204 5 Equity and Shareholders’ Capital
GAAP, Japanese GAAP, and Canadian GAAP have been mentioned in the
Regulation.^319
Supplementary prospectus, withdrawal rights. If a new matter likely to
influence the assessment of the investment arises after the publication of the
prospectus but before the closing of the offer or the start of trading on a regulated
market, a supplement to the prospectus must be published.^320 As said above, a base
prospectus will be complemented by a supplementary prospectus.^321 A
supplementary prospectus requires prior approval.
The Prospectus Directive provides that an investor must have particular
withdrawal rights in certain circumstances when the price has been left open^322 or
a supplementary prospectus has been published.^323
Advertisements. There is a distinction between advertisements and
prospectuses. An advertisement means “announcements: (a) relating to a specific
offer to the public of securities or to an admission to trading on a regulated
market; and (b) aiming to specifically promote the potential subscription or
acquisition of securities.”^324
Advertisements do not require prior approval. However, advertisements must
observe the following principles: advertisements must state that a prospectus has
been or will be published and indicate where investors are or will be able to obtain
it;^325 advertisements must be clearly recognisable as such;^326 the information
contained in an advertisement must not be inaccurate or misleading; and all
information must be consistent with the information contained in the prospectus.^327
The Prospectus Directive does not grant a single European passport to
advertising and host Member States remain empowered to impose requirements
concerning advertising. For example, the Directive does not address the language
of advertisements. This can increase translation costs and slow down the
process.^328
The process in practice. In traditional company law, it is often assumed that a
company markets its shares directly to potential investors and that investors
subscribe for new shares. In practice, however, the firm uses investment banks as
intermediaries. The firm expects that those intermediaries: (a) possess know-how
about the capital market, investors, and the pricing of securities; and (b) can take
care of formalities. The most important steps of the issuing process will be
described in section 5.10 below.
(^319) Recital 4 of Regulation 1569/2007. See also See Moloney N, EC Securities Law. OUP,
Oxford (2008) pp 223–228.
(^320) Article 16 and recital 34 of Directive 2003/71/EC (Prospectus Directive).
(^321) Article 5(4) of Directive 2003/71/EC (Prospectus Directive).
(^322) Article 8(1)(b) of Directive 2003/71/EC (Prospectus Directive).
(^323) Article 16(2) of Directive 2003/71/EC (Prospectus Directive).
(^324) Article 2(9) of Regulation 1787/2006.
(^325) Article 15(2) of Directive 2003/71/EC (Prospectus Directive).
(^326) Article 15(3) of Directive 2003/71/EC (Prospectus Directive).
(^327) Articles 15(3) and 15(4) of Directive 2003/71/EC (Prospectus Directive).
(^328) Moloney N, EC Securities Law. OUP, Oxford (2008) p 162.