Following the Lord Hill review and the subsequent FCA consultation, the Government has announced that it will replace the current prospectus regime. The UK Prospectus Regulation is going to change to separate (i) regulation of public offers of securities and (ii) regulation of admissions of securities to trading.
A prospectus will be required for admission to trading on regulated markets, but no longer for public offerings. There will be a general prohibition on public offerings of securities subject to exemptions. The existing exemptions will be expanded to cover:
- offers of securities that are, or will be, admitted to UK regulated markets;
- pre-emptive offers of securities to those who already hold equity securities;
- offers of securities that are or will be admitted to trading on certain multilateral trading facilities;
- offers of securities made by private companies through a platform operated by a firm specifically authorised for the purpose; and
- offers of securities made by companies that have prepared documents according to the rules of a relevant overseas jurisdiction and market.
Existing exemptions relating to offers to ‘Qualified Investors’, offers to fewer than 150 persons and offers under employee share schemes will be retained.
The biggest change here is that admission documents published in accordance with the AIM rules will be treated as a type of prospectus. This opens the door to a potential return to rights issues in the mid-market and is something that the AIM community campaigned for (unsuccessfully) at the time of the introduction of the prospectus regime in 2005.
To increase the capital raising options available to private companies, there will no longer be a requirement for an FCA-approved prospectus for offers over €8 million in any 12 month period. Instead, securities will be allowed to be offered to the public provided that the offer is made through a platform operated by a firm specifically authorised for the purpose. There will be a new regulated activity covering the operation of an electronic platform for the public offering of securities eg crowdfunding.
We await the full legislative framework.
If you aren’t receiving our legal updates directly to your mailbox, please sign up now
Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.