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European Commission - Speech - [Check Against Delivery]

Opening speech given by Commissioner Jonathan Hill on the overhaul of prospectus rules for the Capital Markets Union

Brussels, 30 November 2015

Good morning. Today, we are publishing a proposal to overhaul the Prospectus Directive. My goal and the goal at the heart of the CMU is to make it easier for companies of all sizes in Europe to get funding on the capital markets. By creating a simpler, faster and cheaper prospectus regime, I want to help companies that have good ideas to grow, and create jobs here in Europe.

We're starting with prospectuses because they're what businesses need to publish before raising money on places like stock exchanges. They're a key document for potential investors; and for companies, they are the springboard to capital markets. Last year, while companies in the EU raised some 370 billion euro through the issuance of shares or corporate bonds, companies in America raised over three times that amount.

I suppose at its most simple, I would like European business to be able to raise more. But at the moment, prospectuses can be a barrier, particularly for smaller companies. They can run to hundreds of pages in length and can be extremely expensive to produce - costing anything between tens of thousands of euro to one million euro.

Today's proposal will help return prospectuses more closely to their original purpose: to provide clear and comparable information to investors across Europe so that companies can unlock the investment they need to grow. And when companies are looking to raise only a small amount of capital, we should drop them altogether.

So there are five main areas where we plan changes.

First, we’re increasing the amount of capital you can raise on EU markets without a prospectus at all: up five times, from 100 000 to 500 000 euro. If they want to, Member States will be able to raise that limit to 10 million euro - twice the current threshold.

Second, we’re creating a special regime for smaller companies. This will allow SMEs to produce simpler and cheaper prospectuses. And we’ll make sure that the cost of producing a prospectus is not disproportionate to the investment sought. All SMEs with a market capitalisation under 200 million euro – up from the current limit of 100 million euro - will qualify for this new regime.

Third, we want to streamline the process for companies which have already issued a prospectus and want to raise capital on a repeat basis: currently about 70% of all prospectuses. I don't think it makes sense that you should have to keep producing the same amount of information if you have already done it before. Once businesses have made key information available, they won't need to provide the whole lot all over again when raising further capital. This in itself will speed up the process and save listed companies, we estimate, up to 100 million euro a year.

Fourth, we're acting to halve approval times for larger companies that tap the markets frequently by creating a frequent issuer regime. These companies will only have to produce an annual universal registration document that can be used each time they go to the market. This will help our companies be more nimble and it will reduce the approval times for raising capital from 10 to 5 days.

Fifth, we'll make prospectuses more useful for investors. We'll shorten them, reduce the information they need to include and sharpen up their focus. Once approved, we'll make all EU prospectuses available in one place where investors will find all the information they need on companies they're interested in backing.

This proposal is a key early action of the Capital Markets Union. Taken together these measures will make it easier for companies to get funding in Europe. They will make prospectuses simpler, faster and cheaper to produce. They will be clearer to investors and easier to get hold of. I think that all 28 Member States will benefit. I'm looking forward to working with them and the European Parliament to get this proposal adopted as speedily as possible, and in that way to support businesses that create growth in Europe.

SPEECH/15/6202


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