ESMA Q&A on Prospectuses – Clarification on "straddling offers"

The European Securities and Markets Authority (ESMA) clarified in the April 2016 version of its Questions & Answers on Prospectuses a long standing question pointing out divergent views between member states on "straddling offers".

ESMA confirms the possibility for an issuer to continue an offer beyond the validity of a base prospectus, subject to the following conditions being fulfilled:

• The new base prospectus shall be approved and published no later than on the last day of validity of the initial base prospectus;
• The new base prospectus shall include or incorporate by reference the form of final terms contained in the initial base prospectus;
• The new base prospectus shall identify the securities subject to the straddling offer, by listing the relevant ISINs and specifying where the final terms of these securities are published;
• The final terms shall contain a prominent warning on their first page indicating the last day of validity of the initial base prospectus and where the succeeding base prospectus will be published.

According to ESMA, the issuer can alternatively publish and file a new set of final terms referring to the new base prospectus.

Most of these principles are also included in the Commission proposal for a regulation on the prospectus published on 30 November 2015 (article 8(10)).