Simple Prospectus Exemptions to Target Retail Investors in Europe

Article 3(2) of the Prospectus Regulation became applicable last year, with every provision applying on 21 July 2019. The new prospectus regulation allows European companies to raise up to €8 million every 12 months. With a simplified information document, issuers can target retail investors across the EU.

The exemptions lower the legal costs whilst the digital instruments ease distribution and increase the speed of on-boarding investors. Each member state can decide the maximum amount of funds raised under this exemption:

Austria

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers between 250,000 EUR and 2 million EUR, the issuer must publish an information document according to the Alternative Financing Act.

For offers between 2 and 5 million EUR, the issuer must publish a simplified, national prospectus according to the Capital Markets Act.

Belgium

Threshold below which a prospectus is not required:

5 million EUR

8 million EUR: This threshold applies if the offered securities are admitted or to be admitted to the MTF Alternext or the MTF Marché Libre.

National rules applicable to offers below the threshold:

For offers of investment instruments below or equal to the thresholds and for direct admission to trading on MTF Alternext/Marché Libre (without a public offer), the issuer must publish an information note. The information note must comply with the conditions set out in the prospectus law and Royal Decree of 23 September 2018 and must be filed with the FSMA, without prior approval, at the latest at the time when it is made available to the public.

Bulgaria

Threshold below which a prospectus is not required:

1 million EUR

National rules applicable to offers below the threshold:

No rules established

Croatia

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers below 5 million EUR, the issuer must notify Hanfa that it is making use of the exemption immediately after the issuer’s company body issues a decision on the offer of securities (e.g. after the decision of the issuer’s general assembly), but not later than three working days before the begining of the exempted offer in Croatia. When the issuer cannot meet this deadline, the notice has to be submitted within three working days following the begining of the offer (following the beginning of the subscription period or allocation of securities), including reasons for the issuer’s inability to deliver the notification earlier.

Cyprus

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

No rules established

Czech Republic

Threshold below which a prospectus is not required:

1 million EUR

National rules applicable to offers below the threshold:

No rules established

Denmark

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

No rules established

Estonia

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 2.5 and 8 million EUR, the issuer must publish a simplified prospectus in accordance with a regulation established by the Minister of Finance.

Finland

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 1 and 8 million EUR, before the offer the issuer must file a document with the FIN-FSA (the FIN-FSA does not approve the document) and publish it. The document must be a maximum of 6 pages and drawn up in Finnish or Swedish, and it must contain the basic facts of the issuer and the offer (Note: The main content requirements are basic facts and warnings, main risks of the issuer and the security, information on the issuer/security/offer/guarantor/guarantee, statement that the information in the document is up-to-date, date of publication and validity period of the document and possibility to refer to other sources of information. The latest annual financial statements, articles of association and an extract from the Register of Companies must be kept available on the issuer’s website.). The issuer must keep the document available on its website and file any subsequent changes with the FIN-FSA.

France

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers below 8 million EUR of securities not admitted to trading on an MTF, the issuer must file a summary information document with the AMF prior to the beginning of the offer (content defined in AMF instruction 2018-07). The information document does not have to be approved by the AMF.

For offers below 8 million EUR of securities not admitted to trading on an MTF which are made available on a crowdfunding website, a summary information document must be published on the crowdfunding website prior to the beginning of the offer. This document (average size 8 pages and content defined in AMF instruction 2014-12) does not have to be filed with nor approved by the AMF. Two types of regulated entities can operate a crowdfunding website:

Investment firms: The crowdfunding website of an investment firm can give access to offers of securities below 8 million EUR within a period of 12 months with no mandatory prospectus;
Crowdfunding investment advisors (a national status): At present, the crowdfunding platform of a crowdfunding investment advisor may only advise offers of securities with a total consideration below 8 million EUR within a period of 12 months with no mandatory prospectus.

In case of a first-time admission to trading (IPO) on an MTF (without offer of securities to the public or with an offer below 8 million EUR), an information document may be required by the Market Rules of the MTF operator (average size 100 pages and content defined by the Market Rules). The information document does not have to be filed with nor approved by the AMF.

In case of secondary offerings, the AMF recommends the publication of a press release prior to and/or after the transaction (average size 3 to 10 pages and content defined by AMF position 2013-03). The press release does not have to be filed with nor approved by the AMF.

Germany

Threshold below which a prospectus is not required:

8 million EUR: This threshold applies to offers issued by credit institutions and by issuers whose shares are admitted to trading on a regulated market so-called privileged issuers) without further conditions. For offers other than by privileged issuers, this threshold may be used on the condition that securities are only provided in conjunction with investment advice or investment brokerage by an investment firm that is obliged to verify that the securities that can be acquired by a nonqualified investor do not exceed the following amounts:

1,000 EUR, or
Up to 25,000 EUR, depending on the financial situation or monthly net income of the nonqualified investor.

These conditions only apply if the offer is above 1 million EUR. The conditions do not apply in case of a rights issue addressed to shareholders.

National rules applicable to offers below the threshold:

For offers other than by privileged issuers making use of the 8 million EUR exemption, the issuer must produce a 3 page securities information sheet which must be approved by BaFin and published.

This requirement only applies if the offer is above 100,000 EUR.

