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Brussels, 2nd July 2003

Financial services: Commission welcomes European Parliament's approval of prospectuses proposal

The European Commission has welcomed the European Parliament's vote to approve the Commission's amended proposal for a Directive on prospectuses. This Directive will make it easier and cheaper for companies to raise capital throughout the EU on the basis of approval from a regulatory authority ("home competent authority") in one Member State. It will reinforce protection for investors by guaranteeing that all prospectuses, wherever in the EU they are issued, provide them with the clear and comprehensive information they need to make investment decisions. A prospectus is a disclosure document, containing key financial and non-financial information, that a company makes available to potential investors when it is issuing securities (shares, bonds, derivative securities, etc.) to raise capital and/or when it wants its securities admitted to trading on exchanges.

Internal Market Commissioner Frits Bolkestein said " I am very pleased that the European Parliament has approved the proposal and stuck to the essence of the Commission's proposal. I now hope the Council of Ministers will quickly follow suit. This Directive will be good for issuers and for investors. It will make it easier to raise capital on an EU-wide basis and boost the competitiveness of the European economy. It will also increase confidence in the markets and in corporate information."

The Directive will introduce a new "single passport for issuers" making securities available to investors either through a public offer procedure or by admitting their shares to trading. This means that once approved by the authority in one Member State, a prospectus will then have to be accepted everywhere else in the EU. In order to ensure investor protection, that approval will only be granted if prospectuses meet common EU standards for what information must be disclosed and how.

For investors, the Directive will raise the quality of information and ensure easy access to it through the centralised filing of disclosure documents.

The Directive only concerns initial disclosure requirements. Conditions for admission to listing remain subject to existing European and national requirements.

The Commission's original proposal was adopted in May 2001 (see IP/01/759). Following Parliament's opinion in March 2002, the Commission adopted a modified proposal on 9th August 2002 (see IP/02/1209 and MEMO/02/180).

The Council then reached a political agreement in November of that year, followed by the formal adoption of a Common Position, which the Parliament has now amended.

The main differences between the European Parliament's text as voted today and the Commission's amended proposal are:

  • the threshold above which issuers can freely choose the "home competent authority" which will approve their prospectus has been reduced to €1,000 for non-equity securities, from €50,000 in the amended proposal. Below that threshold, issuers will have to obtain approval from the relevant authority in the Member State where they are based. Additionally, an equivalent €1,000 threshold applies to issues in other currencies

  • time limits for the home competent authority to approve a prospectus have been shortened and all procedures significantly accelerated

  • the option to delegate tasks related to the scrutiny and approval of prospectuses from the competent authority to other entities will lapse after eight years

  • a transitional period of eight years has been set to allow Member States to adapt their national structures to the requirements of the Directive

  • a review clause whereby the implementation and effectiveness of the Directive will be re-assessed five years after its entry into force has been inserted in the text.

The Directive on prospectuses is a centrepiece of the EU's Financial Services Action Plan (see IP/02/796), and of the drive to create an integrated European securities market by 2003.

The proposal will now return to the EU's Council of Ministers for definitive approval under the so-called co-decision procedure.

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