prospectus for the public offering of securities in europe vol2

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Prospectus for the Public Offering of Securities in Europe

The Prospectus Directive of 4 November 2003 and the Prospectus Regulation of 29 April 2004 permits a single European passport for a prospectus that has been approved by the competent authority of a Member State to be used for the public offering of securities in other Member States without the need to obtain approval in each State. The Prospectus Directive sets forth the general rules and requirements for the preparation, approval and distribution of prospectuses and defines the content, format and publication of the prospectus, while the Prospectus Regulation defines the minimum information that must be included in the prospectus and its related documents.

This second volume contains reports of the implementation of the Prospectus Directive in those EU and EEA Member States not included in the first volume. Together, both volumes give the reader an overview of the implementation throughout the European Union and the European Economic Area.

Dirk Van Gerven is a Brussels partner with the Benelux law firm of NautaDutilh and a member of the Brussels and New York Bars. He has extensive experience in all areas of corporate and financial law, includ-ing securities regulation. He is in charge of continuing legal education for the Dutch-speaking Bar Association of Brussels and has published widely in the fields of corporate and financial law. Since 2003, he has been a member of the Supervisory Board of Belgium’s Banking, Finance and Insurance Commission.

Law Practitioner SeriesThe Law Practitioner Series offers practical guidance in corporate and commercial law for the practitioner. It offers high-quality comment and analysis rather than simply restating the legisla-tion, providing a critical framework as well as exploring the fundamental concepts that shape the law. Books in the series cover carefully chosen subjects of direct relevance and use to the practitioner.

The series will appeal to experienced specialists in each field, but is also accessible to more junior practitioners looking to develop their understanding of particular fields of practice.

The Consultant Editors and Editorial Board have outstanding expertise in the UK corporate and commercial arena, ensuring academic rigour with a practical approach.

Consultant EditorsCharles Allen-Jones, retired senior partner of LinklatersMr Justice David Richards, Judge of the High Court of Justice, Chancery Division

EditorsChris Ashworth – Lovells LLPProfessor Eilis Ferran – University of CambridgeStephen Hancock – Herbert SmithJudith Hanratty – BP Corporate Lawyer, retiredKeith Hyman – Clifford ChanceKeith Johnston – Addleshaw GoddardVanessa Knapp – Freshfields Bruckhaus DeringerCharles Mayo – Simmons & SimmonsAndrew Peck – LinklatersTimothy Polglase – Allen & OveryRichard Snowden QC – Erskine ChambersWilliam Underhill – Slaughter & MaySandra Walker – Rio Tinto

Books in the Series

Stamp Duty Land TaxMichael Thomas; Consultant Editor David Goy QC

Accounting Principles for LawyersPeter Holgate

The European Company, Volume 1General editors: Dirk Van Gerven and Paul Storm

The European Company, Volume 2General editors: Dirk Van Gerven and Paul Storm

Capital Markets Law and Compliance: The Implications of MiFIDPaul Nelson

Reward Governance for Senior ExecutivesEdited by Carol Arrowsmith and Rupert McNeil

Prospectus for the Public Offering of Securities in Europe, Volume I: European and National Legislation in the Member States of the European Economic AreaGeneral editor: Dirk Van Gerven

Prospectus for the Public Offering of Securities in Europe, Volume IIGeneral editor: Dirk Van Gerven

Common Legal Framework for Takeover Bids in EuropeGeneral Editor: Dirk Van Gerven

Accounting Principles for Non-Executive DirectorsPeter A. Holgate and Elizabeth Buckley

Prospectus for the Public Offering of Securities in Europe

Volume II

General Editor

DI R K VA N GE RV E N

CAMBRIDGE UNIVERSITY PRESS

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2009

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v

Contents

Contributors vii

Preface ixdirk van gerven, NautaDutilh

Part II Application in the EU Member States

1 Austria 3florian khol and viktoria ebnerBinder Grösswang Rechtsanwälte OG

2 Bulgaria 19raina dimitrova and angel angelovBorislav Boyanov & Co.

3 Cyprus 46alexandros tsadirasEuropean University, Cyprus

4 Finland 60mikko heinonen and klaus ilmonenHannes Snellman, Attorneys-at-law Ltd

5 France 72jean-marc desachéGide Loyrette Nouel

6 Germany 88dr andreas wüsthoff and boris kläsenerSJ Berwin LLP

7 Ireland 101michael a. greene and cian mccourtA & L Goodbody

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Contents

8 Italy 113francesco gianni, andrea marani and gaudiana giustiGianni, Origoni, Grippo & Partners

9 Malta 134louis de gabrieleCamilleri Preziosi Advocates

10 Romania 148iuliana craiciuMusat & Asociatii

11 Republic of Slovenia 159eva pergarec, jurij dolžan and mitja vidmarOdvetniki Jurij Dolžan, Mitja Vidmar & Igor Zemljaric

12 Spain 182ramiro rivera and augusto piñelUría Menéndez

13 Sweden 195jan anderssonJönköping International Business School, Linköping University

Part III Application in the EEA Member States

14 Iceland 205ólafur arinbjörn sigurðsson hdl.Logos Legal Services

15 Liechtenstein 215andreas schurti and alexander appelWalch & Schurti

Part IV Annexes

Annex I 233

Annex II 260

Annex III 365

Index 372

vii

austriaFlorian KholViktoria EbnerBinder Grösswang Rechtsanwälte OG

bulgariaRaina DimitrovaAngel AngelovBorislav Boyanov & Co.

cyprusAlexandros TsadirasEuropean University Cyprus

finlandMikko HeinonenKlaus IlmonenHannes Snellman, Attorneys-at-law Ltd

franceJean-Marc DesachéGide Loyrette Nouel

germanyAndreas WüsthoffBoris KläsenerSJ Berwin LLP

irelandMichael A. GreeneCian McCourtA&L Goodbody

italyFrancesco GianniAndrea Marani

Gaudiana GiustiGianni, Origoni, Grippo & Partners

maltaLouis de GabrieleCamilleri Preziosi Advocates

romaniaIuliana CraiciuMusat & Asociatii

sloveniaJurij DolžanEva PergarecMitja VidmarOdvetniki Dolžan, Vidmar & Zemljaric

spainRamiro RiveraAugusto PiñelUría Menéndez

swedenJan AnderssonJönköping International Business

SchoolLinköping University

icelandÓlafur Arinbjörn Sigurðsson hdl.Logos legal services

liechtensteinAndreas SchurtiAlexander AppelWalch & Schurti

Contributors

ix

This is the second volume of the book on the Prospectus Directive. The first volume, containing a general report on the Prospectus Directive and national reports from those Member States which had already adapted their legislation, was published by Cambridge University Press in 2008. The purpose of this book is to provide a comprehensive analysis of the European legal framework and the legislation implementing the Prospective Directive in all Member States of the European Union (EU) and the European Economic Area (EEA). Indeed, the Prospectus Directive has been made applicable by Treaty to the EEA, and public offerings of securities in the EEA can, thus, also benefit from the European passport.

The first volume included reports from Belgium, the Czech Republic, Denmark, Estonia, Greece, Hungary, Latvia, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Slovakia, the United Kingdom and Norway.

Volume II contains reports from the remaining countries of the EU and the EEA, i.e., Austria, Bulgaria, Cyprus, Finland, France, Germany, Ireland, Italy, Malta, Romania, Slovenia, Sweden, Spain, Iceland and Liechtenstein.

In total, volumes I and II contain reports on the implementation of the Prospective Directive in all twenty-seven EU Member States, as well as Iceland, Liechtenstein and Norway. This book is, thus, a useful tool for com-panies seeking to finance their activities through the issuance of securities to the European public and for their advisers and intermediaries involved in such financings.

This book was made possible thanks to contributions by distinguished law firms in the EEA and EU member countries. A list of contributors appears at the beginning of each volume.

Finally, I wish to thank not only the contributors but also those whose names are not mentioned herein, in particular Bianca Porcelli, Katherine Raab and many others from NautaDutilh, for their continuing support in helping this second volume become a reality.

Dirk Van GervenBrussels, 30 July 2008

Preface

PART I I

Application in the EU Member States

3

I Introduction 3 II Competent authority 4 III Procedure of prior approval and appeal 6 1 Offer of securities to the public 6 A Procedure 6 B Exemptions 7 C Appeal 8 2 Admission to trading on a regulated market 9 IV Content and format, language and supplements of the prospectus 9 1 Content 9 2 Summary 9 3 Format 10 4 Supplements 10 5 Language 11 V Publication and advertisements 11 1 Method of publication 11 2 Advertisements 13 VI Use of prospectus approved in other

(non-EU and non-EEA) countries 13 VII Sanctions 13 VIII Prospectus liability 14 IX Rules applicable to transactions and securities not subject to the Prospectus

Directive and Regulation 15 X Conclusion 16

I Introduction

1.1 In Austria, the Prospectus Directive was implemented by a comprehensive amend-ment1 of the ‘Capital Market Act’2 (the ‘CMA’). The CMA applies to all public offers3 of securities or investments within Austria and governs the necessity, con-tent and publication requirements of a prospectus in the event of a public offer of securities or investments, as well as the content and publication requirements of

1AustriaFlor ian Khol and V iktor ia Ebner

Binder Grösswang Rechtsanwälte OG

4

1.1 Prospectus for the Public Offering of Securities in Europe

a prospectus for admission to trading on a regulated market of an Austrian stock exchange. The amended CMA entered into force on 10 August 2005.

