182 5 Equity and Shareholders’ Capital
cluding information disclosed in the context of meetings relating to offers of secu-
rities, shall be disclosed to all qualified investors or special categories of investors
to whom the offer is exclusively addressed.”^203 This language is intended to en-
courage transparency by prohibiting secret information divulged to one set of in-
vestors, and not to others, and thus, discourage potential unfair advantage and po-
tential conflicts of interest.^204
The disclosure obligations can also depend on whether the securities are offered
to investors by a financial services provider (“investment firm”) as well as on how
sophisticated the potential investors are.^205
Some exemptions depend on whether potential investors are regarded as quali-
fied investors (Prospectus Directive) or professional investors (MiFID). These
concepts are different because the two regimes were created for different pur-
poses.^206
Investment advice is heavily regulated in the EU (Volume I). It can also be noted that the
Distance Marketing of Financial Services Directive^207 establishes a set of EU-wide rules on
the information that must be supplied to consumers when financial services are sold
through the use of distance means (such as telephone, fax, internet, or mail). The Directive
sets minimum periods of withdrawal from distance contracts.
Member States’ laws. The Prospectus Directive, which tries to achieve a maxi-
mum level of harmonisation, leaves little discretion to the Member States. The ex-
emptions under the Prospectus Directive thus determine when a private placement
is private under the governing law.
On the other hand, where no prospectus is required, the disclosure obligations
of the parties depend on the governing law. There are differences depending on
the Member State.^208
English law. In England, the Financial Services and Markets Act 2000 (FSMA)
is the most important statute regulating securities markets.^209 The FSMA provides
for a unified and media-neutral financial promotion regime. Financial promotion
(^203) Article 15(5) of Directive 2003/71/EC (Prospectus Directive).
(^204) See Speck BD, Tanega J, Private Equity Placements: Comparing the Laws in Switzer-
land, the European Union, the United Kingdom and the United States of America: Part
1, JIBLR 21(4) (2006) p 224.
(^205) Article 19 of Directive 2004/39/EC (MiFID). For Swiss law, see BGE 105 II 75, 80, E.
2.a; Groner R, Private Equity – Recht. Stämpfli Verlag AG, Bern (2007) pp 87–91.
(^206) See European Securities Markets Expert Group, Differences between the Definitions of
“Qualified Investor” in the Prospectus Directive and “Professional Client” and “Eligible
Counterparty” in MiFID – Is Alignment Needed? November 2008.
(^207) Directive 2002/65/EC concerning the distance marketing of consumer financial services
and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC.
(^208) Impact Assessment Report on private placement, Commission Staff Working Document,
SEC(2008) 2340 pp 12–13.
(^209) See Speck BD, Tanega J, Private Equity Placements: Comparing the Laws in Switzer-
land, the European Union, the United Kingdom and the United States of America: Part
2, JIBLR 21(5) (2006) pp 252–265.