would  be 
sufficient.  An  entirely  new  database  would  be  extremely  costly  and  burdensome  to  set  up, 
especially  in  view  of  the  translation  needs  that  would  evolve.  It  would  provide  little  to  no 
added value as all the information was already available online. 

Stakeholder views as expressed by different interest groups:  

Regulatory and Supervisory authorities: Most competent authorities supported the creation 
of a single, centralised, EU database but expressed some concerns regarding costs. Arguments 
from those acknowledging the benefits of such system:  

- 

It would facilitate the harmonization between different Member States and thus avoid 
the selection of different jurisdictions depending on its flexibility. 

-  ESMA’s  role  as  a  central  access  point  as  an  integrated  EU  filing  system  for  all 
prospectuses  should  be  further  improved  including  the  finals  terms.  The  provisions 
concerning  notification  and  communication  procedures  with  regard  to  approved 
prospectuses and filed final terms (Article 5 (4), 14 (1), 17 and 18 of the Prospectus 
Directive) could be streamlined. 

Crowdfunding organisations: This issue was not addressed. 

Non-governmental organisations: Most contributors welcome the creation of an EU filling 
system. Arguments in favour of this option include:  

It would allow users to easily navigate between all prospectuses in the EU. 

- 
-  Better  accessibility  and  comparability.  It  will  be  easier  to  make  the  website  well-

- 

known to companies and consumers.  
It  would  be  a  logical  consequence  of  the  CMU.  A  central  information  storage  of  all 
issuer  related  information  would  enhance  transparency  around  prospectuses  and  the 
approval and pass-porting process, as well as enhancing the accessibility for investors 
to any related information, thereby enhancing investor protection. 

Moreover, some contributors made the following suggestions: 

-  The  EU  filling  system  could  be  run  by  an  already  well-known  organisation  (e.  g. 

- 

national competent authorities or ESMA). 
It should further more be clear to the investor that the authority managing the platform 
(e.g.  ESMA)  does  not  guarantee  the  correctness  of  the  information  provided  in  the 
prospectus. 

- 49 - 

 
-  The  system  should  be  complementary  to  the  obligation  of  issuers  to  publish  the 

prospectus on, for example, their own website.  

-  The possibility to request a paper version, on the basis of Article 14(7), should in any 

case remain.  

One contributor against such system considers that most prospectuses will be of no relevance 
to investors outside the member state in which they were approved. 

Stock  exchanges:  The  majority  of  stock  exchange  respondents  –only  one  exception-  are  in 
favour  of  the  creation  of  a  single,  centralised,  EU  database  as  it  would  be  beneficial  for 
issuers and investors.  The contributors made the following suggestions: 

-  The EU filling system should be free of charge and prospectuses should be available 

for an indefinite period of time. 

-  The European Electronic Access Point which is in progress by ESMA and deals with 
the dissemination of regulated information, could be used to cover this need with no 
additional implementation costs. 

-  The  facility  should  be  available  if  prospectuses  are  made  pan-EU  documents 

(automatically passported).  

-  Use  of  modern  technology,  such  as  XBRL  schema,  to  support  cross-border 
comparability of prospectuses would facilitate a single integrated filing system. As has 
been raised in discussions relating to the Shareholder Rights Directive, there may also 
be an argument in favour of issuers providing translations of certain key information 
into  a  common  language  such  as  English  for  the  benefit  of  investors  from  other 
Member States. 

Investors'  associations:  Only  two  investors  associations  addressed  this  question.  Both 
respondents  highlighted  the  benefits  of  the  creation  of  a  single,  centralised,  EU  database  as 
such  system  would  increase  accessibility,  transparency  and  comparability.    Moreover,  they 
note that it should be complementary to the obligation of issuers to publish the prospectus on, 
for e.g. on their own website. Furthermore, it should be clear to the investor that the authority 
managing the platform, e.g. ESMA, does not guarantee the correctness of the info provided in 
the prospectus. 

Consultancies and law firms: A majority of consultancies and law firms support the creation 
of a database. One respondent suggested the creation of a central and comprehensive database 
similar to the US EDGAR system. Only two respondents favoured the status quo.  The main 
concerns expressed concern costs, additional complexity and language barriers. Amongst the 
arguments in favour of such system: issuers would benefit from lower cost of capital resulting 
from a wider pool of investors.  

Companies, SMEs, micro-enterprises, sole traders: Many contributors support the creation 
of  a  single,  centralised,  EU  database  as  investors  and  issuers  would  be  able  to  access  and 
compare documents easily. This system would increase the ease of use of an "incorporation 
by  reference"  system.  Another  respondent  considered  a  unique  access  to  all  prospectuses 
published  in  Europe  a  pragmatic  example  of  what  capital  market  union  should  look  like: 
implementation of appropriate tools at a unified European level. ESMA is a good candidate 
for  leading  the  project.  While  some  respondents  expressed  concerns  regarding  the  costs 
involved, the majority considered that the benefits would far outweigh the set-up costs. 

Financial industry: A majority of respondents are in favour of creating a single, centralised, 
EU  database.  An  integrated  EU  filing  system  would  give  investors  the  possibility  to  get  a 
complete  overview  of  all  offers  to  the  public  within  a  certain  category  of  instruments. 

- 50 - 

 
Therefore,  this  system  would  enhance  transparency  and  accessibility  for  investors  to  any 
related information, thereby improving investor protection. 

Several  industry  associations  suggest  using  the  Officially  Appointed  Storage  Mechanisms 
(OAMs) along with the pan European network of OAMs. 

