112 4 Debt
equity securities offered to the public or admitted to trading on a regulated market.
The scope of the Prospectus Directive is thus not limited to equity securities or to
securities which have been admitted to the official lists of stock exchanges.^116
However, there are many loan instruments to which the Prospectus Directive
does not apply. For example, the Directive does not apply to securities included in
an offer where the total consideration of the offer is less than €2,500,000.^117
The obligation to publish a prospectus does not apply to the following types of
offer: (a) an offer of securities addressed solely to qualified^118 investors; and/or (b)
an offer of securities addressed to fewer than 100 natural or legal persons per
Member State, other than qualified investors; and/or (c) an offer of securities ad-
dressed to investors who acquire securities for a total consideration of at least
€50,000 per investor, for each separate offer; and/or (d) an offer of securities
whose denomination per unit amounts to at least €50,000; and/or (e) an offer of
securities with a total consideration of less than €100,000 (calculated over a period
of 12 months).^119
Even where no prospectus is required under the Prospectus Directive, “material
information provided by an issuer or an offeror and addressed to qualified inves-
tors or special categories of investors, including information disclosed in the con-
text of meetings relating to offers of securities, shall be disclosed to all qualified
investors or special categories of investors to whom the offer is exclusively ad-
dressed”.^120
4.5 Particular Remarks on Corporate Bonds..............................................
Large companies do not have to borrow from banks; they can raise long-term debt
from the markets by issuing bonds. Basically, a bond is a loan in the form of a
debt security. There is a borrower (issuer of bonds) and many lenders (holders of
bonds). The issuer undertakes to repay the principal and interest (the coupon) at a
later date (maturity). Bonds enable the issuer to finance long-term investments
with external funds. Short-term debt securities like certificates of deposit (CDs) or
commercial paper (CP) are considered to be money market instruments rather than
bonds and will be discussed in the following section.
Particular aspects. There are particular aspects relating to bonds. First, there is
a bond market. Second, there is both a primary market and a secondary market.
Third, there cannot be a market without a trading infrastructure and a post-trading
infrastructure. Fourth, several regulatory initiatives have been started in recent
years aimed at creating a single market in financial services across the EU, and
(^116) Recital 12 of Directive 2003/71/EC (Prospectus Directive).
(^117) Article 1(2)(h) of Directive 2003/71/EC (Prospectus Directive).
(^118) For a definition of qualified investors, see Article 2(1)(e) of Directive 2003/71/EC (Pro-
spectus Directive).
(^119) Article 3(2) of Directive 2003/71/EC (Prospectus Directive).
(^120) Article 15(5) of Directive 2003/71/EC (Prospectus Directive).