1.2 Until the implementation of the Prospectus Directive in August 2005, as in most other Member States, different rules applied in Austria for prospectuses in connection with the public offer of securities or investments and in connec-tion with the listing admission of securities on an Austrian stock exchange: (i) The CMA provided, inter alia, for the publication of a prospectus in any case of an initial public offer of securities or assets or investments in Austria; and (ii) the ‘Stock Exchange Act’4 as amended, provided, inter alia, for the publica-tion of a prospectus for the listing admission of securities or investments on the official and semi-official market of an Austrian stock exchange.

1.3 Since the implementation of the Prospectus Directive in August 2005, the con-tent and publication requirements for prospectuses are exclusively governed by the CMA. The Stock Exchange Act governs, inter alia, the rules for listing admission of securities, insider trading and transparency.

1.4 In addition to the CMA and the Stock Exchange Act, the competent national supervisory authority (the Financial Market Authority (‘FMA’)) issued several regulations and circular letters on specific topics, mainly to clarify the CMA and Stock Exchange Act .5

II Competent authority

1.5 In Austria, until the implementation of the Prospectus Directive in August 2005, the Vienna Stock Exchange (Wiener Börse) was competent for the approval of prospectuses for the admission to trading but not for the approval of prospectuses for public offers without admission to trading. As the Vienna Stock Exchange during the discussion of the implementation of the Prospectus Directive refused to become competent for the approval of all pro-spectuses, the competence for such approvals has been allocated to the FMA (Art. 8a CMA).

1.6 The FMA is an independent, autonomous and supervisory authority for the Austrian financial market, established as an institution under public law. It is responsible for the supervision of credit institutions, insurance undertakings, pension funds, staff provision funds, investment funds, investment service pro-viders, companies listed on the stock exchange, as well as stock exchanges themselves. The FMA monitors both stock market and over-the-counter (OTC) trades.

1.7 To supervise the Austrian financial market, the FMA takes any measures necessary to ensure compliance with provisions of law; defines minimum standards and publishes regulations putting legal provisions into concrete terms; works out, in discussions with market participants, proposals to ensure

5

Austria 1.10

that the Austrian financial market permanently adheres to high standards; represents Austria’s interests in EU and other international bodies; and sup-ports cooperation with other supervisory authorities, such as the International Organisation of Securities Commissions (IOSCO), the Committee of Euro-pean Securities Regulators (CESR) and in the expert groups of the European Commission.

1.8 With respect to public offers of securities and admissions to trading the FMA is especially competent for:

(i) the public offer of securities in the territory of Austria; (ii) approval of prospectuses for public offers in Austria and admissions to

trading on Austrian regulated (official and semi-official) markets; and (iii) admissions to trading on a regulated market of another Member State

of the EEA in the event that Austria is the home Member State6 of the issuing company .

1.9 In addition to the FMA, Oesterreichische Kontrollbank Aktiengesellschaft (‘OeKB’) serves as Austria’s main financial and information service provider for the export industry and the capital market. In this function, OeKB is the competent notification office (Meldestelle), which acts as a depository for the prospectuses to be issued in compliance with the CMA and the Investment Fund Act.7 The notification office examines prospectuses, submitted as req-uired for the admission to trading on a regulated market and for public offers of securities and investments as defined in the CMA, as to whether the liability of drawing up a prospectus has been formally complied with. A further task is the safekeeping of prospectuses for a period of fifteen years from the date of submission of the prospectus to ensure preservation of evidence in case of possible future compensation claims. The notification office has to answer in-quiries regarding compliance with the formal publication regulations accord-ing to the CMA within three working days, and provides, upon request, copies of prospectuses filed (Art. 12(2) CMA).

1.10 Further, within the framework of implementing the EU Transparency Directive8 in Austria , OeKB was assigned to establish a system for central storage of regulated information on Austrian issuers (see no. 40 of this chapter). OeKB acts as the officially appointed storage system and operates this system named IssuerInformationCenter Austria. The purpose of the IssuerInformationCenter Austria is to receive, store and make available on an anonymous basis regu-lated information on Austrian issuers, whose securities are admitted to trad-ing on a regulated market. Issuers can quickly and easily transfer regulated information via OeKB’s web-based EmittentenPortal Austria (IssuersPortal) within a secure environment, i.e., via electronic upload of the documents, either in pdf- or txt-format. Subsequently, the documents are forwarded to the IssuerInformationCenter. All documents are filed in their original format and are available for download in their original format free of charge.9

6


1.11 The competence of the FMA is interrelated with the question of whether Austria may be considered the home Member State as set forth in the CMA (Art. 1(1)(12) CMA). It depends on a number of circumstances whether the FMA is competent to approve a prospectus:

(i) the issuer’s place of business in accordance with applicable law or its articles of association (i.e., situated in Austria, in another Member State or outside the European Union);

(ii) the type of securities which are offered (i.e., equity or non-equity securities);

(iii) the place where the offer of securities is made.

In the most relevant cases the competence of the FMA further depends on whether the offer includes equity securities or non-equity securities with a nominal value per security of less than €1,000 by an issuer with a registered office in Austria .

1.12 If Austria is not the home Member State, the FMA can transfer its author-ity to approve a prospectus to the Member State where the offer or admis-sion to trading takes place (Art. 8(6) CMA). Such transfer of authority will only occur when the link with Austria is remote and the FMA considers another regulatory authority to be better qualified to examine the prospec-tus. Likewise, the FMA can in similar circumstances also accept a trans-fer of power from the national regulatory authority of another Member State provided that this authority agrees with the transfer to the FMA (Art. 8(6) CMA) .

III Procedure of prior approval and appeal

1 Offer of securities to the public

A Procedure

1.13 A public offer of securities and assets shall be permissible within Austria only if a prospectus that has been prepared and approved in accordance with the CMA by the FMA (or by a competent authority of another EU Member State) is published at least one working day in advance (Art. 2 CMA).

A public offer is a declaration of the intention to sell securities or assets or investments addressed to the general public. Such declaration of intention addressed to the general public is in any case deemed to be given if the iden-tity of the persons to whom the offer is addressed has not been specified by the offeror before submitting the declaration (Art. 1(1)(1) CMA).

1.14 To receive the approval for a prospectus an application has to be filed with the FMA with, inter alia, the following documents attached: (i) a signed pro-spectus; and (ii) a cross-reference list if the prospectus is not drawn up exactly

7

Austria 1.17

in the manner as provided for pursuant to the relevant Annexes of the Prospectus Regulation.

1.15 Within ten working days of receipt of the application for approval of a pro-spectus, the FMA shall announce whether it needs more information or if the prospectus is approved. This period is statutorily extended to twenty working days if the prospectus is filed for an initial public offer. If the FMA does not react within the said time periods the prospectus shall not be deemed approved (Art. 8a(3) and (4) CMA). The FMA shall approve the prospectus if it is com-plete, coherent, clear and complies with the CMA.

In practice, the draft prospectus as well as the timetable for the offer are filed and discussed with the FMA prior to the formal application to ensure approval in time.

1.16 Private placements are not subject to the prospectus requirement as they do not qualify as public offers of securities or investments. In case of a private placement, the offeror is entitled to publish an offering memorandum or any other information without the approval of the FMA to the extent that this memorandum and/or information concerns a private placement addressed only to a limited circle of persons (for further exemptions see nos. 17 to 18 of this chapter). In this case, the content and publication requirements of the Prospectus Directive and Prospectus Regulation will not apply. However, cer-tain notification requirements have to be considered (see V. Publications and Advertisements of this chapter) .

B Exemptions

1.17 The CMA provides exemptions from the obligation to publish a prospectus for certain public offers (Art. 3 CMA). The exemptions correspond more or less with the exemptions set forth in Article 4(1) of the Prospectus Directive (for details see chapter 1, no. 15).

In practice, the most relevant exemptions from the obligation to publish a prospectus are:

(i) offers of securities addressed only to Qualified Investors (see no. 18 of this chapter);10

(ii) offers of securities addressed to fewer than 100 persons in a given Member State, other than qualified investors;

(iii) offers of securities addressed to investors who acquire the securities for a total consideration of at least €50,000 per investor for each separate offer;

(iv) offers of securities whose denomination per unit amounts to at least €50,000; and/or

(v) offers of securities having a total consideration of less than €100,000, calculated over a period of twelve months.

