Committee Of European Securities Regulators Submits Final Advice On The Content And Format Of Prospectus

The likelihood that investors will soon witness a new standardised format for prospectus for all European securities, drew closer today with the submission of CESR’s final advice to the European Commission. The advice follows a consultation by CESR with industry on the minimum information to be provided in a prospectus; including, a ‘roadmap’ to help firms identify what information is required for the offer or admission to trading of different types of security in the EU; specific proposals for the format of the prospectus and, a requirement on issuers to disclose annually information if admitted to trading on a regulated market.

CESR’s final advice to the European Commission sets out the agreed:

• Minimum information to be included in any EU prospectus: CESR proposes disclosure requirements related to schedules for derivative securities, offering programmes, wholesale debt securities and a proposal for minimum disclosure requirements for equities when they are linked to some other product such as an underlying instrument.
• Format of the prospectus: The Directive allows the prospectus to be composed of three separate documents (registration document, securities note and summary) or by a single document. It also offers the possibility to use a base prospectus. CESR sets out in more detail how the prospectus should be drawn up, both in relation to prospectus in a single document format and those which adopt the format of a base prospectus and supplements. For example, a single document prospectus should begin with a summary followed by the risk factors, and a clear and detailed table of content, beyond this, there is freedom to present information in any order. Furthermore, to ensure it is practical and easy for companies wishing to make a public offer or have its securities admitted to trading , CESR provides a practical manual in the form of a ‘roadmap’ to help firms identify what information is needed for each type of security and for each format of prospectus.
• Annual information: CESR’s advice proposes that annual information can be published in paper or electronic format and released either on the issuers’ website or, the website of the relevant regulator. Where appropriate, publishing this document can be delegated to the regulated market itself. There will be a deadline of fifteen business days to file this document with the competent authority.

CESR’s consultation with industry has resulted in a number of changes to CESR’s final submission to the European Commission including for example, the decision:

• to allow most non-equity securities including warrants in any form (with some exceptions), to be included in the same base prospectus. This base prospectus covers most of the products issued in an offering programme and enables a large majority of issuers to use one base prospectus only.
• that issuers should indicate in the prospectus where information can be obtained about past and potential performance of the underlying product and its volatility.
• to extend the wholesale regime to derivative securities that have no denomination.

All responses to the consultation and an indication of how CESR has decided to take forward comments are included in the feedback statement also published today.