“Great Relief” From APCIMS, QCA And The London Stock Exchange, Over Treasury Clarification On Prospectus Directive Implementation.

APCIMS, the QCA and the London Stock Exchange today welcomed the Treasury’s announcement, making clear that following the implementation of the Prospectus Directive on 1 July 2005, there will be no need to issue a prospectus just because brokers place shares with discretionary private clients.

Following the consultation on implementing the Prospectus Directive earlier this year, APCIMS and the QCA and the London Stock Exchange noted concerns from around the industry that the existing practice, whereby private client brokers place tranches of new shares from companies on AIM and Ofex with their discretionary clients, could be subject to further regulation. It was understood that, in the event that the broker was involving more than 99 of its clients, the requirement to produce a prospectus would be triggered.

APCIMS, QCA and the London Stock Exchange have taken legal advice over this interpretation. The advice confirmed that when acting for discretionary clients there would be no requirement for a prospectus, irrespective of the number of clients involved.

Angela Knight, APCIMS’ Chief Executive comments:

“We are delighted to learn that the Treasury has taken our joint representations on board about how this Directive should be interpreted.
The potential cost to firms of issuing a prospectus unnecessarily would have been passed onto their clients, making these new issues a less attractive proposition. This common sense decision by the Treasury means that firms can continue to offer new issues to their clients without attracting further unnecessary costs.”

Andrew Smith, QCA Chairman and Director of Corporate Finance at Collins Stewart comments:

“This comes as a great relief to all those involved in raising capital for smaller quoted companies which are the engine of the economy. The advice obtained from Queen’s Counsel by the QCA and APCIMS was clear and has contributed to the overturning of what was assumed to be a fait accompli. This ruling is of major importance to the fundraising abilities of companies joining AIM or Ofex and will help maintain private client investments and hence liquidity.”

Mat Wootton, Deputy Head of AIM at the London Stock Exchange:

“The Exchange has spent several months preparing the AIM community for the implementation of the Prospectus Directive on 1 July 2005 and has worked hard to minimise the impact of the Directive on the smooth and efficient operation of the market. The Exchange is delighted that the treatment of discretionary retail brokers has been clarified by HM Treasury. This recognises the crucial role played by retail brokers for companies raising capital on admission to AIM and ensures the ongoing participation of retail investors in the secondary market.”