The European Securities and Markets Authority (ESMA) has published a statement which sets out a framework,(ESMA/2011/36) http://esma.europa.eu/popup2.php?id=7517, on the way in which third country issuers in general, can meet the requirements of the PD. The framework allows prospectuses from non-EU countries, drawn up in accordance with third country legislation, to have a ‘wrap’ added, so that the resulting document meets the requirements of the EU Directive.
ESMA also announces today, in a Statement (ESMA/2011/37) http://esma.europa.eu/popup2.php?id=7518, that Israeli issuers may list their prospectus for shares on any EU regulated market, on the basis of a prospectus drawn up in accordance with Israeli regulation, with the addition of a ‘wrap’ which contains a number of supplementary disclosures. The new framework will ensure that Israeli prospectuses meet the requirements of the EU's Prospectus Directive (PD), enabling EU investors to continue to enjoy equivalent levels of protection in receiving similar information in considering offers from third country issuers.
ESMA’s Vice Chair, Carlos Tavares noted
“The important work to develop a framework for third country prospectuses highlights ESMA’s strong commitment to harmonised application of the Prospectus Directive in a consistent manner across Europe. It is widely recognized that deep liquid markets with greater investor choice can greatly benefit the global economy when implemented in a way that ensures investor confidence is maintained. We welcome the close co-operation we have had with the Israeli Securities Authority in understanding their prospectus requirements and we are confident that the additional information provided will greatly benefit EU investors.”
Following the announcement, the Israeli Minister of Finance, Dr. Yuval Steinitz said
"EU standards are a benchmark around the world and I warmly thank ESMA and the member authorities for the work they have done during their assessment of Israeli prospectus regulation. The recognition of Israeli standards creates a strong opportunity for Israeli issuers and I hope will bring real benefits to exchanges and investors in Israel and the EU."
The Chairman of the Israel Securities Authority, Prof. Zohar Goshen added
"The Israeli market has today taken an important step forward in facilitating the access to funding for Israeli firms in Europe. We continue to place great importance and value on the effective regulation and
supervision of prospectuses as a key means of increasing investor confidence and greatly welcome this development and the close dialogue we have had with ESMA which has ensured greater understanding of our regulatory regime.”
Most of the differences found between Israeli and EU disclosure requirements reflect varying market conditions in the EU and Israel and the policy decisions taken by each authority. This fact is reflected in ESMA's announcement setting out its methodology which states:
(…) This arrangement is not a comment on third country prospectus regimes but recognition of the potential for differences between those regimes and the PD. The framework allows a third country prospectus to have a ‘wrap’ added to it so that the resulting document meets the requirements of the PD.” (ESMA/2011/36)
ESMA’s announcement will be of great value to Israeli issuers for whom a listing in the EU can increase their exposure to a wider set of investors, benefit their businesses and increasing the liquidity of their shares. This announcement will also ease the process by which Israeli issuers may list on one EU regulated market and then passport that listing to other markets across the whole of the EU. EU retail investors will also benefit from a wider offer of securities, whilst ensuring the confidence of having the additional provisions of information.
In order to facilitate listing in the EU and help Israeli issuers deal with the practicalities of entering EU markets, the ISA will seek to complete a series of bilateral MoUs with various EU national regulators, beyond the ones already completed.
