200 5 Equity and Shareholders’ Capital
Now there are common rules on prospectuses. Like listing rules, the prospectus
rules are based on many sources. The requirements for the drawing up, approval
and distribution of the prospectus have been harmonised by the Prospectus
Directive and an implementing Regulation which sets out the required contents of
prospectuses in detail.^292 The implementing Regulation is an example of Level 2
legislation made under the Lamfalussy Process (section 5.9.1). The Committee of
European Securities Regulators (CESR) has also issued recommendations for the
consistent implementation of prospectus requirements.^293
Benefits. The Prospectus Directive brings many benefits. The Directive makes
it easier and cheaper for companies to raise capital throughout the EU by
introducing the principle of a “single passport for issuers”.^294 The Directive
requires approval from a regulatory authority in one Member State (the issuer’s
“home competent authority”) instead of regulatory authorities in many Member
States. Furthermore, it provides that once approved by the authority in one
Member State, a prospectus will have to be accepted everywhere else in the EU.
Those rules have been made possible by the fact that the Directive also
harmonises rules on the contents of prospectuses.
Duty to publish a prospectus, Community scope. The Prospectus Directive
requires the publication of a prospectus: “Member States shall not allow any offer
of securities to be made to the public within their territories without prior
publication of a prospectus.”^295
No prospectus may be published until it has been approved by the competent
authority of the home Member State.^296 In Germany, the competent authority is
BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht, Federal Financial
Supervisory Authority). In England, the competent authority is the Financial
Services Authority (FSA) created by the Financial Services and Markets Act 2000
(FSMA). An approved prospectus has Community scope meaning that the
prospectus approved by the home Member State is valid in any other Member
State provided that certain notification requirements are complied with.^297
No duty to publish a prospectus. However, the scope of the Prospectus
Directive is limited in many ways. In some cases it is permitted to offer shares to
investors without the publication of a prospectus. Those limitations are important
in practice, because differences in prospectus requirements can give rise to the
emergence of different markets.
First, the Directive does not apply to securities included in an offer where the
total consideration of the offer is less than €2.5 million.
(^292) Regulation 809/2004 implementing Directive 2003/71/EC as regards information con-
tained in prospectuses as well as the format, incorporation by reference and publication
of such prospectuses and dissemination of advertisements.
(^293) CESR, Recommendations for the Consistent Implementation of the European Commis-
sion’s Regulation on Prospectuses, No 809/2004, CESR/05–054b (2005).
(^294) Recital 14 of Directive 2003/71/EC (Prospectus Directive).
(^295) Article 3(1) of Directive 2003/71/EC (Prospectus Directive).
(^296) Article 13 of Directive 2003/71/EC (Prospectus Directive).
(^297) Articles 17 and 18 of Directive 2003/71/EC (Prospectus Directive).