Luxembourg implementation of the New Prospectus Regulation
The Luxembourg parliament adopted on 2 July 2019 the new prospectus law implementing Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing as of 21 July 2019 the former prospectus regime set out in the law of 10 July 2005.
As of July 21 of this year, Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the Prospectus Regulation) will fully enter into force and repeal Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading, as amended (the Prospectus Directive). Please revert to our Legal Flash of 2 June 2017 (New prospectus rules adopted) for further information in this respect.
While the Prospectus Regulation will be binding in its entirety and directly applicable in all Member States, certain provisions of the Prospectus Regulation still require Member States to take specific implementation measures. To this effect, the Luxembourg Parliament has adopted on 2 July 2019, the draft law n° 7328 implementing the Prospectus Regulation (the New Prospectus Law) and repealing the law of 10 July 2005 relative aux prospectus pour valeurs mobilières, as amended (the Prospectus Law).
Although the New Prospectus Law will enter into force as of 21 July 2019 (except for certain provisions which will be repealed as of the date of publication of the New Prospectus Law in the Luxembourg Official Journal), it should be noted that prospectuses or simplified prospectuses approved before 21 July 2019 in accordance with the Prospectus Law, will continue to be governed by this law until the end of their validity, or until 12 months have elapsed after 21 July 2019, whichever occurs first.
Key features of the New Prospectus Law
1. New prospectus exemption for small scale offerings
In accordance with the provisions of the Prospectus Regulation, Luxembourg has opted to exempt offers of securities to the public falling within the scope of the Prospectus Regulation, from the obligation to publish a prospectus, if the total consideration of the offer in the European Union is lower than EUR 8,000,000, calculated over a 12 months period. This corresponds to the maximum amount which Member States could have opted for under the Prospectus Regulation.
Anyone wishing to benefit from this exemption will however need to notify the Commission de Surveillance du Secteur Financier, the Luxembourg financial sector supervisory authority (the CSSF) beforehand.
Furthermore, if the total consideration of the offer amounts to at least EUR 5,000,000 (but is lower than EUR 8,000,000) over a 12 months period, an information note must be published in accordance with the New Prospectus Law, in addition to the above mentioned prior notification to the CSSF.
In order to ensure a certain level of investor protection, the information note must contain brief information on the issuer and the securities offered as well as on the reasons and conditions of the offer (as further detailed in the New Prospectus Law). Neither the offer nor the information note must be formally approved by the CSSF.
The increase of the exemption threshold (compared to the one set out under the Prospectus Law) will be particularly favorable for small and medium sized companies seeking financing on the capital markets, freeing them from the hurdles of a full-fledge prospectus approval process.
2. Alleviated prospectus regime
The Luxembourg legislator has also maintained a national prospectus regime (Part III of the New Prospectus Law) which follows the general lines of the simplified prospectus regime under the Prospectus law, for all offers of securities to the public and admissions to trading on a regulated market which do not fall under the scope of the Prospectus Regulation. The features of, and regime applicable to the alleviated prospectus are strictly set out in the New Prospectus Law.
It is worth noting here that the new prospectus exemption for small scale offerings described above will also apply in the context of the alleviated prospectus regime.
Finally, similar to the voluntary prospectus regime set out in the Prospectus Regulation, the Luxembourg legislator has also decided to grant such an option under its national prospectus regime for alleviated prospectuses. As a result, where an offer of securities or an admission to trading of securities on a regulated market is otherwise exempted from the obligation to draw up an alleviated prospectus pursuant to the New Prospectus Law, issuers may still opt to draw up a “voluntary” prospectus entailing the same rights and obligations as an alleviated prospectus required under the New Prospectus Law.
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