The above described offers do not qualify as public offers of securities and can be marketed without a prospectus. Moreover, any publication of information

8


about the offer, so long as it remains within the above limits, will not be subject to prior approval by the FMA and the content and publication requirements for prospectuses will not apply (see V. Publications and Advertisements of this chapter).

Any subsequent resale of the securities shall be considered as a separate offer subject to the prospectus obligation if it does not fall within one of the above exemptions.

1.18 Qualified investors are deemed not to require the protection of a prospectus as they are thought to have sufficient expertise and knowledge to ascertain the risks attached to the securities offered. The following entities/persons are considered qualified investors:

(i) legal entities regulated or authorised to operate in the financial mar-kets, including credit institutions, investment firms, other authorised or regulated financial institutions, insurance companies, collective invest-ment vehicles and their management companies, pension funds and their management companies, commodities dealers, and entities not authorised or regulated for this purpose whose sole object is to invest in securities;

(ii) national and regional governments, central banks, international and transnational institutions such as the International Monetary Fund, the European Central Bank, the European Investment Bank and similar international organisations;

(iii) legal entities that do not qualify as small-and medium-sized enterprises (SMEs);11

(iv) natural persons who reside in Austria and who expressly apply to be deemed a Qualified Investor by the FMA to be so characterised if they meet at least two of the following criteria: (1) the person has carried out an average of at least ten transactions of significant value on the securities markets per quarter during the past four quarters; (2) the value of that person’s securities portfolio exceeds €500,000; and (3) the person works or has worked for at least one year in the financial sector in a position that requires knowledge of securities investments .

C Appeal

1.19 Any decision of the FMA can only be appealed before the Austrian Admin-istrative Court (Verwaltungsgerichtshof) or under certain circumstances before the Austrian Constitutional Court (Verfassungsgerichtshof) within six weeks as from the notification of the decision.

1.20 In principle, such appeal has no suspension effect with regard to the deci-sion of the FMA unless suspended execution is granted by the Administrative Court or Constitutional Court. In addition, the courts may under certain cir-cumstances grant interim measures to safeguard interests of the parties .

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Austria 1.26

2 Admission to trading on a regulated market

1.21 As mentioned above, securities may not be admitted to trading on a regulated market unless a prospectus has been approved by the FMA or the competent regulator of another Member State and was duly published. In this case, the procedure to request approval of the prospectus is the same as the procedure applicable to a public offer (see nos. 13 through 18 of this chapter) .

IV Content and format, language and supplements of the prospectus

1 Content

1.22 A prospectus shall contain all information that is needed in order to enable investors to reach an informed decision on the financial situation of the issuer, in particular on its assets and liabilities, the earnings situation, future pros-pects and rights attached to the securities or investments (Art. 7(1) CMA). Specifically, a prospectus has to be drawn up pursuant to the information referred to in Article 3 to Article 24 of the Prospectus Regulation and the Annexes thereto (for details see chapter 1, nos. 29 to 33).

1.23 In case the final amount of securities or investments to be offered or the final offer price or exchange ratio is not known at the beginning of the public offer, which is usually the case in initial public offerings (IPOs), such information must not be included in the approved prospectus. However, the final amount of securities to be offered or the final offer price has to be filed with the FMA and published accordingly (see no. 33 of this chapter) (Art. 7(5) CMA).

1.24 Thus, the main rule for contents of the prospectus contained in Article 5 of the Prospectus Directive is almost literally implemented into Austrian law.

2 Summary

1.25 As a general rule, each prospectus should contain a summary.12 The summary must briefly convey the essential characteristics and risks associated with the issuer, any guarantor and the securities (Art. 7 CMA).

1.26 Further, the summary must contain a warning (Art. 7(2) CMA) that: (i) it should be read as an introduction to the prospectus; (ii) any decision to invest in the securities should be based on the prospectus

as a whole; (iii) if a claim with respect to the information contained in the prospectus is

brought before the courts, the issuer has to bear the cost of translating the prospectus before the commencement of legal proceedings; and

(iv) those persons who have prepared the summary, including any translation thereof, and applied for its notification, shall be held civilly liable but only if the summary is misleading, inaccurate or inconsistent when read together with the rest of the prospectus.

10


1.27 The summary must be drawn up in the language in which the prospectus was originally prepared. The CMA neither provides for a translation of the sum-mary into German13 if the prospectus is drawn up in English or another lan-guage accepted by the FMA in a regulation (see no. 32 of this chapter) nor for a limit of 2,500 words as recommended by the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 35) .

3 Format

1.28 At the offeror’s/issuer’s discretion the prospectus can be drawn up as a single document or as multiple separate documents. A prospectus consisting of mul-tiple separate documents shall allocate the content to:

(i) a registration document (with information relating to the offeror or the issuer);

(ii) a securities note (with information relating to the securities to be offered or admitted to trading); and

(iii) a summary note (Art. 7(3) CMA).

1.29 Using a tripartite prospectus may be useful if the issuer intends to make mul-tiple offers of different types of securities within one year (being the term within which the approval by the competent authority of a registration docu-ment remains valid) .

1.30 For the public offer or admission to trading of certain types of securities (such as non-equity securities, including warrants in any form issued under an offer-ing programme, or non-equity securities issued in a continuous or repeated manner by credit institutions), the prospectus can, at the discretion of the issuer, offeror or person requesting admission to trading on a regulated market, consist of a base prospectus containing all relevant information about the is-suer and the securities offered or to be admitted (Art. 7(4) CMA). Using a base prospectus may be useful in the event the issuer intends to offer non- equity securities in the framework of a debt issuance programme. The final terms of the offer can be omitted from the base prospectus and can be published and deposited with the FMA at the time of each individual offer of debt securities. These final terms do not need to be approved by the FMA. It is important to note that the FMA will see to it that final terms are only used to communicate information to the market which has already been provided for as an option in the base prospectus .

4 Supplements

1.31 In the event that a significant new factor arises or a material mistake or in accuracy of the approved prospectus occurs in the period between approval of the prospectus and the close of the offer or the admission to trading, the issuer shall prepare a supplement to the prospectus. This supplement must be

11

Austria 1.34

immediately published in the same way as the prospectus has been published (see no. 33 of this chapter) and simultaneously filed with the FMA. The FMA has to approve the supplement within a maximum period of seven working days (Art. 6(1) CMA) .

5 Language

1.32 The prospectus for public offers in Austria or an admission to trading on an Austrian stock exchange shall be prepared in German and English.14 The summary must be drawn up in a generally understandable language. In prac-tice, English is commonly accepted as a generally understandable language. Nevertheless, it may be argued from a consumer protection point of view that only German qualifies as a generally understandable language. Therefore, it is common practice that, for example, terms of conditions of a bonds offer are drawn up in both the English and the German language irrespective of whether the other parts of the prospectus are drawn up in English only .

V Publication and advertisements

1 Method of publication

1.33 The German version of Article 14(1) and (2) of the Prospectus Directive was more or less literally copied into the CMA (Art. 10(2) and (3) CMA). The pro-spectus is therefore deemed to have been duly published if:

(i) it is (entirely) published in the Amtsblatt zur Wiener Zeitung (Austria’s official gazette) or in a newspaper distributed throughout Austria;15 or

(ii) is made available free of charge in printed form at the market where the securities will be admitted for trading or at the registered office of the issuer or16 at the offices of the financial intermediaries, including paying agents; or

(iii) is published in electronic form on the issuer’s website and as the case may be on the website of the financial intermediaries including paying agents; or

(iv) in electronic form on the website of the regulated market where the ad-mission to trading has been applied for; or

(v) in electronic form on the website of the FMA or a website of a third party retained by the FMA, provided that the FMA has decided to pro-vide such services .17

1.34 In a circular letter (the ‘Circular Letter’),18 the FMA stated that for publication to be deemed valid in Austria the prospectus must be available in Austria or may be obtained within Austria. This statement implies that for the purpose of a public offer in Austria it may not be sufficient to make the prospectus avail-able solely at a registered office of an issuer outside of Austria without at the

12


same time making it available at the registered seat of financial intermediaries within Austria .

1.35 Further, the FMA must be informed in advance on how the prospectus is being published and where it will be available (Art. 10(3) CMA). In the Circular Letter, the FMA has clarified that this requirement, however, only applies to prospectuses approved by the FMA and not to prospectuses passported into Austria .

1.36 Austria does not require issuers, which publish their prospectus in a newspaper or in printed form in accordance with Article 14(2)(a) or (b) of the Prospectus Directive, to publish their prospectus in an electronic form over the internet in accordance with Article 14(2)(c) of the Prospectus Directive .