II. STATISTICS OF THE RESPONSES TO THE ISSUES DISCUSSED IN THE IMPACT ASSESSMENT: 

Online public consultation on the review of the Prospectus Directive 
- Statistics exported from EUSurvey –104 

Are you replying as: 

a private individual 
an organisation or a company 
a public authority or an international organisation 21 

Answers Ratio 
36 
125 

19.78%
68.68%
11.54%

Type of organisation: 

Answers Ratio 
Academic institution 
0 
Company, SME, micro-enterprise, sole trader 25 
12 
Consultancy, law firm 
3 
Consumer organisation 
51 
Industry association 
0 
Media 
7 
Non-governmental organisation 
0 
Think tank 
0 
Trade union 
27 
Other 

0% 
13.74%
6.59% 
1.65% 
28.02%
0% 
3.85% 
0% 
0% 
14.84%

Type of public authority 

Answers Ratio 
1.1% 
2 
International or European organisation 
0% 
0 
Regional or local authority 
4.4% 
Government or Ministry 
8 
6.04% 
Regulatory authority, Supervisory authority or Central bank 11 
0.55% 
1 
Other public authority 

104  Please  note  that  the  percentage  figures  reported  in  the  column  'Ratio'  always  refer  to  the  full  number  of  182 
responses and not only to the responses to the respective question. Therefore, in almost all cases these percentage 
figures do not add up to 1. 

- 51 - 

 
 
 
 
 
 
 
 
 
 
                                                 
Where are you based and/or where do you carry out your activity? 

Answers  Ratio 
4.4% 
8 
Austria 
9.89% 
18 
Belgium 
1.1% 
2 
Bulgaria 
1.1% 
2 
Croatia 
0.55% 
Cyprus 
1 
1.1% 
Czech Republic  2 
2.75% 
5 
Denmark 
0% 
0 
Estonia 
1.1% 
2 
Finland 
12.09% 
22 
France 
20.88% 
38 
Germany 
1.1% 
2 
Greece 
0.55% 
1 
Hungary 
0% 
0 
Iceland 
1.65% 
3 
Ireland 

Italy 
Latvia 

7 
0 

3.85% 
0% 

Answers Ratio 
0 
Liechtenstein 
0 
Lithuania 
1 
Luxembourg 
0 
Malta 
1 
Norway 
2 
Poland 
1 
Portugal 
0 
Romania 
3 
Slovakia 
0 
Slovenia 
5 
Spain 
4 
Sweden 
1 
Switzerland 
The Netherlands 6 
37 
United 
Kingdom 
Other country 

0% 
0% 
0.55% 
0% 
0.55% 
1.1% 
0.55% 
0% 
1.65% 
0% 
2.75% 
2.2% 
0.55% 
3.3% 
20.33% 

4.4% 

8 

Field of activity or sector (if applicable): 

Answers  Ratio 
8.79% 
16 
Accounting 
7.14% 
13 
Auditing 
17.03% 
31 
Banking (issuing-finance department) 
14.84% 
27 
Banking (investment department) 
2.2% 
4 
Credit rating agencies 
4.4% 
8 
Insurance 
5.49% 
10 
Pension provision 
20.33% 
Investment management  
37 
15.38% 
Market infrastructure operation (e.g. CCPs, CSDs, Stock exchanges) 28 
3.3% 
6 
Social entrepreneurship 
41.21% 
75 
Other 
Not applicable 
14.84% 
27 
Please indicate if you are: 

a company listed on a regulated market of the European Economic Area  
a company whose securities are admitted to trading on a multilateral trading 
facility (MTF) of the EEA 
none of the above 

Answers  Ratio
6.04%
11 
0.55%
1 

13 

7.14%

Please indicate if you are: 

a  company  with  a  market  capitalisation  below  EUR  200  000  000  ("small 
and  medium-sized  enterprise"  under  the  meaning  of  Article  4(1)(13)  of 
Directive 2014/65/UE) 
a  company  meeting  at  least  2  of  the  following  3  criteria:  1.  an  average 
number of employees during the financial year of less than 250, 2. a total 

Answers  Ratio 
0 

0% 

6 

3.3% 

- 52 - 

 
 
 
 
 
 
 
 
 
 
 
balance sheet not exceeding EUR 43 000 000 3. an annual net turnover not 
exceeding  EUR  50  000  000  ("small  and  medium-sized  enterprise";  under 
the meaning of Article 2(1)(f) of Directive 2003/71/EC) 
none of the above 

19 

10.44%

1. Is the principle, whereby a prospectus is required whenever securities are admitted to 
trading on a regulated market or offered to the public, still valid? In principle, should a 
prospectus be necessary for: 

Admission to trading on a regulated market 
An offer of securities to the public 
Should  a  different  treatment  should  be  granted  to  the  two  purposes  (i.e. 
different types of prospectus for an admission to trading and an offer to the 
public) 
Other 
Don't know / no opinion 

Answers  Ratio 
51.1% 
93 
54.4% 
99 
10.44%
19 

8 
18 

4.4% 
9.89% 

c.  What  fraction  of  the  costs  indicated  above  would  be  incurred  by  an  issuer  anyway, 
when offering securities to the public or having them admitted to trading on a regulated 
market,  even  if  there  were  no  prospectus  requirements,  under  both  EU  and  national 
law? Please estimate this fraction. 

Yes, a percentage of the costs above would be incurred anyway 21 
1 
No 
66 
Don't know / no opinion 

11.54% 
0.55% 
36.26% 

Answers  Ratio 

3. Bearing in mind that the prospectus, once approved by the home competent authority, 
enables an issuer to raise financing across all EU capital markets simultaneously, are the 
additional  costs  of  preparing  a  prospectus  in  conformity  with  EU  rules  and  getting  it 
approved by the competent authority outweighed by the benefit of the passport attached 
to it? 

