ESMA published a Q&A on the Prospectus Regulation on 12 July 2019, which includes 3 new questions and 22 questions which have been updated to reflect the new Regulation. ESMA’s accompanying statement confirms that a number of the previous Q&As on the Prospectus Directive will not be carried forwards under the new regime, and that the PD Q&As will cease to be published after 21 July 2020 when the grandfathering period expires.

The new Q&A contain some helpful clarifications:

  • Issuers can continue a public offer started under a Prospectus Directive-compliant base prospectus using a new base prospectus approved under the Prospectus Regulation. Issuers should file an updated Final Terms and Summary complying with the new rules, in relation to any such “bridging” offer.
  • The requirements for financial intermediaries to notify investors of public offer withdrawal rights in Article 23(3) applies equally to the issuer, in cases where the issuer itself is distributing securities that it has issued. ESMA clarified that the obligations in sub-paragraph 1 of Article 23(3) to inform investors of the possibility of supplements apply at the time of subscription by the investor, whilst the notification requirements in sub-paragraph 2 apply on the day that a supplement is published.

The Q&A also sets out details and diagrams the process for updating a Universal Registration Document at various stages in its life cycle, including (i) before it forms part of a prospectus, (ii) before and after passporting, (iii) when it is a constituent part of a prospectus and (iv) after it has ceased to form part of a prospectus.

A few reminders from the updated Q&As:

  • If a Supplement amending a specific Final Terms is published, ESMA recommends also publishing an updated set of Final Terms, to replace the original Final Terms and give investors a clear picture of the amended terms.
  • For non-material mistakes or inaccuracies where a Supplement is not required, issuers should be entitled to publish a notice to investors explaining the inaccuracy.
  • When determining the home Competent Authority for low-denomination securities, the term “nearly equivalent” does not mean exactly EUR 1,000 and should be assessed at the time of submission of the draft prospectus. This is helpful to issuers who may be conducting offers in a different currency, which may be subject to exchange rate fluctuations during the offer period.

Sarah Natt
Head of Legal & Regulatory

Please contact us if you would like to find out how we can help you manage your programme and prospectus updates efficiently with respect to the Prospectus Regulation.