1.37 Austria exercised the option provided for in Article 14(3) of the Prospectus Directive and thus requires the publication of a notice stating how the pro-spectus has been made available and where it can be obtained by the public. Accordingly, such notice may be published either in a newspaper or in elec-tronic form on the website (Art. 10(4) CMA) . However, this provision is in contradiction of Article 31 of the Prospectus Regulation, which requires such notice to be published in a newspaper only. Given the direct applicability of the Prospectus Regulation in Austria, the means of publication as provided for in the CMA is, therefore, limited to publication in newspapers only. With re-gard to the required content and timing for the publication of such notice, see Chapter 1, vol. I, of this book, no. 56.

1.38 According to the Circular Letter, the obligation to publish such notice only applies to a prospectus or the base prospectus, but not to the publication of the final terms or supplemental information to the prospectus according to Article 5(4) and Article 8(1) of the Prospectus Directive (Art. 7(4) CMA) .

1.39 According to Article 14(4) of the Prospectus Directive, the FMA publishes a list of all prospectuses approved by it over its website.19 A hyperlink to the published prospectus on the website of the issuer is currently not available .

1.40 OeKB in its capacity as notification office (see nos. 9 to 10 of this chapter) has to be provided, without undue delay, with regulated information on the securities or investments, which are offered for the first time in Austria. Further offers of the same securities do not have to be notified. The following details about the offer in Austria have to be submitted to OeKB: issuer, prospective date of the issue, total volume, minimum denomination, maturity, information on the identification of the investment (ISIN or other identification) and, if applicable, the reasons for the exemptions to publish a prospectus. The information will be included in the so-called ‘issuing calendar’, which is administered by OeKB to monitor issues of securities and other investments as defined in the CMA (Art. 13 CMA) in Austria to provide an insight into the extent and manner of the expected capital market utilisation. Public as well as private placements

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Austria 1.44

are subject to this notification requirement . An exemption only exists for offers of investment fund units within the meaning of Article 1(2)(a) and (c) of the Prospectus Directive, offers of certain participation certificates,20 offers of shares within the meaning of Article 4(1)(d), Article 3(2)(e) of the Prospectus Directive, and certain shares offered to existing or former employees .

2 Advertisements

1.41 The advertisement restrictions of Article 15(1) to (6) of the Prospectus Directive were almost literally copied into the CMA (Art. 4(1) CMA). For details see Chapter 1, vol. I, of this book, nos. 60 to 63.

VI Use of prospectus approved in other (non-EU and non-EEA) countries

1.42 Prospectuses approved by the home Member State of a foreign offeror/issuer and supplements thereto are valid for a public offer or admission to trading in Austria provided that the FMA was appropriately notified in accordance with Article 18 Prospectus Directive (Art. 8b CMA). Austria does not require a German translation of the summary for the public distribution in Austria (see no. 27 of this chapter) .

1.43 Further, a notice must be published in an Austrian newspaper stating how the prospectus or base prospectus has been made available and where such docu-ments can be obtained by the public (Art. 14(3) Dir.; see no. 35 of this chapter). In addition, OeKB must be provided with certain information for the issuing calendar on the securities offered in Austria (see no. 40 of this chapter).

VII Sanctions

1.44 In connection with public offers of securities or other investments that require a prospectus everyone who:

(i) offers securities or other investments without timely publication of a pro-spectus or supplements to the prospectus;

(ii) provides wrongful information in a published prospectus or a supple-ment thereto or conceals relevant information;

(iii) does not publish financial reports as required by the CMA; or (iv) includes untruthful data or conceals relevant information in financial

reports;

may face a maximum penalty of up to two years’ imprisonment or a monetary fine of up to an amount equal to the individual’s income for 360 days (360 Tagessätze Ersatzfreiheitsstrafe), provided that the offence is not subject to more severe sanctions according to other applicable laws (Art. 15 CMA).

14


The perpetrator under certain circumstances will not be penalised for acts mentioned in (i) and (ii) above if he or she voluntarily prevents the sale of the securities or investments (Art. 15(2) CMA).

1.45 Further, the CMA provides for a fine of up to €50,000 for the following acts committed in connection with public offers of securities or other investments which require a prospectus:

(i) offers of securities or investments, if the prospectus, any supplements or publications do not comply with the provisions of the CMA or the issuer provides or publishes incorrect financial reports;

(ii) if the issuer or prospectus auditor provides wrongful information in a prospectus or supplements thereto or an auditor provides wrongful infor-mation in the financial reports or signs off a prospectus without having obtained the required insurance coverage ;21

(iii) violations of the advertisement rules (see no. 41 of this chapter); (iv) if offerors of debt securities that are required to publish their ratings do

not publish the rating or do not deliver the rating information to the no-tification office in due time (see no. 40 of this chapter);

(v) if offerors do not provide OeKB with the required information for the issuing calendar (see no. 40 of this chapter) even if not relating to a public offer;

(vi) if offerors do not provide the notification office with the prospectus and its supplements in a timely manner;

(vii) the offer of debt securities without a required licence ; (viii) if an auditor signs off a prospectus, supplement thereto or financial reports

while being barred from doing so (e.g., based on a conflict of interest); or (ix) non-compliance with certain orders of the FMA, failure to immedi-

ately forward the auditor’s check mark for prospectus supplements to the notification office, non-compliance with certain information require-ments or violation of the advertisement or publication rules pursuant to Chapter V of the Prospectus Regulation (Art. 16 CMA) .

VIII Prospectus liability

1.46 The CMA provides for a special joint and several liability of persons who have assumed responsibility for the prospectus or parts of it for the correctness and integrity of the prospectus (prospectus liability – Prospekthaftung) (Art. 11 CMA).

1.47 According to the prospectus liability investors shall have the right to claim damages arising out of placing their trust in the correctness or integrity of the information contained in the prospectus or any other information required to be published pursuant to the CMA that is relevant for assessing securities or investments from:

15

Austria 1.51

(i) the issuers for any incorrect or incomplete information for which they are responsible themselves or for which their staff or any other persons whose services were used to draw up the prospectus are responsible;

(ii) the prospectus auditors for any incorrect or incomplete information due to their own gross negligence or of their staff or of any other persons whose services were used to audit the prospectus;

(iii) any persons who, either in their own name or for third parties, have accepted the investor’s purchase declaration, and from the mediator of the contract if the person acting as intermediary is professionally engaged in trading or mediating securities or investment transactions and these persons or their staff knew of the incorrectness or incomplete-ness of the information pursuant to (i) or of the audit, or were unaware of this due to gross negligence;

(iv) the auditor of the annual accounts, who, knowing of the incorrectness or incompleteness of the information in the meaning of (i) above and knowing that the annual accounts confirmed by him or her form part of the prospectus, has given the annual accounts an audit opinion .

1.48 In case securities or investments of a foreign issuer are offered the party mak-ing such offer, which is subject to the obligation to publish a prospectus within Austria, shall also be liable pursuant to (i) above.

1.49 The liability towards investors may not be restricted or excluded in advance and is, if not intentionally caused, limited to each investor to the purchase price including fees and interests. Further, claims based on this prospectus liability have to be filed with the court within five years after the public offer was made .

IX Rules applicable to transactions and securities not subject to the Prospectus Directive and Regulation

1.50 The CMA not only governs securities or investments subject to the Prospectus Directive and the Prospectus Regulation, but also contains special rules for the public offer of other investments. Such other investments comprise property rights for which no securities are issued, but also certain money market instru-ments with a duration of less than twelve months.22

1.51 Prospectuses of other investments are not subject to authorisation by the FMA. Rather, such offers require the publication of a prospectus fulfilling specific minimum content requirements provided for in schedules C to E of the CMA. The prospectus has to be audited either by a credit institute or an auditor. Certain other requirements applicable to securities are not applicable to other investments either, such as the maximum duration of a prospectus or certain language requirements.

16


1.52 Public offers of investment funds are subject to the Austrian Investment Fund Act23 (governing the public distribution of Austrian as well as foreign UCITS and non-UCITS funds, respectively) to the Austrian Real Estate Investment Fund Act.24

X Conclusion

1.53 After more than two years of practice with the implemented Prospectus Directive and Prospectus Regulation in Austria, the FMA has established a good and efficient practice of handling the new prospectus regime, espe-cially in regard to the passporting of prospectus and all regulatory aspects of prospectus approvals for public offers of securities or admissions to trading on regulated markets. Thus, the approval process as well as the coordination and communication between all market players has become easier, which is a benefit especially in cross-border public offers .

Notes

1. Bundesgesetz, mit dem das Kapitalmarktgesetz, das Börsegesetz, das Investmentfondsgesetz, das Wertpapieraufsichtsgesetz und das Finanzmarktaufsichtsbehördengesetz geändert werden; BGBl I 78/2005 of 28 July 2005.

2. Bundesgesetz über das öffentliche Anbieten von Wertpapieren und anderen Kapitalveranlagungen und über die Aufhebung des Wertpapier-Emissionsgesetzes (Kapitalmarktgesetz – KMG) sowie über die Abänderung des Aktiengesetzes 1965, des Genossenschaftsgesetzes, des Nationalbankgesetzes 1984, des Kreditwesengesetzes und des Versicherungsaufsichtsgesetzes; BGBl. Nr. 625/1991 of 6 December 1991.