Answers  Ratio 
14.29%
26 
Yes 
16.48%
No 
30 
21.98%
Don't know / no opinion  40 

4. The exemption thresholds in Articles 1(2)(h) and (j), 3(2)(b), (c) and (d), respectively, 
were initially designed to strike an appropriate balance between investor protection and 
alleviating  the  administrative  burden  on  small  issuers  and  small  offers.  Should  these 
thresholds  be  adjusted  again  so  that  a  larger  number  of  offers  can  be  carried  out 
without a prospectus?  

a) the EUR 5 000 000 threshold of Article 1(2)(h): 
Answers Ratio 
20.33%
32.97%
19.78%

Yes, from EUR 5 000 000 to more  37 
60 
No 
36 
Don't know / no opinion 

b) the EUR 75 000 000 threshold of Article 1(2)(j): 
Answers Ratio 

- 53 - 

 
 
 
 
 
 
 
 
 
 
 
 
Yes, from EUR 75 000 000 to more  13 
44 
No 
73 
Don't know / no opinion 

7.14% 
24.18%
40.11%

c) the 150 persons threshold of Article 3(2)(b): 
Answers Ratio 

Yes, from 150 persons to more  41 
47 
No 
45 
Don't know / no opinion 

22.53%
25.82%
24.73%

d) the EUR 100 000 threshold of Article 3(2)(c) & (d): 

Yes, from EUR 100 000 to more  17 
62 
No 
56 
Don't know / no opinion 

Answers Ratio 
9.34% 
34.07%
30.77%

5.  Would  more  harmonisation  be  beneficial  in  areas  currently  left  to  Member  States' 
discretion,  such  as  the  flexibility  given  to  Member  States  to  require  a  prospectus  for 
offers of securities with a total consideration below EUR 5 000 000? 

Yes 
No 
Other areas 
Don't know / no opinion  37 

Answers  Ratio 
37.36%
68 
14.84%
27 
0.55% 
1 
20.33%

6.  Do  you  see  a  need  for  including  a  wider  range  of  securities  in  the  scope  of  the 
Directive than transferable securities as defined in Article 2(1)(a)? 

Answers  Ratio 
5.49% 
Yes 
10 
39.01%
71 
No 
27.47%
Don't know / no opinion  50 

7.  Can  you  identify  any  other  area  where  the  scope  of  the  Directive  should  be  revised 
and  if  so  how?  Could  other  types  of  offers  and  admissions  to  trading  be  carried  out 
without a prospectus without reducing consumer protection? 
Answers  Ratio 
31.87%
58 
Yes 
13.19%
No 
24 
25.82%
Don't know / no opinion  47 

8.  Do  you  agree  that  while  an  initial  public  offer  of  securities  requires  a  full-blown 
prospectus, the obligation to draw up a prospectus could be mitigated or lifted for any 
subsequent  secondary  issuances  of  the  same  securities,  provided  that  relevant 
information updates are made available by the issuer? 

Yes 
No 
Don't know / no opinion  22 

Answers  Ratio 
57.69%
105 
3.85% 
7 
12.09%

- 54 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
9. How should Article 4(2)(a) be amended in order to achieve this objective105? 

The 10% threshold should be raised 
The  exemption  should  apply  to  all  secondary  issuances  of  fungible 
securities,  regardless  of  their  proportion  with  respect  to  those  already 
issued 
No amendment 
Don't know / no opinion 

Answers  Ratio 
14.84%
27 
23.63%
43 

20 
35 

10.99%
19.23%

10. If the exemption for secondary issuances were to be made conditional to a full-blown 
prospectus  having  been  approved  within  a  certain  period  of  time,  which  timeframe 
would be appropriate? 

One or several years 
There  should  be  no  timeframe  (i.e.  the  exemption  should  still  apply  if  a 
prospectus was approved ten years ago) 
Don't know / no opinion 

Answers  Ratio 
35 
51 

19.23%
28.02%

39 

21.43%

11. Do you think that a prospectus should be required when securities are admitted to 
trading on an MTF? 

Yes, on all MTFs 
Yes, but only on those MTFs registered as SME growth markets 3 
No 
Don't know / no opinion 

71 
27 

Answers  Ratio 
28 

15.38% 
1.65% 
39.01% 
14.84% 

12. Were the scope of the Directive extended to the admission of securities to trading on 
MTFs,  do  you  think  that  the  proportionate  disclosure  regime  (either  amended  or 
unamended) should apply? 

Yes, the amended regime should apply to all MTFs 
Yes, the unamended regime should apply to all MTFs 
Yes, the amended regime should apply but not to those MTFs registered as 
SME growth markets 
Yes, the unamended regime should apply but not to those MTFs registered 
as SME growth markets 
Yes, the amended regime should apply but only to those MTFs registered 
as SME growth markets 
Yes,  the  unamended  regime  should  apply  but  only  to  those  MTFs 
registered as SME growth markets 
No 
Don't know / no opinion 

Answers  Ratio 
25 
1 
3 

13.74%
0.55% 
1.65% 

1 

10 

1 

37 
38 

0.55% 

5.49% 

0.55% 

20.33%
20.88%

13.  Should  future  European  long  term  investment  funds  (ELTIF),  as  well  as  certain 
European  social  entrepreneurship  funds  (EuSEF)  and  European  venture  capital  funds 
(EuVECA)  of  the  closed-ended  type  and  marketed  to  non-professional  investors  be 

105 To mitigate or lift the obligation to draw up a prospectus for any subsequent secondary issuances of the same 

securities, provided that relevant information updates are made available by the issuer 

- 55 - 

 
 
 
 
 
 
 
 
 
                                                 
exempted  from  the  obligation  to  prepare  a  prospectus  under  the  Directive,  while 
remaining  subject  to  the  bespoke  disclosure  requirements  under  their  sectorial 
legislation and to the PRIIPS key information document? 

Yes, such an exemption would not affect investor/consumer protection in a 
significant way 
No, such an exemption would affect investor/consumer protection 
Don't know / no opinion 

Answers  Ratio 
17.03%
31 

18 
71 

9.89% 
39.01%

14.  Is  there  a  need  to  extend  the  scope  of  the  exemption  provided  to  employee  shares 
schemes in Article 4(1)(e) to non-EU, private companies? 

Answers  Ratio 
23.08%
42 
Yes 
6.59% 
No 
12 
31.87%
Don't know / no opinion  58 

15. Do you consider that the system of exemptions granted to issuers of debt securities 
above a denomination per unit of EUR 100 000 under the Prospectus and Transparency 
Directives may be detrimental to liquidity in corporate bond markets? 

Answers  Ratio 
35.71%
65 
Yes 
19.23%
No 
35 
17.58%
Don't know / no opinion  32 
If you have answered yes: 
a) Do you then think that the EUR 100 000 threshold should be lowered? 

