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Brussels, 9 January 2009

Financial services: Commission launches consultation on review of Prospectus Directive

The European Commission has launched a consultation on its review of the application of the Prospectus Directive, including some proposals to improve and simplify this Directive. The Prospectus Directive aims to ensure that investors are provided with clear and comprehensive information when making investment decisions. The Commission now wishes to assess the potential impact of its proposals and the merit of any alternative approaches. All interested stakeholders, in particular businesses, investors and consumers, are invited to participate. The proposal is a key element of the Commission's action plan to reduce administrative burdens on EU companies. The closing date for replies is 10 March 2009.

Internal Market and Services Commissioner Charlie McCreevy said: "We want to improve and simplify the Prospectus Directive so that it meets the needs of issuers and investors and removes any unnecessary burdens on businesses. I encourage all interested parties to give us their views."

Issues addressed by the consultation

As a result of extensive and continuous dialogue with stakeholders, including the Committee of European Securities Regulators (CESR) and the European Securities Markets Expert Group (ESME), the Commission has concluded that some particular elements of the Prospectus Directive merit a review and has put forward proposals to improve and simplify the Directive.

The consultation on these proposals starts with a general assessment of the overall functioning of the Prospectus Directive in terms of its effectiveness and efficiency in achieving its aims. The Commission concludes that the application of the Prospectus Directive is to be considered as broadly positive. In general, most market participants appear satisfied with the disclosure regime established by the Directive, and they consider it an important step towards the establishment of a single European securities market.

Notwithstanding this overall positive assessment, the Commission has identified some elements in the Directive that may create in practice unnecessary burdens and unjustified costs for companies and intermediaries. The consultation then explains these issues and suggests measures to address the problems identified. The issues include:

  • definition of qualified investors
  • revision of exempt offers ('retail cascade' issue and employee shares schemes)
  • revision of annual disclosure obligation
  • time limit for exercise of right of withdrawal
  • certain thresholds of the Directive

Finally the consultation considers issues that have been brought to the Commission's attention but that are not included at this stage in the draft proposals. The Commission is particularly keen to receive contributions and suggestions from stakeholders on these issues, including:

  • effectiveness of the prospectus summary
  • disclosure requirements for offers with Government guarantee schemes
  • disclosure requirements for small quoted companies and for rights issues

The Commission is very keen to fully understand and assess the financial and other impacts of the proposal as well as any alternative approaches. Therefore, contributors are invited to comment on compliance costs, impacts on competition and other impacts, costs and benefits.

About the Prospectus Directive

The Directive introduced a "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 regulatory authority in one Member State, a prospectus then has to be accepted everywhere else in the EU. In order to ensure investor protection, that approval is granted only if the prospectus meets common EU standards for what information must be disclosed and how.

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.

The consultation is available at:

Comments should be sent to the following e-mail address:

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