3. Certain notification requirements provided for in the CMA also apply to pri-vate offers; see no. 40 of this chapter.

4. Bundesgesetz vom 8. November 1989 über die Wertpapier-und allgemeinen Warenbörsen und über die Abänderung des Börsesensale-Gesetzes 1949 und der Börsegesetz-Novelle 1903 (Börsegesetz 1989 – BörseG); BGBl. I Nr. 555/1989 of 29 November 1989.

5. Available via www.fma.gv.at. 6. As defined in Art. 1(1)(12) CMA. 7. Bundesgesetz über Kapitalanlagefonds (Investmentfondsgesetz – InvFG 1993),

Official Gazette I No. 532/1993 as of 30 July 1993. 8. Directive 2004/109/EC of the European Parliament and of the Council of 15

December 2004 on the harmonisation of transparency requirements in rela-tion to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC; Official Journal L 390 as of 31 December 2004.

9. The IssuerInformationCenter is available under http://issuerinfo.oekb.at.10. As defined in Art. 1(1)(5a) CMA.

www.fma.gv.at

http://issuerinfo.oekb.at.

17

Austria 1.53

11. Small- and medium-sized enterprises are companies which, according to their last annual or consolidated accounts, meet at least two of the following three criteria: (i) an average of less than 250 employees during the last financial year; (ii) a balance sheet total not exceeding €43,000,000; and (iii) net annual turnover not exceeding €50,000,000 .

12. A summary is not required if the prospectus relates to the admission to trad-ing on a regulated market of non-equity securities having a denomination of at least €50,000 (high-denomination non-equity securities); see Art. 7(2) CMA .

13. See Art. 19(2) and (3) Dir., and, for details, Chapter 1, vol. I, of this book, no. 50.

14. Pursuant to a circular letter of the FMA, currently only German and English qualify as accepted languages; see Rundschreiben der Finanzmarktaufsicht of 29 March 2007 zu Fragen der Umsetzung der Prospektrichtlinie in Kapitalmarktgesetz und Börsegesetz, available at www.fma.gv.at.

15. A prospectus may only be published in a newspaper other than the Amtsblatt zur Wiener Zeitung, which fulfils the conditions stipulated in section 5 of FMA’s minimum-content, publication and language regu-lation (Verordnung der Finanzmarktaufsicht über die Mindestinhalte von Prospekte ersetzenden Dokumenten, über die Veröffentlichung von Prospekten in Zeitungen und über die Sprachenregelung, Official Gazette II No. 236/2005), i.e., a newspaper that is published on working days and is regularly available throughout Austria and exceeds the following thresh-olds on average per year: (i) 100,000 pieces print run; and (ii) 75,000 news-papers distributed in Austria .

16. The English version of Article 14(2)b of the Prospectus Directive states that a printed form of the prospectus shall be made available at the registered office of the issuer and at the offices of the financial intermediaries, including paying agents. The German version, however, contains a translation error and thus provides that the prospectus shall be made available at the registered office of the issuer or at the offices of the financial intermediaries, including pay-ing agents. As a result of the copy and paste method applied by the Austrian legislator this error was also incorporated in section 10(2)(2) of the CMA .

17. So far the FMA has neither decided to operate such a website itself nor to delegate such services to a third party.

18. Rundschreiben der Finanzmarktaufsicht of 29 March 2007 zu Fragen der Umsetzung der Prospektrichtlinie in Kapitalmarktgesetz und Börsegesetz, available at www.fma.gv.at.

19. Currently accessible via https://webhost.fma.gv.at/fmaprospekt/liste/gebil-ligte_Prospekte.pdf.

20. The exemption applies to participation certificates within the meaning of §6 Bundesgesetz of 18 February 1982 über die Errichtung und Verwaltung von Beteiligungsfonds (Beteiligungsfondsgesetz), Official Gazette I No. 111/1982, as amended.

21. For the auditing of prospectuses relating to securities or other investments, auditors have to obtain insurance indemnity in the amount of €3.65 mil-lion per year. For the auditing of prospectuses relating to real estate funds

www.fma.gv.at

www.fma.gv.at

https://webhost.fma.gv.at/fmaprospekt/liste/gebilligte_Prospekte.pdf.

https://webhost.fma.gv.at/fmaprospekt/liste/gebilligte_Prospekte.pdf.

18


(Veranlagungsgemeinschaft in Immobilien), auditors have to obtain insurance coverage in the amount of €18.2 million per year.

22. Article 1(1)(3) CMA defines other investments as property rights for which no securities are issued arising out of direct or indirect investments of the capital of several investors for their collective account and collective risk or for col-lective account or risk together with the issuer if the administration of the cap-ital invested is not overseen by the investor him or herself; other investments shall also comprise all fungible rights for which securities are issued, which do not qualify as transferable securities pursuant to Article 1(4) of Directive 93/22/EEC with the exemption of money-market instruments with a duration of less than twelve months.

23. Bundesgesetz über Kapitalanlagefonds (Investmentfondsgesetz – InvFG 1993), Official Gazette I No. 532/1993 as of 30 July 1993.

24. Bundesgesetz über Immobilienfonds (Immobilien-Investmentfondsgesetz-ImmoInvFG), Official Gazette I No. 80/2003 as amended. This statute contains regulatory provisions for Austrian real estate investment funds only, whereas foreign real estate investment funds are subject to the (general) Investment Fund Act.

19

I Introduction 19 II The Commission 21 III General principles 22 1 Exemptions 22 IV The prospectus 26 1 Contents of the prospectus 26 2 Base prospectus 27 3 Prospectuses consisting of separate documents 28 4 Omission of information 28 5 Updates, amendments and supplements 29 6 Language 30 7 Liability 31 V Approval of the prospectus 31 1 Competency 31 2 Application 32 3 Examination 33 4 Refusal 33 5 Validity 34 6 Offer or admission to trading in more Member States 34 VI Publication 35 VII Powers of the Commission 37 VIII Disclosure of information 38 1 General 38 2 Language 42 3 Supervision requirements 42 IX Competence of the Commission 43 X Judicial control 44

I Introduction

2.1 With Bulgaria’s aim of becoming a Member State of the European Union (EU), the acceptance of the acquis communautaire started. Thus, most of the national legislation effective nowadays corresponds to the regulations and

2BulgariaRaina Dim itrova and Angel Angelov

Borislav Boyanov & Co.

20


directives in force within the EU. Bulgaria’s accession to the EU on 1 January 2007 was just the step needed to ensure Bulgarian legislation conformed with EU legislation.

The Prospectus Directive, as well as other pieces of legislation of the acquis communautaire, which are related to issues such as public companies, trading of securities and prospectuses, have been transposed into national law by either the enforcement of wholly new pieces of legislation or by amending and supplementing existing laws.

2.2 In compliance with the Prospectus Directive, Bulgarian legislation has fully accepted and implemented the substance of all of the main terms and defin-itions used in the Prospectus Directive, i.e., securities, equity securities, non-equity securities, offer of securities to the public, qualified investors, home and host Member State, and small- and medium-sized enterprises.

The Bulgarian legislature has recently adopted special laws for the imple-mentation of the Prospectus Directive and the other applicable acquis com-munautaire, and other existing pieces of legislation have been amended and supplemented, respectively.

2.3 In Bulgaria, issues regarding publicly offered and traded securities, offerors, regulated markets, prospectuses, and authorities having supervisory functions over the process of trading with securities are regulated mainly by the follow-ing laws:

(i) The Public Offering of Securities Act of 1999, as amended (‘POSA’) – it regulates the legal status and special requirements applicable to publicly traded joint stock companies, publicly traded securities, the public offers of securities and the admission of securities to trading on regulated mar-kets, etc.

(ii) The Measures Against Market Abuse with Financial Instruments Act of 2006, as amended (‘MAMAFI’) – it regulates issues relating, among other matters, to market abuse prevention and detection, heightening of public confidence in the financial instruments market, provision of prompt and complete disclosure of information to investors, creation of conditions for the development of a fair, transparent and effective finan-cial instruments market.

(iii) Markets in Financial Instruments Act of 2007 (‘MFIA’) – it regulates the activity of investment intermediaries and regulated markets in financial instruments, the requirements applicable to persons managing and con-trolling such entities, as well as the requirements applicable to persons with a qualified stake in the capital of such entities, and the state supervi-sion over the said entities and persons.

(iv) Ordinance No. 2 of 17 September 2003 of the Financial Supervision Commission on the Prospectuses in Case of Public Offering and Admission for Trade on a Regulated Market of Securities and on the

21

Bulgaria 2.6

Disclosure of Information by the Public Companies and the Other Issuers of Securities, as amended (‘the Ordinance’) – it regulates the requirements applicable to the initial disclosure of information in case of public offering of securities, the subsequent disclosure of information by the public companies and the other issuers of securities, as well as the other requirements to the contents of a prospectus.