Answers  Ratio 
29.12%
53 
Yes 
3.3% 
No 
6 
2.2% 
Don't know / no opinion  4 

b) Do you then think that some or all of the favourable treatments granted to the above 
issuers should be removed? 

Answers  Ratio 
16.48%
30 
Yes 
11.54%
No 
21 
2.75% 
Don't know / no opinion  5 

c) Do you then think that the EUR 100 000 threshold should be removed altogether and 
the  current  exemptions  should  be  granted  to  all  debt  issuers,  regardless  of  the 
denomination per unit of their debt securities? 

Answers  Ratio 
21.98%
40 
Yes 
6.59% 
No 
12 
2.2% 
Don't know / no opinion  4 

16. In your view, has the proportionate disclosure regime (Article 7(2)(e) and (g)) met its 
original purpose to improve efficiency and to take account of the size of issuers?  

Yes 
No 

Answers  Ratio 
4.4% 
8 
32.97%
60 

- 56 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
Don't know / no opinion  45 

24.73%

17)  Is  the  proportionate  disclosure  regime  used  in  practice,  and  if  not  what  are  the 
reasons?  
a) Proportionate regime for rights issues 

Answers  Ratio 
6.04% 
11 
Yes 
23.63%
43 
No 
27.47%
Don't know / no opinion  50 

b)  Proportionate  regime  for  small  and  medium-sized  enterprises  and  companies  with 
reduced market capitalisation 

Answers  Ratio 
12.09%
22 
Yes 
18.68%
34 
No 
25.82%
Don't know / no opinion  47 

c) Proportionate regime for issues by credit institutions referred to in Article 1(2)(j) of 
Directive 2003/71/EC 

Answers  Ratio 
2.75% 
5 
Yes 
9.34% 
No 
17 
42.86%
Don't know / no opinion  78 

19.  If  the  proportionate  disclosure  regime  were  to  be  extended,  to  whom  should  it  be 
extended? 

To types of issuers or issues not yet covered 
To  admissions  of  securities  to  trading  on  an  MTF,  supposing  those  are 
brought into the scope of the Directive 
Other 
Don't know / no opinion 

Answers  Ratio 
6.04% 
11 
7.69% 
14 

24 
49 

13.19%
26.92%

20.  Should  the  definition  of  'company  with  reduced  market  capitalisation'  (Article 
2(1)(t))  be  aligned  with  the  definition  of  SME  under  Article  4(1)(13)  of  Directive 
2014/65/EU by raising the capitalisation limit to EUR 200 000 000? 

Answers  Ratio 
26.37%
48 
Yes 
10.44%
No 
19 
21.43%
Don't know / no opinion  39 

21. Would you support the creation of a simplified prospectus for SMEs and companies 
with  reduced  market  capitalisation  admitted  to  trading  on  an  SME  growth  market,  in 
order to facilitate their access to capital market financing? 

Yes 
No,  the  higher  risk  profile  of  SMEs  and  companies  with  reduced  market 
capitalisation  justifies  disclosure  standards  that  are  as  high  as  for  issuers 
listed on regulated markets 
Don't know / no opinion 

Answers  Ratio 
22.53%
41 
17.58%
32 

36 

19.78%

- 57 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
23.  Should  the  provision  of  Article  11  (incorporation  by  reference)  be  recalibrated  in 
order to achieve more flexibility? 

Answers  Ratio 
40.66%
74 
Yes 
7.14% 
No 
13 
16.48%
Don't know / no opinion  30 

24.  a)  Should  documents  which  were  already  published/filed  under  the  Transparency 
Directive  no  longer  need  to  be  subject  to  incorporation  by  reference  in  the  prospectus 
(i.e. neither a substantial repetition of substance nor a reference to the document would 
need  to  be  included  in  the  prospectus  as  it  would  be  assumed  that  potential  investors 
have anyhow access and thus knowledge of the content of these documents)? 

Answers  Ratio 
19.23%
35 
Yes 
29.12%
No 
53 
14.29%
Don't know / no opinion  26 

b) Do you see any other possibilities to better streamline the disclosure requirements of 
the Prospectus Directive and the Transparency Directive? 

Answers  Ratio 
17.58%
Yes 
32 
8.79% 
16 
No 
30.77%
Don't know / no opinion  56 

25.  Article  6(1)  Market  Abuse  Directive  obliges  issuers  of  financial  instruments  to 
inform the public as soon as possible of inside information which directly concerns the 
said  issuers;  the  inside  information  has  to  be  made  public  by  the  issuer  in  a  manner 
which  enables  fast  access  and  complete,  correct  and  timely  assessment  of  the 
information  by  the  public.  Could  this  obligation  substitute  the  requirement  in  the 
Prospectus  Directive  to  publish  a  supplement  according  to  Article  17  without 
jeopardising  investor  protection  in  order  to  streamline  the  disclosure  requirements 
between Market Abuse Directive and Prospectus Directive? 

Answers  Ratio 
31.87%
58 
Yes 
15.38%
No 
28 
17.58%
Don't know / no opinion  32 

26. Do you see any other possibility to better streamline the disclosure requirements of 
the Market Abuse Directive and the Prospectus Directive? 

Answers  Ratio 
9.34% 
17 
Yes 
11.54%
No 
21 
34.07%
Don't know / no opinion  62 

- 58 - 

 
 
 
 
 
 
 
 
 
 
 
 
27. Is there a need to reassess the rules regarding the summary of the prospectus? 

Yes, regarding the concept of key information and its usefulness for retail 
investors 
Yes, regarding the comparability of the summaries of similar securities 
Yes, regarding the interaction with final terms in base prospectuses 
No 
Don't know / no opinion 

Answers  Ratio 
34.62%
63 

25 
29 
16 
37 

13.74%
15.93%
8.79% 
20.33%

28.  For  those  securities  falling  under  the  scope  of  both  the  packaged  retail  and 
insurance-based  investment  products  (PRIIPS)  Regulation,  how  should  the  overlap  of 
information  required  to  be  disclosed  in  the  key  investor  document  (KID)  and  in  the 
prospectus summary, be addressed? 

