Implementation of the revised Prospectus Directive into Dutch law
On 8 May 2012 the First Chamber of the Dutch Parliament adopted a bill realising the implementation of the revised Prospectus Directive. The revised Directive (2010/73/EU) amends the Prospectus Directive (2003/71/EC). The amendments were made with the aim of increasing legal clarity and efficiency in the prospectus regime and reducing administrative burdens for issuers and intermediaries. Certain changes are specifically designed to support the overall objective of the Prospectus Directive, namely enhancing the level of investor protection and to ensure that sufficient and adequate information is provided to retail investors. The bill amends the Financial Supervision Act (Wet op het financieel toezicht, the “FSA”) and the Act on supervision of financial reporting. The amendments will enter into force on 1 July 2012, unless mentioned otherwise. Among the most significant changes are the following:
Adjustment of 100 persons exemption
The exemption for offerings addressed to fewer than 100 non-qualified investors per EU member state has been amended to allow fewer than 150 non-qualified investors to be targeted with an offering without the obligation to publish a prospectus.
Scope of the Prospectus Directive
Securities included in an offer fall outside the scope of the Prospectus Directive if the total consideration of the offer, calculated over a period of twelve months, is less than EUR 2.5 million. The amendment clarifies the scope by making it clear that the threshold needs to be computed at the level of the European Economic Area and thus not on a country-by-country basis. In addition, the revised prospectus Directive offers the possibility to raise the amount to EUR 5 million. However, the Dutch government decided not to follow this amendment, because it reduces the supervision area. For that reason, the limit of 2.5 million will nationally be maintained. The calculation method on the level of European Economic Area also applies to the exemption in the FSA concerning offering with a total consideration of less than EUR 100,000.
Adjustment of EUR 50,000 threshold
Prospectus Directive exemptions from the obligation to publish a prospectus upon an offering include offers addressed to investors who acquire securities in denominations of at least EUR 50,000 and offers with a subscription of at least EUR 50,000. This EUR 50,000 threshold is raised to EUR 100,000 as it is argued that the current threshold no longer reflects the distinction between retail investors and professional investors in terms of investment capacity, as it appeared that even retail investors made investments of more than EUR 50,000 in a single transaction. This amendment was already included in the Amendment Act Financial Markets 2010 and has entered into force on 1 January 2012.
The current standard of liability for the summary section of the prospectus was not amended, except that a new requirement is added to provide, when read together with the other parts of the prospectus, ‘key information’ in order to aid investors when considering whether to invest in the offered securities. Key information must be drawn up in the same language as the prospectus and shall include the risks associated with, and the essential characteristics of, the issuer, any guarantor and the securities offered. It shall also provide the general terms of the offer, details of the admission to trading, and reasons for the offer and use of proceeds. In addition, the summary will have to be drawn up in a common format in order to facilitate comparability of the summaries of similar securities. In October 2011 the European Securities and Market Authority (the “ESMA”) provided the European Commission with technical advice on the format of the summary of the prospectus and detailed content and specific form of the key information to be included in the summary. The European Commission has recently published a proposal amending the Prospectus Regulation (809/2004/EG). This proposal sets out the new requirements for the content and format of the prospectus summary. The summary must contain a number of key figures and the length of the summary may not exceed 7% of the length of the prospectus itself with a maximum of 15 pages. If the European Parliament and the European Council raise no objections to the proposal, it shall enter into force on 1 July 2012. For certain obligations a transitional period applies. The new rules do not apply to prospectuses that are approved before 1 July 2012.
Alignment of qualified investor definition
Investment firms conducting private placements are currently not entitled to treat as qualified investor those persons that are considered to be professional clients or eligible counterparties under the Markets in Financial Instruments Directive ((2004/39/EC), the “MiFID”). Investments firms therefore have to double check the status of the persons to whom the private placement have to be addressed, creating complexity and costs for these firms. This undesired effect will be ended by aligning the definition of qualified investors in the Prospectus Directive with the definition of professional clients set out in MiFID.
Employee share schemes
The current exemption for companies which have securities already admitted to trading on a regulated market is extended to all companies with employee share schemes whose head office or registered office is in the European Economic Area. Such companies need to make an alternative document available containing information on the number and nature of the securities and the reasons for and details of the offer. In addition, companies registered outside the European Economic Area with securities admitted to trading on a regulated market or third country market will also be exempted from the obligation to publish a prospectus, if (i) the same alternative document is made available as the companies registered within the European Economic Area are required to publish, and (ii) in the event of an admission to trading on a third country market, the European Commission has decided that the market's regime is equivalent to the regime in the EU.
Validity of prospectus
A prospectus remains to be valid for a period of 12 months, but it is clarified that this period runs from the date of approval of the prospectus and not the date of its publication. The date of approval can be more easily verified by the competent authority.
Publication of prospectus
The prospectus shall be considered available to the public once it has been published in electronic form on the issuer's website or, if applicable, on the website of the financial intermediaries placing or selling the securities, including paying agents. It will be no longer required that both issuer and any financial intermediary place the prospectus on their website in order to make this document validly available.