II The Commission

2.4 For the purpose of exercising control and supervision in the financial sector,1 a special governmental body has been established by virtue of the Financial Supervision Commission Act named the Financial Supervision Commission (‘the Commission’). The Commission is independent from the Bulgarian Government and reports its activities to the National Assembly (the Parliament) of Bulgaria only.

The Commission exercises control through:

(i) issuance of authorisations (licences) and confirmations, as well as refusals to issue such authorisations and confirmations;

(ii) conduct of off-site and on-site inspections on the operations of the per-sons supervised;

(iii) implementation of administrative measures and imposition of admin-istrative sanctions.

2.5 Three directorates have been established within the Commission: Supervision of Investment Activities; Insurance Supervision; and Social Insurance Supervision. Each of the said divisions is managed by a Deputy Chairman of the Commission.

Among the powers of the Commission, the following shall be taken into consideration:

(i) adoption and enforcement of ordinances when so provided by the legislation;

(ii) issuance of instructions in writing for the execution and interpretation of different pieces of legislation such as the POSA, MFIA, MAMAFI, etc.;

(iii) issuance or refusals of the respective licences as provided by the POSA, the MFIA, etc.;

(iv) adoption of resolutions for granting or refusal of confirmation to prospectuses.

2.6 Considering the rights and obligations of the Commission, it is the authority which has to monitor and supervise all the issues with respect to the offering and trade of securities under the meaning of acquis communautaire and the Prospectus Directive in particular.

22


With the purpose of monitoring, supervising and enforcing the legislation applicable in the financial sector, the Commission has the right to take differ-ent types of administrative measures (such as ban of trade and the appointment of administrators), to demand information and to impose sanctions in case of violations of the legislation.

III General principles

2.7 Under the Bulgarian legislation, the public offering of securities as well as their trading on a regulated market is prohibited and illegal if the offeror of the said securities has not published a prospectus. The prospectus itself can be published only if the Commission has issued a confirmation of the prospectus in writing. In the case of subscription or sale of securities before publication of the prospectus (preceded by its approval) as well as in the case that informa-tion in the prospectus is untrue or material information has not been revealed within the prospectus, the investor who has subscribed/purchased securities shall have the right to claim the transaction effected as null and void, save as where the said investor has acted in bad faith. The term for exercising such right is three months as of ascertaining of the relevant circumstances but shall not exceed one year as of subscription/sale and purchase of the securities.

1 Exemptions

2.8 The provisions of the legislation on the procedures for offering of securities or admission of securities to trading on regulated market shall not apply to:

(i) units issued by collective investment undertakings other than the closed-end type;

(ii) non-equity securities issued by the Republic of Bulgaria or by another Member State, by the regional or local authorities thereof, by international organisations whereof the Republic of Bulgaria or another Member State is a member, by the European Central Bank, by the Bulgarian National Bank or by the central banks of the other Member States;

(iii) shares in the capital of the central banks of the Member States; (iv) securities unconditionally and irrevocably guaranteed by the Republic

of Bulgaria or by another Member State or by their regional or local authorities;

(v) securities issued by non-profit organisations, recognised in a Member State, with a view to their obtaining the means necessary to achieve their objectives;

(vi) non-equity securities issued in a continuous or repeated manner by banks, provided that the said securities:

(a) are not subordinated, convertible or exchangeable; (b) do not give a right to subscribe to or acquire other types of securities

and that they are not linked to a derivative financial instrument;

23

Bulgaria 2.10

(c) represent reception of repayable deposits; (d) are covered by the Bank Deposit Insurance Fund-Bulgaria or by a

similar deposit guarantee scheme in another State;

(vii) non-fungible shares of capital whose main purpose is to provide the holder thereof with a right to occupy an apartment, or other form of immovable property or a part thereof, and where the shares cannot be sold on without this right being given up;

(viii) non-equity securities issued in a continuous or repeated manner by banks, where the total consideration of the offer is less than the BGN2 equivalent of €50,000,000, which limit shall be calculated over a period of one year, provided that the said securities:

a. are not subordinated, convertible or exchangeable; b. do not give a right to subscribe to or acquire other types of securities

and that they are not linked to a derivative financial instrument.

In the cases referred to in items (ii), (iv) and (viii), the issuer, the offeror or the person asking for admission to trading on a regulated market may draw up a prospectus in accordance with the requirements of the legislation and the instruments for the application thereof, when the securities are offered to the public or admitted to trading.

2.9 In compliance with POSA, the obligation to publish a prospectus shall not apply to the following types of offers:

(i) an offer of securities addressed solely to qualified investors; (ii) an offer of securities addressed to fewer than 100 natural or legal per-

sons in the Republic of Bulgaria or to fewer than 100 natural or legal persons in each other Member State;

(iii) an offer of securities addressed to investors who acquire securities for a total consideration of the BGN equivalent of at least €50,000 per in-vestor for each separate offer;

(iv) an offer of securities whose denomination per unit amounts to the BGN equivalent of at least €50,000;

(v) an offer of securities with a total consideration of the BGN equivalent of less than €100,000, which limit shall be calculated over a period of one year.

Any subsequent resale of securities, which were previously the subject of one or more of the types of offer covered under items (i) through (v) above, shall be regarded as a separate offer with respect to the assessment of an offer as a public offer under the meaning of the POSA.3 The placement of securities through investment intermediaries shall be admitted after publication of a prospectus if any of the conditions covered under items (i) to (v) above are not met.

2.10 The obligation to publish a prospectus shall not apply to offers of securities to the public of the following types of securities:

24


1. shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase of capital;

2. securities offered in connection with a takeover by means of an exchange offer, provided that a document is made available to the persons contain-ing information which is regarded by the Commission as being equiva-lent to the information contained in the prospectus;

3. securities offered, allotted or to be allotted in connection with a merger, provided that a document is made available to the persons containing information which is regarded by the Commission as being equivalent to the information contained in the prospectus;

4. shares offered, allotted or to be allotted free of charge to existing share-holders, as well as dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available to the persons containing information on the reasons for the offer of the shares, on the number and nature of the shares, on the rights conferred by the shares and the manner of exer-cise of the said rights, on the terms and procedure for acquisition of the shares, as well as other details of the offer;

5. securities offered, allotted or to be allotted to existing or former mem-bers of the management and supervisory bodies and/or factory and office workers by the employer thereof, which has securities already admitted to trading on a regulated market, or by a person related thereto, provided that a document is made available to the persons containing information on the reasons for the offer of the securities, on the number and nature of the securities, on the rights conferred by the securities and the manner of exercise of the said rights, on the terms and pro-cedure for acquisition of the securities, as well as other details of the offer.

2.11 The obligation to publish a prospectus shall not apply to the admission to trad-ing on a regulated market of the following types of securities:

1. shares representing, over a period of one year, less than ten per cent of the number of shares of the same class already admitted to trading on the same regulated market;

2. shares issued in substitution for shares of the same class already admit-ted to trading on the same regulated market, if the issuing of such shares does not involve any increase of capital;

3. securities offered in connection with a takeover by means of an ex-change offer, provided that a document is made available to the persons containing information which is regarded by the Commission as being equivalent to the information contained in the prospectus;

4. securities offered, allotted or to be allotted in connection with a merger, provided that a document is made available to the persons containing

25

Bulgaria 2.11

information which is regarded by the Commission as being equivalent to the information contained in the prospectus;

5. shares offered, allotted or to be allotted free of charge to existing share-holders, as well as dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market and that a document is made available to the persons containing information on the reasons for the offer of the shares, on the number and nature of the shares, on the rights conferred by the shares and the manner of exercise of the said rights, on the terms and procedure for acquisition of the shares, as well as other details of the offer;

6. securities offered, allotted or to be allotted to existing or former mem-bers of the management or supervisory bodies and/or factory and office workers by the employer thereof or a person related thereto, provided that the said securities are of the same class as the securities already admitted to trading on the same regulated market and that a document is made available to the persons containing information on the reasons for the offer of the securities, on the number and nature of the securities, on the rights conferred by the securities and the manner of exercise of the said rights, on the terms and procedure for acquisition of the securities, as well as other details of the offer;

7. shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market;

8. securities already admitted to trading on another regulated market, pro-vided that:

(a) these securities, or securities of the same class, have been admit-ted to trading on that other regulated market for more than eighteen months;

(b) the admission to trading on that other regulated market was pre-ceded by confirmation of a prospectus and the publication thereof for securities first admitted to trading on a regulated market after 31 December 2003;

(c) except where (b) applies, for securities first admitted to listing after 30 June 1983, a prospectus for admission to trading was confirmed;

(d) the ongoing obligations for trading on that other regulated market have been fulfilled;

(e) the person asking for the admission of securities to trading on a regu-lated market in the Republic of Bulgaria, invoking this exemption, makes a summary document available to the public in a language accepted by the Commission, and the said summary document was published in the Republic of Bulgaria, and the contents of the said

26


summary document is responsive to the requirements of the legis-lation and the instruments for the application thereof and the said document states where the most recent prospectus can be obtained and where the financial information published by the issuer accord-ing to his ongoing disclosure obligations is available.