By  providing  that  information  already  featured  in  the  KID  need  not  be 
duplicated in the prospectus summary 
By eliminating the prospectus summary for those securities 
By aligning the format and content of the prospectus summary with those 
of  the  KID  required  under  the  PRIIPS  Regulation,  in  order  to  minimise 
costs and promote comparability of products 
Other 
Don't know / no opinion 

Answers  Ratio 
6.59% 
12 

27 
24 

21 
35 

14.84%
13.19%

11.54%
19.23%

29.  Would  you  support  introducing  a  maximum  length  to  the  prospectus?  If  so,  how 
should such a limit be defined? 

Yes, it should be defined by a maximum number of pages 9 
6 
Yes, it should be defined using other criteria 
95 
No 
18 
Don't know / no opinion 

Answers Ratio 
4.95% 
3.3% 
52.2% 
9.89% 

31.  Do  you  believe  the  liability  and  sanctions  regimes  the  Directive  provides  for  are 
adequate? 
The overall civil liability regime of Article 6 

Answers  Ratio 
Yes 
25 
23 
No 
No opinion  44 

13.74% 
12.64% 
24.18% 

The specific civil liability regime for prospectus summaries of Article 5(2)(d) and Article 
6(2) 

Answers  Ratio 
29 
Yes 
20 
No 
No opinion  43 

15.93% 
10.99% 
23.63% 

The sanctions regime of Article 25 

Yes 
No 

Answers  Ratio 
26 
21 

14.29% 
11.54% 

- 59 - 

 
 
 
 
 
 
 
 
 
 
 
 
No opinion  44 

24.18% 

32.  Have  you  identified  problems  relating  to  multi-jurisdiction  (cross-border)  liability 
with regards to the Directive? 

Answers  Ratio 
22.53%
41 
Yes 
6.04% 
No 
11 
32.42%
Don't know / no opinion  59 

33.  Are  you  aware  of  material  differences  in  the  way  national  competent  authorities 
assess  the  completeness,  consistency  and  comprehensibility  of  the  draft  prospectuses 
that are submitted to them for approval? 

Answers  Ratio 
27.47%
50 
Yes 
6.04% 
11 
No 
25.82%
Don't know / no opinion  47 

34. Do you see a need for further streamlining of the scrutiny and approval procedures 
of prospectuses by NCAs? 

Answers  Ratio 
20.33%
37 
Yes 
13.19%
No 
24 
24.18%
Don't know / no opinion  44 

35.  Should  the  scrutiny  and  approval  procedure  be  made  more  transparent  to  the 
public? 

Answers  Ratio 
7.69% 
14 
Yes 
30.22%
No 
55 
22.53%
Don't know / no opinion  41 

36.  Would  it  be  conceivable  to  allow  marketing  activities  by  the  issuer  in  the  period 
between the first submission of a draft prospectus and the approval of its final version, 
under  the  premise  that  no  legally  binding  purchase  or  subscription  would  take  place 
until the prospectus is approved? 

Answers  Ratio 
25.82%
47 
Yes 
17.03%
No 
31 
14.84%
Don't know / no opinion  27 

- 60 - 

 
 
 
 
 
 
 
 
 
 
 
 
37. What should be the involvement of national competent authorities (NCA) in relation 
to prospectuses? Should NCA: 

review  all  prospectuses  ex  ante  (i.e.  before  the  offer  or  the  admission  to 
trading takes place) 
review only a sample of prospectuses ex ante (risk-based approach) 
review  all  prospectuses  ex  post  (i.e.  after  the  offer  or  the  admission  to 
trading has commenced) 
review only a sample of prospectuses ex post (risk-based approach) 
Other 
Don't know / no opinion 

Answers  Ratio 
36.26%
66 

6 
0 

0 
14 
23 

3.3% 
0% 

0% 
7.69% 
12.64%

38. Should the decision to admit securities to trading on a regulated market (including, 
where  applicable,  to  the  official  listing  as  currently  provided  under  the  Listing 
Directive) be more closely aligned with the approval of the prospectus and the right to 
passport? 

Answers  Ratio 
15.93%
29 
Yes 
16.48%
30 
No 
21.98%
Don't know / no opinion  40 

39. a) Is the EU passporting mechanism of prospectuses functioning in an efficient way? 

Answers  Ratio 
19.78%
36 
Yes 
15.93%
No 
29 
23.08%
Don't know / no opinion  42 

b) Could the notification procedure between NCAs of home and host Member States set 
out  in  Article  18  be  simplified  (e.g.  limited  to  the  issuer  merely  stipulating  in  which 
Member States the offer should be valid, without any involvement from NCAs) without 
compromising investor protection? 

Answers  Ratio 
15.38%
28 
Yes 
10.99%
No 
20 
28.02%
Don't know / no opinion  51 

40.  Please  indicate  if  you  would  support  the  following  changes  or  clarifications  to  the 
base prospectus facility.  
a) The use of the base prospectus facility should be allowed for all types of issuers and 
issues and the limitations of Article 5(4)(a) and (b) should be removed: 

Answers  Ratio 
I support 
44 
I do not support  26 

24.18% 
14.29% 

b) The validity of the base prospectus should be extended beyond one year: 

Answers  Ratio 
I support 
50 
I do not support  35 

27.47% 
19.23% 

- 61 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
c) The Directive should clarify that issuers are allowed to draw up a base prospectus as 
separate  documents  (i.e.  as  a  tripartite  prospectus),  in  cases  where  a  registration 
document has already been filed and approved by the NCA: 

Answers  Ratio 
60 
I support 
I do not support  10 

32.97% 
5.49% 

d) Assuming that a base prospectus may be drawn up as separate documents (i.e. as a 
tripartite  prospectus),  it  should  be  possible  for  its  components  to  be  approved  by 
different NCAs: 

Answers  Ratio 
40 
I support 
I do not support  24 

21.98% 
13.19% 

e) The base prospectus facility should remain unchanged: 

Answers  Ratio 
I support 
29 
I do not support  33 

15.93% 
18.13% 

42.  Should  the  dual  regime  for  the  determination  of  the  home  Member  State  for  non-
equity securities featured in Article 2(1)(m)(ii) be amended? 

