EU: Raising capital on public markets to be facilitated

Mar 17, 2021 Benn-Ibler Rechtsanwälte

A short prospectus for well-known issuers has been introduced at EU level. The aim is to help companies recapitalize in light of the economic impact of COVID-19. The EU Recovery prospectus aims to provide a simplified prospectus for issuers and investors.

The EU Recovery prospectus is one of the measures elaborated under the "Capital Markets Recovery Package" at Union level.

The EU Recovery prospectus is available to known issuers for secondary issuances. This means in particular that shares of the issuer have been admitted to trading on a regulated market for at least the previous 18 months without interruption and that the shares to be issued under the EU Recovery prospectus are fungible with the existing previously issued shares (Art 14a of the amended Prospectus Regulation 2017/1129).

Simplified disclosure rules shall apply to the EU Recovery prospectus. The EU Recovery prospectus shall contain the necessary abridged information to enable investors to inform themselves about the economic situation and prospects of the issuer, as well as about the essential information concerning the shares, the rights attached to those shares and certain details of the issuance (Art 14a para 2).

In order to accelerate access to capital, a shortened deadline of seven working days for the regulatory approval of the prospectus applies under the new regulation.

The EU Recovery prospectus is intended by the legislator to be limited to an initial phase of economic recovery after the outbreak of the COVID-19 pandemic. Therefore, the regulation is limited in time and expires on 31.12.2022.

However, the new regulation contains a grandfather clause so that all recovery prospectuses approved before the expiry of the regulation are treated as recovery prospectuses until the end of their validity or until the expiry of 12 months after 31 December 2022.

Regulation (EU) 2021/337