New Prospectus Regulation | New ESMA Q&A

On March 27th 2019, ESMA published new Questions & Answers on the Prospectus Regulation documents (“Q&A”) relating to Regulation (EU) 2017/1129 of 14 June 2017 (the “Prospectus Regulation”). The Prospectus Regulation shall be fully applicable from July 21st 2019.

The Q&A currently covers three main subjects:

The so-called “grandfathering” provision of Article 46 (3) of the Prospectus Regulation (the “Grandfathering Provision”) and the implementation of the regulation;
The status of existing level 3 guidance, established under the Directive 2003/71/EC of 4 November 2003, as amended (the “Prospectus Directive”); and
Updating or supplementing information included in the registration document or the universal registration document.

ESMA has clarified that advertisements do not fall within the scope of the Grandfathering Provision and therefore all advertisements published after the full entry into application of the Prospectus Regulation must comply with the Prospectus Regulation. A registration document does not qualify as a prospectus without a securities note and summary and therefore is not within the scope of the Grandfathering Provision. Therefore, it will not be possible to use a registration document approved or filed under the Prospectus Directive as a constituent part of a prospectus approved under the Prospectus Regulation. On the other hand, information in a registration document approved under the national laws implementing the Prospectus Directive can be incorporated by reference into a prospectus that will be approved under the Prospectus Regulation subject to such information being compliant with the disclosure requirements of the Prospectus Regulation.

For a maximum of 12 months from July 21st 2019 it will be possible to passport prospectuses approved in accordance with the national laws implementing the Prospectus Directive. Any prospectus approved in accordance with the national laws implementing the Prospectus Directive will need to be supplemented in accordance with those laws. When filing final terms in relation to a base prospectus approved in accordance with the national laws implementing the Prospectus Directive, the rules of those same national laws must be applied to the filing of the related final terms.

Previously established level 3 texts (specifically, the ESMA Questions & Answers on Prospectuses and the ESMA Update of the CESR recommendations) are to be applied to prospectuses drawn up under the Prospectus Regulation, to the extent they are compatible with the provisions of the Prospectus Regulation.

Information in a registration document shall be updated by a supplement pursuant to Article 10(1) of the Prospectus Regulation if it is not part of a prospectus. Withdrawal rights do not apply where a registration document is supplemented because there is no offer of securities to the public.

The rules on updating information included in a universal registration document (“URD”) differ under the Prospectus Regulation, depending on whether the update happens before or after the URD is part of a prospectus. ESMA has provided diagrams to assist in the interpretation of the applicable rules.