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IP/01/759

Brussels, 30th May 2001

Financial services: Commission proposes single prospectus valid EU-wide

The European Commission has presented a proposal for a Directive that would introduce a new "single passport for issuers" so that once a prospectus had been approved by the home country authority of the issuer it would have to be accepted throughout the EU for public offer and/or admission to trading on regulated markets. A prospectus is a disclosure document given to investors by issuers when they want to raise capital and/or when they want their securities admitted to trading. The proposed Directive would make the whole system for prospectuses much simpler and operational and so make it easier and cheaper to raise capital throughout the EU. The initiative is one of the centre pieces of the Financial Services Action Plan, and the drive to create an integrated services market by 2003. It is one of the first two proposals for Directives under the new "Lamfalussy" format endorsed at the Stockholm European Council distinguishing framework principles from implementing technical details (see also IP/01/758) on market abuse). The Commission intends to adopt technical measures to complement the framework principles established by the Directive after consulting Member States' representatives in a Securities Committee.

Internal Market Commissioner Frits Bolkestein said "This proposal would make it considerably easier and cheaper for companies of all sizes to raise capital across frontiers in Europe. At the moment, widely varying national rules render the process expensive, complex and inefficient. It is therefore an important measure not only to improve the functioning of EU financial markets but also to help EU industry and commerce raise capital to invest in job creation and innovation. As such, the proposal will promote the competitiveness of the European economy as a whole, which is why the Lisbon European Council identified the measure as a priority. I therefore urge the Council of Ministers and the European Parliament to adopt the proposal as soon as possible."

The proposed Directive seeks to ensure that adequate and equivalent disclosure standards are in place in all Member States when securities are made available for all European investors either through a public offer procedure or because they are admitted to trading.

The proposed Directive includes in its scope all types of securities normally traded in the market and to avoid loopholes and disparities in the treatment of retail investors, would introduce a standard definition of a 'public offer'.

For investors, the proposal would ensure easy access through centralised filing of disclosure documents and better quality of information through higher standards.

The key features of the proposed Directive are the following:

  • Definition of clear conditions for offering securities to the public and for dmission to trading;

  • Harmonisation of the essential definitions in order to avoid loopholes and different approaches, thus ensuring a level playing field throughout the EU;

  • Introduction of enhanced disclosure standards in line with international standards (IOSCO) for public offer of securities and admission to trading (this should make it easier for EU issuers to offer their securities in non-EU countries, notably the US);

  • Introduction of the registration document system for issuers whose securities are admitted to trading on regulated markets in order to ensure a yearly update of the key information concerning the issuer;

  • Concentration of the responsibilities in the home country's administrative competent authority;

  • "Single passport": possibility to offer or admit securities to trading on the basis of a simple notification of the prospectus approved by the home competent authority.

The proposed prospectuses Directive follows the approach suggested by the Committee of Wise Men (chaired by Mr. Lamfalussy) in February 2001 and endorsed in a Resolution of the Stockholm European Council in March 2001. This approach is based on differentiating framework principles from implementing measures. For the proposed prospectuses Directive, this means that all the key rules, basic concepts and principles are laid down in the Directive. In addition, the Commission intends to adopt technical guidance and implementing measures in several specific areas after consulting Member States' representatives in a Securities Committee. These areas are:

  • Adaptation and updating of definitions and exemptions;

  • Definition of specific disclosure standards for prospectuses in accordance with international disclosure standards established by IOSCO (the International Organisation of Securities Commissions) for cross border offerings and initial listing;

  • Detailed technical rules and guidance on issues such as publication of prospectuses, advertising, approval of prospectuses, recognition of prospectuses submitted by third countries issuers.

Under current EU rules, mutual recognition is granted only to prospectuses that set out the information required in the Listing Particulars Directive (80/390/EEC) and are approved by the competent authorities. The host country authority, in the case of recognition of the prospectus, is authorised to require additional information related to the domestic market. Regulations and practices vary widely in European Member States. As a result EU capital markets have been fragmented and it has rarely proved possible to use the existing prospectuses to raise capital across frontiers within Europe. Additionally there is no European recognition system for securities falling outside the scope of the 80/390/EEC Directive.

For further background information on the proposal, see MEMO/01/204.

The full text of the proposal is available on the Europa Website:

http://ec.europa.eu/internal_market (click on What's New)


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