New European prospectus regime enters into force: prospectus approval process is fully digitalised, easier access for issuers, improved investor protection

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The new European regime for capital market prospectuses[1] has been directly applicable throughout the European European Economic Area (EEA) since 21 July 2019. It harmonises the framework for raising capital on both a national and cross-border basis, simplifies the access for issuers – especially for smaller and medium-sized enterprises – to the capital market while also improving investor protection.

“The new legislation for prospectuses is a further milestone in the integration of European financial markets. It makes it easier for undertakings to raise capital throughout Europe via the capital markets. The entire prospectus approval process is now digitalised from “end-to-end”, from submission through to publication by the OeKB. The FMA has been able as a modern authority to set new standards,” remark the FMA’s Executive Directors, Helmut Ettl and Klaus Kumpfmüller.

Easier access for issuers

The EU Growth prospectus as well as the simplified prospectus for secondary issuances are newly created prospectus formats, that particularly provide relief for smaller and medium-sized enterprises in terms of administration and costs entailed. The “universal registration document” is also new, which issuers who use the capital markets intensively use to obtain the status of being frequent issuers, through which status the time frame for prospectus approval is shortened.

Improved investor protection

The information that is required in the prospectus is now more precisely defined, and focuses on the more significant content for investors, in particular risk factors. Such risk factors are to be classified by their probability of realisation and their potential negative effects. Furthermore the new legislation for prospectuses also contains provisions about improved comprehensibility of the content of the prospectus – a clear structure and the use of easily understandable language are to be observed. The summary of the prospectus must concentrate on the material information. It has been shortened and may now only be a maximum of seven A4 pages long, i.e. around half the previously permitted length.

Extension of the electronic prospectus submission platform (SEPP)

The Prospectus Regulation that is now in force has also meant that the electronic prospectus submission platform (SEPP) has also been extended. In addition to prospectuses and supplements from now on, registration documents, universal registration documents or accompanying amendments may now be submitted electronically. To do so, issuers or their representatives are required to register. All previously registered prospectus submitter may continue to use the new submission platform without needing to re-register.

Powers and Sanctioning

The supervisor’s powers and sanctioning measures are defined in the new Capital Market Act 2019 (KMG 2019; Kapitalmarktgesetz 2019[2]), which entered into force on 21 July 2019. Whereas breaches against prospectus law were hitherto generally punished by courts, sanctions are enforced by the FMA under administrative penal law. The KMG 2019 furthermore authorises the FMA now as applicable to prohibit, suspend or restrict the public offering of securities, publicity in this regard or their admission to trading on a regulated market for legally defined time periods. Furthermore the FMA is also authorised to publish sanctions and warnings.

Publication of Prospectuses, Supplements and Documents

The FMA has made use of the option in the Prospectus Regulation to transfer the publication of approved prospectuses, supplements and accompanying documents to third parties. With the entry into force of the Capital Market Act 2019 (KMG 2019) the publication of such items shall be transferred to the Oesterreichische Kontrollbank AG, with information accessible through this link.

Journalists may address further enquiries to:
Ms. Annemarie Bauer
+43/(0)1/24959-6007
+43/ (0) 676 / 88 249 519

 

[1] The new EU Prospectus Regulation (Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC) replaces the previous Prospectus Directive (Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC as amended) with effect from 21 July 2019 and is directly applicable throughout the EEA from this date.
[2] Federal act on the public offering of securities and other capital investments (KMG 2019 – The Capital Market Act 2019)