Source: https://eusipa.org/response-to-the-european-commissions-proposal-for-a-review-of-the-prospectus-directive/
Timestamp: 2020-02-16 18:49:41
Document Index: 414652708

Matched Legal Cases: ['Art 16', 'Art 16', 'Art 5', 'Art 5', 'Art 5', 'Art 5']

Response to the European Commission’s proposal for a review of the Prospectus Directive – EUSIPA
By EUSIPA 10. October 2009 October 21st, 2017 No Comments
Response to the European Commission’s Proposal
for a review of the Prospectus Directive (COM (2009) 491 final)
The European Structured Investment Products Association (eusipa) is the voice of the structured investment products industry in Europe. It acts as a forum for the exchange of best practices, development of industry self-regulatory standards and promotion of the interests of its members. eusipa today represents the major financial institutions active in the sector across Europe organized through its national member organizations in Germany, Italy, Switzerland and Austria.
eusipa strongly welcomes the thorough review of the Prospectus Directive conducted by the European Commission over the last months. The Commission’s proposal published at the end of September takes up most of the deficiencies and weaknesses of the Directive that have become apparent in its practical application since 2005, including a number of points not yet included in the Commission’s Consultation Paper from January this year. However, the proposal still needs amendments in a limited number of points in order to fully reach the objectives behind the review process.
However, two other proposals for each of the points are not included in the Commission’s proposal. In our view, this would mean that the Registration Document could still not realise its full potential to facilitate the offering or listing of securities on a frequent basis, and would result in the requirement for
supplements, and the right of investors to withdraw in the case of a supplement, going further than needed and justifiable.
2. Registration document regime
a. Tripartite format for base prospectuses
b. Passporting of the registration document
3. Supplementary information regime
a. Addressing duplication with Transparency Directive
b. Clarification of investor’s right of withdrawal
The wording of Art 16 (II) currently does not limit the investor’s right to withdrawal in case of a supplement to cases where the information detrimentally affects the assessment of the securities.
Accordingly, investors could use events positively affecting the securities’ assessment, like results which are better than expected by the markets, to withdraw for reasons completely unrelated to the information constituting the object of the supplement. This would almost be comparable to widening prospectus liability to circumstances having a positive impact on the market value of the securities.
According, Art 16 (II) should be replaced by the following: 2. Investors who have already agreed to purchase or subscribe for the securities before the supplement is published shall have the right, exercisable within two working days after the publication of the supplement, to withdraw their acceptances if the information contained in the supplement is detrimental to the investor in assessing the issuer and the securities which are the subject of the offer or the admission to trading on a regulated market or multilateral trading facility as defined by Council Directive 2004/39/EC. In the case of the publication of information under Article 16(1) last sentence the withdrawal right shall apply accordingly.
4. Proposed changes to the summary regime (Art 5 and 6)
Finally, the Commission’s proposal includes changes within Art 5 and 6 of the Directive regarding content of, and liability for, the prospectus summary. In short, the new rules would require the summary to contain “key information in order to enable investors to take informed investment decisions and to compare the securities with other investment products”, and would extent the liability for the summary accordingly.
These amendments would effectively require each summary to contain the necessary contents of a Key Information Document (KID), the introduction of which has been envisaged by the Commission’s Communication on Packaged Retail Investor Products (PRIPs). However, some of the securities covered by the Prospectus Directive will almost certainly not be treated as PRIPs, and made subject to the requirement to prepare a KID. This is case notably for shares, but also for “plain vanilla” bonds. In addition, the requirement for the production of KIDs is meant to be restricted to products offered to retail investors, whilst some of the securities for which a prospectus summary is made are distributed solely to professional investors. Accordingly, the scope of the rules on prospectus summaries, and that of a future KID requirement, are not identical, but differ substantially.
Given the current stage of the PRIP discussion, it currently seems impossible to assess how the requirement for the production of KID will impact prospectus summaries, so that any amendments to Art 5 and 6 on this basis would be premature. Accordingly, the proposed amendments within Art 5 and 6 should not be taken over into the Prospectus Directive.
Comments on the communication of the European Commission on…