No, status quo should be maintained 
Yes,  issuers  should  be  allowed  to  choose  their home  Member  State  even 
for non-equity securities with a denomination per unit below EUR 1 000 
Yes,  the  freedom  to  choose  the  home  Member  State  for  non-equity 
securities with a denomination per unit above EUR 1 000 (and for certain 
non-equity hybrid securities) should be revoked 

Answers  Ratio 
26 
33 

14.29%
18.13%

5 

2.75% 

43. Should the options to publish a prospectus  in  a printed  form and by  insertion  in a 
newspaper  be  suppressed  (deletion  of  Article  14(2)(a)  and  (b),  while  retaining  Article 
14(7), i.e. a paper version could still be obtained upon request and free of charge)? 

Answers  Ratio 
42.31%
77 
Yes 
8.79% 
No 
16 
11.54%
Don't know / no opinion  21 

44. Should a single, integrated EU filing system for all prospectuses produced in the EU 
be created? 

Answers  Ratio 
39.01%
71 
Yes 
9.34% 
No 
17 
15.38%
Don't know / no opinion  28 

46.  Would  you  support  the  creation  of  an  equivalence  regime  in  the  Union  for  third 
country prospectus regimes? 

Answers  Ratio 
29.12%
53 
Yes 
7.69% 
No 
14 
20.88%
Don't know / no opinion  38 

- 62 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
47. Assuming the prospectus regime of a third country is declared equivalent to the EU 
regime, how should a prospectus prepared by a third country issuer in accordance with 
its legislation be handled by the competent authority of the Home Member State defined 
in Article 2(1)(m)(iii)? 

Such  a  prospectus  should  not  need  approval  and  the  involvement  of  the 
Home Member State should be limited to the processing of notifications to 
host Member States under Article 18 
Such a prospectus should be approved by  the Home  Member  State under 
Article 13 
Other 
Don't know / no opinion 

Answers  Ratio 
14.84%
27 

17 

7 
40 

9.34% 

3.85% 
21.98%

48) Is there a need for the following terms to be (better) defined, and if so, how:  
a) 'Offer of securities to the public'? 

Answers  Ratio 
21.98%
40 
Yes 
24.18%
44 
No 
16.48%
Don't know / no opinion  30 

b) 'primary market' and 'secondary market'? 

Answers  Ratio 
14.84%
27 
Yes 
19.78%
No 
36 
21.43%
Don't know / no opinion  39 

49.  Are  there  other  areas  or  concepts  in  the  Directive  that  would  benefit  from  further 
clarification? 

Answers Ratio 
9.89% 
No, legal certainty is ensured 
18 
16.48%
Yes, the following should be clarified: 30 
30.77%
56 
Don't know / no opinion 

50.  Can  you  identify  any  modification  to  the  Directive,  apart  from  those  addressed 
above, which could add flexibility to the prospectus framework and facilitate the raising 
of equity or debt by companies on capital markets, whilst maintaining effective investor 
protection? 

Answers  Ratio 
24.73%
45 
Yes 
7.14% 
No 
13 
26.37%
Don't know / no opinion  48 

51.  Can  you  identify  any  incoherence  in  the  current  Directive's  provisions  which  may 
cause the prospectus framework to insufficiently protect investors? 

Answers  Ratio 
9.89% 
Yes 
18 
9.89% 
18 
No 
31.32%
Don't know / no opinion  57 

- 63 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 7: SELECTED STATISTICS ON INITIAL PUBLIC OFFERINGS (IPOS) MADE IN EUROPEAN 

STOCK EXCHANGES 

Source: PWC's IPO Watch Europe 2014 

Source: PWC's IPO Watch Europe 2014 

- 64 - 

 
 
 
 
 
Source: PWC's IPO Watch Europe 2014 

- 65 - 

 
ANNEX  8:  SUMMARY  OF  THE  MOST  SIGNIFICANT  ALLEVIATIONS  GRANTED  BY  THE 
PROPORTIONATE  DISCLOSURE  REGIME  FOR  RIGHTS  ISSUES  AND  THE  ALLEVIATIONS 
GRANTED UNDER THE PROPORTIONATE DISCLOSURE REGIME FOR SMES 

Most significant alleviations granted by Proportionate Disclosure Regime for Rights Issues 
in the share registration document compared to a regular prospectus106 

Removal of the following items: 

Removal of the following sub-items: 

(cid:131)  Selected financial information (I, 3) 
(cid:131)  Operating and financial review (I, 9) 
(cid:131)  Capital resources (I, 10) 
(cid:131)  Conflicts of interests (I, 14.2) 
(cid:131)  Remuneration and benefits (I, 15) 
(cid:131)  Pro forma financial information (I, 20.2) 

(cid:131) 

Information about the issuer: 
o  History and development (I, 5.1)  
o  Important  events  in  the  developments  of  the 

issuer's business (I, 5.1.5) 

(cid:131)  Business overview: 

o  Products sold or services performed (I, 6.1.1) 
o  Breakdown of revenues by category of activity 

and geographic market(I, 6.2) 

(cid:131)  Organisational structure:  

o List  of  issuer's  subsidiaries  and  information 

thereof (I, 7.2) 

Reduction of the relevant period for the disclosure of the following items: 

(cid:131)  One year instead of two years: material contracts (I, 22) 
(cid:131)  One years instead of three years for:  

o  Historical financial information (Item 20) 
o  Nature of the issuer's operation and its principal activities (Item 6.1.1) 
o  Related party transaction (Item 19) 
o  The amount of the dividend per share (Item 20.7.1) 

106 Share registration document of Annex XXIII, PR compared to Annex I, PR 

- 66 - 

 
 
 
 
                                                 
 