Greece

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers between 100,000 EUR and 5 million EUR, the issuer must publish an information document according to a decision by the HCMC. In general, the document is approved the Athens Stock Exchange or the HCMC, depending on whether the issuer is admitted to trading on a regulated market or an MTF or not.

Hungary

Threshold below which a prospectus is not required:

1 million EUR

National rules applicable to offers below the threshold:

For offers below 1 million EUR, the issuer must publish a simplified prospectus in accordance with the rules established in the Capital Market Act.

Iceland

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers between 2.5 and 5 million EUR, the issuer must publish a national prospectus with information regarding the persons responsible, the offer and the securities to be offered, the issuer and its business, the financial condition of the issuer and the administrative and management body. The rules for the national prospectus are established in Regulation 836/2013.

Ireland

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

An offer below 8 million EUR may constitute a local offer as defined by Section 1348 of the Companies Act 2014. Section 1361 of this Act sets out certain filing and disclosure requirements for offering documents prepared for such local offers.

Italy

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers of equity securities below 8 million EUR through crowdfunding portals pursuant to Article 100-ter, paragraph 1 of the Consolidated Law (Legislative Decree 58/98), the portal manager must publish a document no longer than 5 pages of A4 format. This document must be drawn up according to Annex 3 of Consob Regulation 18592/2013.

According to Consob Regulation 11971/1999, issuers with shares admitted to trading on a regulated market for offers of equity securities to the public below 8 million EUR must include in their board report for the relevant shareholders meeting, if any, and in the pertinent price sensitive press releases details relating to the public offer and its impact on the issuer.

Latvia

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 1 million and 8 million EUR, the issuer is required to publish an information document in accordance with rules established in Regulations of the Financial and Capital Markets Commission.

Liechtenstein

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

No rules established

Lithuania

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 1 and 8 million EUR, the issuer must publish an information document according to the Law on Securities (Article 7(1).

Luxembourg

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 5 and 8 million EUR, an information notice must be published. The content of the information notice is provided for by the law of 16 July 2019 on prospectuses for securities.

Malta

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers below 5 million EUR, an issuer may seek admission to trading on the Prospects MTF, operated by the Malta Stock Exchange. In this case, the issuer must prepare an Admission Document for review and approval by the Malta Stock Exchange.

Netherlands

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

For offers below 5 million EUR, the issuer must:

notify the Dutch Authority for the Financial Markets of the offering of securities to the public; and
complete an information document in the form required under Dutch law, submit the completed form to the Dutch Authority for the Financial Markets and make the information document available to investors.

Norway

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

For offers between 1 and 8 million EUR, issuers must file a national prospectus with The Register of Business Enterprises.

Poland

Threshold below which a prospectus is not required:

2.5 million EUR

National rules applicable to offers below the threshold:

For offers between 100,000 and 1 million EUR, the issuer must publish a document containing the following:

Essential information about the issuer;
Conditions and rules of the offer (securities being offered, use of proceeds, significant risk factors, declaration by issuer on responsibility for information in the document); and
Statement that information is true, reliable and in accordance with the facts.

For offers between 1 and 2.5 million EUR, the issuer must make a memorandum available. The disclosure requirements are specified in the legislation.

Portugal

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

No rules established

Romania

Threshold below which a prospectus is not required:

1 million EUR: This threshold applies to offers made within Romania.

5 million EUR: This threshold may be used by issuers who have Romania as their home Member State when making offers to the public exclusively in other Member States than Romania.

National rules applicable to offers below the threshold:

No rules established

Slovakia

Threshold below which a prospectus is not required:

1 million EUR

National rules applicable to offers below the threshold:

No rules established

Slovenia

Threshold below which a prospectus is not required:

3 million EUR

National rules applicable to offers below the threshold:

For offers below 3 million EUR, the issuer must notify the Securities Market Agency that it is making use of the exemption.

Spain

Threshold below which a prospectus is not required:

5 million EUR

National rules applicable to offers below the threshold:

No rules established

Sweden

Threshold below which a prospectus is not required:

2.5 million EUR

National rules applicable to offers below the threshold:

No rules established

UK

Threshold below which a prospectus is not required:

8 million EUR

National rules applicable to offers below the threshold:

In the UK, financial promotions are restricted. Briefly, the communication of an invitation or inducement to engage in investment activity (a ‘financial promotion’), when made in the course of business, is prohibited unless it is approved or communicated by an authorised person, or able to benefit from a statutory exemption. If an unauthorised person communicates any financial promotion, it will need to be approved by an authorised firm, unless an exemption is available. A number of exemptions exist (including for issuers producing prospectuses under the Prospectus Regulation).

If communicated or approved by an authorised person, as well as being subject to the MiFID disclosure provisions (where applicable), a financial promotion in the UK will also be subject to the financial promotion rules set out in the FCA’s Handbook. The key requirement is for all promotions to be ‘fair, clear and not misleading’. In addition, more detailed rules will apply. For example, if the promotion is communicated to a retail client (or relates to MiFID business), the promotion needs to be accurate, sufficient for the recipient, give a fair and prominent indication of any relevant risks and not disguise, diminish or obscure important items, statements or warnings.

Source ESMA as of March 2020