2.12 In the cases where no prospectus has been published, the investors shall have the right to claim the transaction affected as null and void if the other informa-tion regarding the offer to the public or the admission of securities to trading on a regulated market, as circulated by the issuer or the offeror or the person asking for admission of securities to trading on a regulated market, is untrue or if material information has been withheld, save as where the said investor has acted in bad faith. The term for exercising such right is three months as of ascertaining the relevant circumstances but shall not exceed one year as of subscription/sale and purchase of the securities.

Should more than one issue of securities of the same class be issued within the relevant calendar year and each of the said issue be offered to fewer than 100 persons but the total number of offerees of the said issues exceeds 100 persons, to the issue exceeding this limit the general rules for publishing of prospectus and its confirmation shall apply.

IV The prospectus

2. 13 The Ordinance implementing the POSA explicity provides that the Prospectus Regulation applies to the requirements of the prospectus and its format, its publication and its contents. Furthermore, the Ordinance contains Annexes exactly specifying the information which shall be provided with a prospectus. These Annexes, as well as the provisions of the Ordinance itself, have identical contents as the Annexes to the Prospectus Directive.

1 Contents of the prospectus

2. 14 The prospectus shall contain all information which, according to the particu-lar nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, is necessary to enable investors to make an accurate assessment of the economic situation and financial position, assets and liabilities, profits and losses, and prospects of development of the issuer and of the guarantors of the securities, as well as of the rights attached to such securities. A prospectus may not contain untrue, misleading or deficient particulars.

The prospectus shall contain information concerning the issuer and the securities to be offered to the public or to be admitted to trading on a regulated market, and shall also include a summary. There is no requirement for a sum-mary note to be provided where the prospectus relates to the admission to trad-ing on a regulated market of non-equity securities having a denomination per

27

Bulgaria 2.17

unit of at least the BGN equivalent of €50,000, except when the Commission or the competent authority of a relevant Member State requests the provision of such summary note.

2.15 The issuer, the offeror or the person asking for the admission of the securities to trading on a regulated market may draw up the prospectus as a single docu-ment or separate documents. A prospectus composed of separate documents shall contain all the information required under the legislation and the instru-ments for the application thereof, divided into three documents:

(i) a registration document, containing information relating to the issuer; (ii) a securities note, containing information concerning the securities

offered to the public or to be admitted to trading on a regulated market; (iii) a summary note.

2. 16 The prospectus shall be considered to contain the relevant information even when the said information is incorporated in the prospectus by reference to one or more documents which have been confirmed by or submitted to the Commission, provided that the information contained in the said documents is the latest available and a detailed cross-reference list is drawn up in order to enable investors to identify easily specific items of information referred to.

Should any particulars of the required contents of a prospectus prove inapplicable to any specific issuer by reason of the corporate objects or legal form of business organisation thereof or the securities to which the prospectus relates, the said particulars shall be replaced by equivalent information.

The information contained in a prospectus must be provided in an easily analysable and comprehensible form for the investors.

2 Base prospectus

2.17 In compliance with the Prospectus Directive under the POSA, the issuer, offeror or person asking for admission of the securities to trading on a regu-lated market may draw up the prospectus as a base prospectus where the fol-lowing types of securities are offered to the public or are to be admitted to trading on a regulated market:

(i) non-equity securities, including warrants in any form, issued under an offering programme;

(ii) non-equity securities issued in a continuous or repeated manner by banks4 where:

(a) the sums deriving from the issue of the said securities are placed in assets which provide sufficient coverage for the liability deriving from securities until the maturity date thereof;

(b) in the event of bankruptcy of the issuer bank, the sums referred to in (ii)(a) above are intended, as a priority, to repay the principal and interest falling due.

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3 Prospectuses consisting of separate documents

2.18 Where an issuer already has a registration document confirmed by the Commission, when securities are offered to the public or admitted to trading on a regulated market, only a securities note and a summary note may be drawn up. In such cases the securities note shall furthermore provide the latest avail-able information that would normally be provided in the registration document if, since the registration document was last updated or supplemented, there has been a material change in the particulars contained or new circumstances have occurred, which could affect investors’ assessments. The Commission shall pronounce on the securities note and the summary note according to the procedures established for confirmation of a prospectus. Where the issuer has a registration document, which has been submitted to the Commission with-out being confirmed, the Commission shall decide on the entire prospectus, including any updated information.

4 Omission of information

2.19 In compliance with the possibility under Article 8(2) of the Prospectus Directive, the Commission may authorise the omission from the prospectus of certain information if the Commission considers that:

(i) disclosure of such information would be contrary to the public interest; (ii) disclosure of such information would be seriously detrimental to the

issuer, provided that the omission would not be likely to mislead invest-ors with regard to facts and circumstances essential for the latter;

(iii) such information is of minor importance only for a specific offer or ad-mission to trading on a regulated market and is not such as will influ-ence the assessment of the financial position and prospects of the issuer, offeror or guarantor of the securities.

Where information on the final offer price and on the final amount of securi-ties that will be offered cannot be included in the prospectus, the maximum price or the criteria and/or the conditions in accordance with which the final price and the final amount of securities will be determined shall be disclosed therein. If such information is not disclosed in the prospectus, the persons who have subscribed for or purchased securities, as the case may be, may withdraw the acceptances of the subscription or purchase within two work-ing days or within another longer time limit as provided for in the prospectus after submission to the Commission of the information on the final price and the final amount of the securities which will be offered by means of a writ-ten declaration at the places where the securities were subscribed for or pur-chased, as the case may be. The person shall not be liable for the withdrawal of the acceptance thereof, save as where the said person has acted in bad faith.

29

Bulgaria 2.21

The issuer, offeror or person asking for admission of the securities to trading on a regulated market is obliged to inform the Commission of the final price and the final amount of securities which will be offered and to publish this information – through its publication in the press, in the form of a leaflet or in another appropriate manner not later than the initial date of the public offering or the admission of the securities to trading on a regulated market.

5 Updates, amendments and supplements

2.20 Issuers5 whose securities are admitted to trading on a regulated market in Bulgaria shall be obliged, at least annually, to provide a document that con-tains or refers to all information that they have published or otherwise made available to the public over the preceding twelve months. Where such a docu-ment refers to a particular item of information, the said document shall state where the said information can be obtained.

The document shall be submitted to the Commission not later than within one month after publication of the annual financial statement of the issuer.

During the period commencing with the submission of an application for confirmation of a prospectus and ending with the making of decision by the Commission, the issuer, offeror or person asking for admission of the securi-ties to trading on a regulated market must notify the Commission of any inter-vening changes as may necessitate amendments to the prospectus within three working days after occurrence or learning of the said changes, as the case may be, and must amend the prospectus accordingly.

2.21 During the period between the time when confirmation of the prospectus is granted and the final closing of the offer to the public or the time when trading on a regulated market begins, the issuer, offeror or the person asking for ad-mission of the securities to trading on a regulated market must draw up a sup-plement to the prospectus and submit the said supplement to the Commission before the lapse of the next succeeding working day after the occurrence or the learning, as the case may be, of every significant new factor, material mis-take or inaccuracy relating to the information contained in the prospectus, which is capable of affecting the assessment of the securities offered. The summary, as well as any translations thereof, shall also be supplemented, if necessary, to take into account the new information included in the supplement to the prospectus. In such cases the person who has already subscribed for or, respectively, purchased securities before the supplement to the prospectus is published, shall have the right to withdraw the acceptance thereof of the said securities within two working days or within another longer time limit as provided for in the prospectus after publication of the notice of the supple-ment, without being liable, save where the said person has acted in bad faith. The withdrawal of acceptance shall be effected via a written declaration at the place where the securities were subscribed for or purchased, as the case may be.

30


The Commission shall pronounce on the supplement to the prospectus within seven working days after receipt of the said prospectus, or, where add-itional particulars and documents have been requested, within seven working days after receipt of the said particulars and documents.

The Commission shall refuse to approve the supplement to the prospectus if the requirements under the legislation and the instruments for the applica-tion thereof are not complied with. In such a case, the Commission may dis-continue the public offering or the trading in the securities.

2.22 The issuer, offeror or person asking for admission of the securities to trading on a regulated market must give public notice of any such supplement and shall make the supplement available to the public within seven days after the deci-sion of the Commission to confirm the supplement to the prospectus.

6 Language

2.23 If an offer to the public is made or admission to trading on a regulated market is demanded only in Bulgaria and the home Member State is Bulgaria, the prospectus shall be drawn up in the Bulgarian language.