Alleviations granted under the Proportionate Disclosure Regime for SMEs 
in the share registration document  

Current regime107 

Proposed regime108 

•  Business overview (I,6) focused on the last two 

•  Business overview (I,6) focused on the last two 

fiscal years only (instead of three) 

fiscal years only (instead of three) 

•  Statement  on  where  the  audited  financial 
statements for the last 2 financial years may be 
obtained,  instead  of  producing  the  audited 
financial  statements  for  the  last  3  financial 
years (I, 20.1)  

•  Statement  on  where  the  audited  financial 
statements for the last 2 financial years may be 
obtained,  instead  of  producing  the  audited 
financial  statements  for  the  last  3  financial 
years (I, 20.1)  

•  Statement  on  where 

the 

•  Statement  on  where 

the 

information  may  be  obtained, 
producing it (I, 20.6) 

interim  financial 
instead  of 

information  may  be  obtained, 
producing it (I, 20.6) 

interim  financial 
instead  of 

•  Removal of the additional items: 

(cid:131)  Selected financial information (I, 3) 

(cid:131)  Property, plants, equipment (I, 8) 

(cid:131)  Operating and financial review (I, 9) 

(cid:131)  Capital resources (I, 10) 

(cid:131)  R&D, patents and licenses (I, 11) 

(cid:131)  Conflicts of interests (I, 14.2) 

(cid:131)  Remuneration and benefits (I, 15) 

(cid:131)  Pro forma financial information (I, 20.2) 

(cid:131)  Documents on display (I, 24) 

The  proposed  alleviations  should  remove  at  least  7  additional  items  out  of  the  25  figuring  in  the 
current share registration document. 

107 Based on the comparison of the disclosure requirements provided under Annex XXV vis-à-vis Annex I, PR 
108 Based on the envisaged content of the share registration document and taking into account the current information requirements of certain 
MTFs (AIM Rules for Companies, OMX First North Nordic Rulebook, MAB Circular 5/2010) in their admission documents when the offer 
of does not qualify as offer to the public for the purpose of the PD. 

- 67 - 

 
 
 
 
 
                                                 
Table 19: Disclosure requirements in Regulated Markets and MTFs 

Regulated markets (Prospectus regime) 

First 
North 

AIM 

MAB 

Registration Document (Annex I, Prospectus Regulation) 
(cid:57) 
X 
X 
(cid:57) 
X 
X 
(cid:57) 
(cid:57) 
X 
X 
X 
X 
X 
(cid:57) 
X 
(cid:57) 
X 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
X 
(cid:57) 
(cid:57) 
X 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
X 

1. PERSON RESPONSIBLE 
2. STATUTORY AUDITORS 
3. SELECTED FINANCIAL INFORMATION 
4. RISK FACTORS 
5.1 History and development of the issuer 
5.2 Investments 
6. BUSINESS OVERVIEW 
7. ORGANIZATIONAL STRUCTURE 
8. PROPERTY, PLANTS AND EQUIPMENT 
9.1 OPERATING AND FINANCIAL REVIEW – Financial conditions 
9.2 OPERATING AND FINANCIAL REVIEW – Operating results 
10. CAPITAL RESOURCES 
11. RESEARCH & DEVELOPMENT, PATENTS AND LICENSES 
12. TREND INFORMATION 
13. PROFIT FORECASTS AND ESTIMATES 
14.1 ADMINISTRATIVE, MANAGEMENT, SUPERVISORY BODIES 
14.2 Conflicts of interests 
15. REMUNERATION AND BENEFITS 
16. BOARD PRACTICES 
17. EMPLOYEES 
18. MAJOR SHAREHOLDERS 
19. RELATED PARTY TRANSACTIONS 
20.1 Historical financial information 
20.2 Pro forma financial information  
20.3 Financial statements 
20.4 Auditing of historical annual financial information 
20.5 Age of latest financial information 
20.6 Interim and other financial information 
20.7 Dividend policy    
20.8 Legal and arbitration proceedings 
20.9 Significant change in issuer's financial and trading position 
21.1 Share capital 
21.2 Memorandum ad Articles of Association 
22. MATERIAL CONTRACTS 
23. THIRD PARTY INFORMATION& STATEMENT 
24. DOCUMENTS ON DISPLAY 
25. INFORMATION ON HOLDINGS 
Symbols explanation 
(cid:57) Information to be disclosed under MTFs' admission documents at the same level of disclosure as under the PR 
X Information not required under MTFs' admission documents but required under the PR 
Note:  Disclosure  requirements  on  regulated  markets  reflect  the  requirements  of  the  Prospectus  Directive; 
disclosure requirements on MTFs are based on the respective admission documents. 
* MTFs: 1) AIM – Alternative Investment Market (http://www.londonstockexchange.com) 
2) MAB – Mercado Alternativo Bursatil (http://www.armabex.com) 
3) Nasdaq OMX First North (http://www.nasdaqomx.com)  

(cid:57) 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
X 
X 
X 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X  
(cid:57) 

(cid:57) 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
X 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
(cid:57) 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 
X 
X 
(cid:57) 
X 
X 
(cid:57) 
(cid:57) 
X 
X 
X 
X 
(cid:57) 
X 
(cid:57) 

- 68 - 

 
 
Regulated markets (Prospectus Directive) 

First 
North 

AIM  MAB 

1. PERSONS RESPONSIBLE 
2. RISK FACTORS 
3.1 Working capital Statement  

Securities Note (Annex III, Prospectus Regulation) 
(cid:57) 
(cid:57) 
(cid:57) 

3.2 Capitalisation and indebtedness 

3.3 Interest of natural and legal persons involved in the issue/offer  
3.4 Reasons for the offer and use of proceeds  

(cid:57) 

X 
(cid:57) 

(cid:57) 
(cid:57) 
X 

X 

X 
(cid:57) 

(cid:57) 
X 
X 

X 

X 
(cid:57) 

(cid:57) 

(cid:57) 

(cid:57) 

X 

X 

(cid:57) 

