Prospectus Regulation (2017/1129)

The Prospectus Regulation (Regulation (EU) 2017/1129) establishes the legal framework for the prospectus that must be published when securities are offered to the public or admitted to trading on a regulated market in the European Union. Replacing Directive 2003/71/EC, the Regulation entered into force on 21 July 2019, with the objectives of simplifying the prospectus regime, reducing costs for issuers, enhancing investor protection, and supporting the Capital Markets Union. The Regulation is directly applicable in all Member States.

The Prospectus Requirement

Article 3 establishes the core obligation: securities may not be offered to the public in the EU without prior publication of a prospectus approved by the relevant competent authority. The same requirement applies to the admission of securities to trading on a regulated market. The prospectus must contain all information necessary to enable investors to make an informed assessment of the assets, liabilities, profits, losses, financial position, and prospects of the issuer and the rights attaching to the securities.

The prospectus must be made available to the public in good time before the offer, and in any event at least six working days before the final closing of the offer.

Exemptions from the Prospectus Requirement

Article 1 provides exemptions from the prospectus requirement for specified types of offers. The most practically significant exemptions include:

• Offers addressed solely to qualified investors (Article 1(4)(a));
• Offers addressed to fewer than 150 natural or legal persons per Member State (other than qualified investors);
• Offers with a total consideration of less than EUR 1 million over 12 months;
• Offers with a minimum investment of EUR 100,000 per investor or a minimum denomination of EUR 100,000.

Member States may exempt offers between EUR 1 million and EUR 8 million from the prospectus requirement under national law, provided such offers are not subject to notification to other Member States.

Types of Prospectus

The Regulation introduces several prospectus formats designed to reduce costs and improve accessibility. The standard prospectus contains a summary, a registration document, and a securities note. The summary must be short (maximum seven pages), written in non-technical language, and key investment information.

The EU Growth Prospectus (Article 15) is a simplified, standardised prospectus for small and medium-sized enterprises (SMEs), issuers with limited market capitalisation, and secondary issuances. The format is shorter and less burdensome than the standard prospectus, with a reduced maximum length for the summary and less extensive disclosure requirements. The EU Growth Prospectus aims to reduce the cost of capital raising for smaller issuers, one of the key barriers to the development of EU capital markets.

Universal Registration Document (URD)

Article 9 introduces the Universal Registration Document (URD), a key innovation of the Regulation. The URD is a registration document that can be filed with the competent authority on a voluntary basis without a securities note or summary. Once approved, the URD becomes a “fast-track” vehicle: the issuer may use the approved URD as a constituent part of a prospectus when capital is needed, reducing the approval timeline to five working days.

Frequent issuers — those whose securities have been admitted to trading for at least three years and who have filed URDs for at least three consecutive years — may benefit from the “frequent issuer” status, allowing access to an accelerated approval process.

Simplified Disclosure for Secondary Issuances

Article 14 provides a simplified disclosure regime for secondary issuances. Where securities are already admitted to trading and the issuer has complied with ongoing transparency obligations under the Market Abuse Regulation and Transparency Directive, the prospectus may incorporate information by reference and omit certain disclosure items.

The simplified prospectus for secondary issuances is significantly shorter than a full prospectus, reflecting the market’s existing familiarity with the issuer.

Approval Process and ESMA Scrutiny

The competent authority of the home Member State approves the prospectus. The authority must notify the issuer of its decision within ten working days (five working days for URDs) of the application submission. The authority may transfer the approval to another Member State’s competent authority by agreement (Article 28).

ESMA plays a coordinating role, developing regulatory technical standards (RTS) on prospectus content, format, and approval procedures. ESMA also maintains the European Electronic Access Point (EEAP) through which approved prospectuses are made available to the public. The prospectus must remain publicly available for at least ten years after approval.

Passporting

Article 25 provides that once approved by the home Member State authority, a prospectus is valid for offers and admissions to trading in all other Member States without additional approval. The issuer must notify the host Member State authority through the notification mechanism operated by ESMA. The host authority cannot require additional information or impose supplementary approval procedures.

The passporting regime is central to the Capital Markets Union, enabling issuers to raise capital across the EU on the basis of a single, uniform disclosure document.

Liability and Sanctions

Article 11 provides that the prospectus must contain a responsibility statement identifying those responsible for its content and confirming that, to the best of their knowledge, the information is in accordance with the facts and contains no omission likely to affect its import.

Liability for inaccurate or misleading prospectuses is governed by national law, but the Regulation requires Member States to ensure that their laws on civil liability apply to persons responsible for the information in the prospectus. The Court of Justice in Bildas (Case C-259/20) addressed the standard of liability, holding that the prospectus summary must be read together with the full prospectus and that omissions from the summary can give rise to liability only where they are misleading when read in context.

The Prospectus Regulation Review

The European Commission adopted a proposal in 2024 to amend the Prospectus Regulation as part of the Listing Act package. The amendments aim to further simplify disclosure requirements, raise the EUR 1 million exemption threshold to EUR 12 million, and streamline the approval process, particularly for SME issuers and companies seeking secondary listings.