On 21 July 2018, the Financial Services and Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018 (the New Regs) came into force. These regulations amended the Financial Services and Markets Act 2000 (FSMA) to give effect to the new Prospectus Regulation.
Under s.85 of FSMA, unless a relevant exemption applies it is unlawful to offer transferable securities to the public, or to request admission of transferable securities to trading on a regulated market situated in the UK, without a prospectus.
The New Regs have made changes to the exemptions, which give with one hand and take away with the other. Overall, however, the position has been relaxed.
Formerly, s. 86(1)(e) of FSMA provided that a person did not breach the restriction in s.85 if the total consideration for an offer of securities to the public in the EEA did not exceed €100,000 (or an equivalent amount), even if there was no prospectus. The New Regs will increase the relevant amount to €8,000,000.
On the other hand, a commonly relied on exemption before the New Regs came into force was paragraph 9(1) of Schedule 11A of FSMA. The effect of this paragraph was to exempt from the obligation to provide a prospectus an offer to the public of transferable securities where the total consideration for those securities being offered in EEA states was less than €5,000,000 (or an equivalent amount). This limit has been substantially reduced by the New Regs to €1,000,000.
Whilst the changes are structured in a slightly confusing way, the end result is that a prospectus should not be required for a public offer of securities for total consideration of €8,000,000 or less.
It should be noted that the above exclusions do not apply in relation to the requirement for a prospectus in relation to admission of transferable securities to trading on a regulated market situated in the UK.
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