3. INFORMATION CONCERNING SECURITIES 
OFFERED/ADMITTED  
5.1  Conditions,  statistics,  timetable  and  action  required  to  apply  for 
offer 
5.2 Plan of distribution and allotment 
5.3 Pricing 
5.4 Placing and underwriting 
6. ADMISSION TO TRADING AND DEALING ARRANGEMENTS 
7. SELLING SECURITIES HOLDERS 
8. EXPENSE OF THE ISSUE/OFFER 
9. DILUTION 
10. ADDITIONAL INFORMATION 
Symbols explanation 
(cid:57)  Information  to  be  disclosed  under  MTFs'  admission  documents  at  the  same  level  of  disclosure  as 
under the PR 
X Information not required under MTFs' admission documents but required under the PR 
Note:  Disclosure  requirements  on  regulated  markets  reflect  the  requirements  of  the  Prospectus  Directive; 
disclosure 
documents.  
based 
* MTFs:1) AIM – Alternative Investment  Market (http://www.londonstockexchange.com) 
2) MAB – Mercado Alternativo Bursatil (http://www.armabex.com) 
3) Nasdaq OMX First North (http://www.nasdaqomx.com)  

X 
X 
X 
(cid:57) 
X 
X 
X 
X 

X 
X 
X 
(cid:57) 
X 
X 
X 
X 

X 
X 
X 
X 
(cid:57) 
(cid:57) 
(cid:57) 
(cid:57) 

requirements 

on  MTFs 

respective 

admission 

are 

the 

on 

- 69 - 

 
 
Issuers above 
€200m at 31st 
December 2013 
Issuers below 
€200m at 31st 
December 2013 
Total 

Median MV at 
31st December 
2013 

Issuers above 
€200m at 31st 
December 2012 
Issuers below 
€200m at 31st 
December 2012 
Total 

Table 20: Analysis of issuers by market capitalisation by trading venue 

Euronext’s 
Alternext* 
(FR, NL, 
BE, PT) 

Cyprus 
ECM 

Prague 
START 
(CZ) 

DB Entry 
Standard
** (DE) 

First 
North 
(SE, DK, 
IS, FI) 

MAB 
(ES) 

ISDX 
(UK) 

AIM 
(UK) 

ATHEX 
(EL) 

ISE ESM 
(IE) 

4 

165 

169 

1 

9 

10 

1 

0 

1 

9 

2 

165 

174 

133 

135 

1 

22 

23 

2 

97 

100 

102 

965 

1062 

0 

14 

14 

9 

16 

25 

AIM 
Italia 
(IT) 

Warsaw 
New 
Connect 
(PL) 

Total 

0 

36 

36 

1 

127 

444 

445 

2069 

2196 

21.0 

39.5 

698.8 

20.3 

10.3 

19.3 

1.9 

24.8 

8.2 

91.0 

19.3 

1.9 

3 

163 

166 

1 

9 

10 

na 

na 

na 

10 

3 

153 

163 

122 

125 

0 

21 

21 

3 

83 

135 

138 

997 

1080 

0 

13 

13 

1 

2 

Issuers above 
€200m at 31st 
December 2011 
Issuers below 
€200m at 31st 
December 2011 
Total 
Source: Europe Economics, Data-gathering and cost-benefit analysis of MiFID II, Level 2 — Draft Final Study, 7 May 2015. 

1040 

1124 

144 

132 

155 

152 

133 

159 

159 

157 

na 

13 

84 

17 

17 

13 

na 

na 

0 

9 

8 

1 

0 

4 

8 

- 70 - 

5 

17 

22 

4 

17 

21 

0 

17 

17 

0 

14 

14 

4 

112 

425 

429 

2072 

2184 

1 

105 

350 

351 

2047 

2152 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 21: Total market capitalisation by trading venue (€bn) 

Euronext’s 
Alternext 
(FR, NL, 
BE, PT) 

Cyprus 
ECM 

PRAGUE 
START 
(CZ) 

DB Entry 
Standard 
(DE) 

First 
North 
(SE, DK, 
IS, FI) 

MAB 
(ES) 

ISDX 
(UK) 

AIM 
(UK) 

ATHEX 
(EL) 

ISE ESM 
(IE) 

AIM 
Italia 
(IT) 

Warsaw 
New 
Connect 
(PL) 

Total 

0.6 

4.0 

7.8 

0.7 

58.4 

Total MV 
at 31st 
December 
2013 
Total MV at 
31st 
December 
2012 
Total MV 
at 31st 
December 
2011 
Source: Europe Economics, Data-gathering and cost-benefit analysis of MiFID II, Level 2 — Draft Final Study, 7 May 2015. 

60.2 

75.5 

50.8 

90.8 

74.3 

0.1 

1.2 

2.6 

0.5 

0.4 

0.2 

5.2 

3.3 

2.6 

2.7 

3.2 

0.5 

0.1 

5.9 

0.6 

na 

na 

63.3 

1.1 

2.7 

233.4 

29.1 

0.5 

2.7 

181.1 

37.8 

0.3 

1.9 

177.4 

Table 22: 2013 trading turnover by trading venue (€mn) 

Euronext’s 
Alternext 
(FR, NL, 
BE, PT) 

Cyprus 
ECM 

Prague 
START 
(CZ) 

DB Entry 
Standard((
DE) 

First 
North 
(SE, DK, 
IS, FI) 

MAB 
(ES) 

ISDX 
(UK) 

AIM 
(UK) 

ATHEX 
(EL) 

ISE ESM 
(IE) 

1 

14,632 

Trading 
turnover 
2013 
2013 
trading  as 
%  of  2013 
MV 
Source: Europe Economics, Data-gathering and cost-benefit analysis of MiFID II, Level 2 — Draft Final Study, 7 May 2015. 

38,007 

187% 

8,340 

14% 

42% 

313 

0% 

8% 

1% 

na 

na 

na 

na 

na 

na 

1 

na 

na 

AIM 
Italia 
(IT) 

Warsaw 
New 
Connect 
(PL) 

Total 

160 

225 

61,679 

14% 

8% 

26% 

- 71 -