3 FINANCIAL SERVICES
(30966)
13688/09
+ ADDs 1-2
COM(09) 491
| Draft Directive amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market
|
| Legal base | Articles 44 and 95 EC; co-decision; QMV
|
| Document originated | 23 September 2009
|
| Deposited in Parliament | 2 October 2009
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| Department | HM Treasury |
| Basis of consideration | EM of 15 October 2009
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| Previous Committee Report | None
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| To be discussed in Council
| Possibly 2 December 2009 |
| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
3.1 Directive 2003/71/EC sets out Community requirements
on prospectuses that must be published when securities are offered
to the public or admitted to trading. Directive 2004/109/EC sets
out transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market in the Community.
The document
3.2 The Commission intends this draft Directive,
amending Directive 2003/71/EC and Directive 2004/109/EC, to simplify
and improve the application of the Directives by reducing legal
uncertainties, reducing unjustified burdensome requirements on
market participants and further enhancing investor protection.
The proposal is presented as part of the Commission's programme
to simplify legislation and reduce administrative burdens.
3.3 The specific aims of the draft Directive are
to:
- clarify that, where limits of offered amounts
are included in the Directives, these limits should be calculated
on a Community-wide basis and may be updated in the future by
the Commission following the comitology regulatory procedure with
scrutiny;[10]
- harmonise the term "qualified investor"
with that of "professional investor" used in the Markets
in Financial Instruments Directive;
- remove a restriction on the choice of home Member
State for issues of non-equity securities with denominations below
€1,000 (£909);
- clarify the requirement and responsibilities
for a prospectus when securities are sold to investors by intermediaries
and not directly by the issuer;
- widen the existing exemption from the requirement
for a prospectus for offers of securities to employees where the
securities are of a company that is not listed on a regulated
market;
- clarify and enhance the requirement for a summary
in a prospectus and clarify the civil liability associated with
it;
- introduce a proportionate disclosure regime for
small companies or credit institutions and for rights issues;
- clarify requirements where securities are guaranteed
by a Member State;
- extend the period during which a prospectus,
duly supplemented and updated, may be considered valid;
- remove one requirement for public reporting that
is duplicated by the two Directives;
- clarify the period when publication of a prospectus,
or supplementary information to it, is required and for the exercise
of the right of withdrawal; and
- ensure that a home competent authority directly
advises an issuer of its approval of a prospectus, removing any
risk of the issuer contravening the law due to an oversight or
error by the competent authority.
The Government's view
3.4 The Financial Services Secretary to the Treasury
(Lord Myners) says that the Government supports the process of
review of existing legislation and this resulting proposal for
amendments to improve the balance between the goals of investor
protection, consumer confidence, efficiency, legal clarity and
reduction of administrative burdens. The Minister comments further
that:
- in relation to the €1,000 threshold for
non-equity securities and the extension of the period of validity
of prospectuses the Government will seek revisions to the draft
Directive to improve the balance;
- otherwise the Government supports the substantive
proposals, as improving this balance;
- the Government is establishing a stakeholder
group to give users and representatives of affected industry in
the UK an opportunity to share views on the detailed proposals
and to gain a more developed understanding of their impacts;
- the Government broadly supports the conclusions
of the Commission's impact assessment; and
- as part of its consultation with stakeholders,
the Government will seek further information on the likely impacts
on affected sectors from UK firms.
Conclusion
3.5 We welcome any effort to simplify Community
legislation and reduce administrative burdens. However, before
considering this draft Directive further we should like to hear
from the Government about:
- the revisions the Government is seeking in
relation to the €1,000 threshold for non-equity securities
and the extension of the period of validity of prospectuses; and
- the outcome of its consultations.
Meanwhile the document remains under scrutiny.
10 Comitology is the system of committees which oversees
the exercise by the Commission of powers delegated to it by the
Council and the European Parliament. Comitology committees are
made up of representatives of the Member States and chaired by
the Commission. There are three types of procedure (advisory,
management and regulatory), an important difference between which
is the degree of involvement and power of Member States' representatives.
So-called "Regulatory with Scrutiny", introduced in
July 2006, gives a scrutiny role to the European Parliament in
most applications of comitology. Back
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