In the event that an offer to the public is made or admission to trading on a regulated market is demanded in one or more Member States excluding Bulgaria and the home Member State is Bulgaria, the prospectus shall be drawn up either in a language accepted by the competent authorities of those Member States or in a language customary in the sphere of international fi-nance, at the choice of the issuer, offeror or person asking for admission of the securities to trading on a regulated market. For the purposes of confirm-ation of the prospectus by the Commission, the prospectus shall be drawn up in the Bulgarian or the English language, at the choice of the issuer, offer or or person asking for admission of the securities to trading on a regulated market.

If an offer to the public is made or admission to trading on a regulated market is requested in more than one Member State including Bulgaria and the home Member State is Bulgaria, the prospectus shall be drawn up in the Bulgarian language. In such cases, the prospectus shall also be made available to the public either in a language accepted by the competent authorities of each host Member State or in a language customary in the sphere of international finance, at the choice of the issuer, offeror or person asking for admission of the securities to trading on a regulated market.

Where admission to trading on a regulated market of non-equity securities whose denomination per unit amounts to at least BGN equivalent of €50,000 is requested in one or more Member States, the prospectus shall be drawn up either in a language accepted by the competent authorities of the home and host Member States or in a language customary in the sphere of international finance, at the choice of the issuer, offeror or person asking for admission of the securities to trading on a regulated market.

31

Bulgaria 2.27

7 Liability

2.24 The prospectus shall be signed by the issuer and the offeror or by the person asking for admission of the securities to trading on a regulated market, as well as by the guarantor of the securities, who shall declare that the prospectus conforms to the statutory requirements.

The members of the management body of the issuer and the procurator (if any), as well as the offeror, the person asking for admission of the securities to trading on a regulated market and the guarantor of the securities shall be jointly liable for any detriment as may be inflicted by reason of any untrue, misleading or deficient particulars in the prospectus. The drawers of the finan-cial statements shall be jointly liable with the persons mentioned above for any detriment as may be inflicted by any untrue, misleading or deficient particulars in the financial statements of the issuer, and the registered auditors shall be jointly liable with the said persons for any detriment as may be inflicted by the financial statements thereby audited.

2.25 Such liability may not arise solely on the basis of the summary note, includ-ing any translation thereof, unless the information contained therein is mis-leading, untrue or inconsistent when read together with the other parts of the prospectus.

2.26 The prospectus shall clearly identify the persons who shall be liable by name and position or, respectively, by business name, registered office and address of the place of management, who shall declare that, to the best of their knowl-edge, the information contained in the prospectus is true and full.

In the cases where no prospectus has been published, liability shall be car-ried with respect to the other information circulated by the issuer, the offeror or the person asking for admission of the securities to trading on a regulated market in connection with the public offering or the admission to trading on a regulated market.

V Approval of the prospectus

1 Competency

2.27 The Commission is competent to decide on applications for approval of pro-spectuses in the following cases:

(i) the home Member State of the issuer is Bulgaria; or (ii) the Commission is called to approve the prospectus further to a request

by a competent authority of a Member State.

Where the Republic of Bulgaria is a home Member State, the Commission may, because of the type of the issuer and the securities offered or the peculiarities of the public offer, subject to the agreement of the relevant competent authority

32


of another Member State, transfer the approval of a specific prospectus to the said competent authority. In such case, the Commission shall notify the issuer, the offeror or the person asking for admission of the securities to trading on a regulated market within three working days from the date of the decision taken by the Commission to assign the approval. The time limit for pronouncement by the relevant competent authority, as the case may be, shall apply as from the date of the decision for the said assignment. Where the Republic of Bulgaria is not a home Member State, the Commission may assume the approval of a prospectus from the competent authority of another Member State.

2 Application

2.28 A person who requests approval of a prospectus shall file with the Commission a hard copy application in writing as well as a registration form in the form of a soft file (both forms approved by the Deputy Chairman of the Commission responsible for the directorate of ‘Supervision of Investment Activity’). The applicant can be:

(a) in the case of a public offering of securities: the issuer, the offeror and the investment intermediary;

(b) in the case of admission of securities to trading on a regulated market: the issuer and the person who requests admission of the securities but is not the issuer.

2.29 In case an applicant or an issuer is a foreign entity, all the requirements with respect to the documents needed to be presented with the request shall be applied mutatis mutandis.

2.30 Both the application and the registration form shall be in the Bulgarian lan-guage. In case the documents that have to be provided are in a language dif-ferent from Bulgarian, these shall be translated into the Bulgarian language and legalised in conformity with the Bulgarian legislation in force. In the case of discrepancies between the Bulgarian and non-Bulgarian language, the Bulgarian translation shall prevail.

2.31 With the application for approval of a prospectus the following documents shall be submitted:

1. the prospectus; 2. documents with respect to the applicant, which include: (i) a certified

copy of the certificate for entering into the Commercial Register, cer-tificate of current legal status; (ii) a certified copy of the deed of incorp-oration/the statutes of the company; and (iii) the resolution for public offering of securities or the admission of securities to trade on a regu-lated market and for the adoption of a prospectus by the competent body of the company;

33

Bulgaria 2.33

3. documents under 2(i) and (ii) above with respect to the issuer of the securities offered in case it is different from the applicant;

4. the issuer’s last annual financial statement, as audited by a registered auditor;

5. documents certifying guarantees granted by third parties for securing of obligations of the issuer as well as any other documents necessary for confirmation of the information provided with the prospectus;

6. a receipt proving the payment of the tax due.

3 Examination

2.32 The Commission shall establish whether the requirements for issuance of the requested confirmation are met. If the particulars and documents provided are incomplete or inconsistent or additional information or evidence of the veracity of data is necessary, the Commission shall send a notification of the estab-lished incompleteness and inconsistencies and/or of the requested information and documents within ten working days of receipt of the application.

The Commission shall pronounce on the application within ten work-ing days of receipt thereof or, where additional particulars and documents have been requested, within ten days of receipt of the said particulars and documents.

In the cases where the public offer involves securities issued by an issuer which does not have any securities admitted to trading on a regulated market and which has not previously offered securities to the public, the time limit shall be twenty working days instead of ten working days.

4 Refusal

2.33 The Commission shall refuse to grant confirmation of the prospectus by a decision in writing on any of the following grounds:

1. where the prospectus does not satisfy the statutory requirements; 2. where the issue price of the shares is lower than the balance sheet value

per share before the increase of capital, calculated at the time of passage of a resolution on an increase of capital, and the interests of shareholders are thus impaired;

3. on account of the special rights attached to the shares, or for any other reason the interests of investors are not safeguarded.

The Commission may only refuse to grant confirmation if the applicant has failed to rectify non-conformities or failed to submit the documents as required within the time limit set by the Commission, which may not be shorter than one month.

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5 Validity

2.34 A prospectus shall be valid for a period of twelve months after its publication. A registration document shall be valid for a period of twelve months. In such cases, the registration document, accompanied by the securities note, updated if applicable, and the summary note shall be considered to constitute a valid prospectus.

In the cases of an offering programme, the base prospectus shall be valid for a period of twelve months.

6 Offer or admission to trading in more Member States

2.35 If an offer to the public is made or admission to trading on a regulated market is demanded within the territory of one or more host Member States, the issuer or the person responsible for drawing up the prospectus must notify the Commission of this in advance. The notification shall indicate the host Member State or States. The prospectus shall be attached to any such notification unless confirmed by the Commission. Where Bulgaria is a home Member State, securities may be offered to the public or admission of securities to trading on a regulated market may be demanded within the territory of one or more host Member States on the basis of a prospectus confirmed by the Commission, after the competent authorities of the host Member States are notified with a notification in advance. Within three working days after the receipt of the notification or, respectively, within one working day after the confirmation of the prospectus, if the prospectus has been submitted for confirmation together with the notification, the Commission shall dispatch to the competent authority of the host Member State a certificate attesting that the prospectus has been drawn up in accordance with the requirements of the Prospectus Directive, as well as a copy of the prospectus. The Commission shall notify forthwith the issuer or, respectively, the person responsible for drawing up the prospectus, of the dispatch of the documents.

If the Commission has authorised the omission of certain information from the prospectus, this shall be stated in the certificate.

2.36 If the Commission is informed by the competent authority of the host Member State of any violations of the effective legislation of that Member State com-mitted by the issuer or by the persons commissioned to carry out the offer to the public, or of any breaches of the obligations attaching to the issuer by reason of the fact that the securities are admitted to trading on a regulated market, the Commission shall apply all relevant measures and shall notify the host Member State of the measures taken.

2.37 In case the Republic of Bulgaria is a host Member State, securities may be offered to the public or may be admitted to trading on a regulated market within the territory thereof after the Commission receives from the relevant competent authority of the home Member State:

35

Bulgaria 2.41

1. a certificate attesting that a confirmed prospectus exists for the secur-ities, which has been drawn up in accordance with the requirements of the Prospectus Directive, as well as information whether any particulars have been omitted from or substituted in the prospectus, the particulars which have been omitted or substituted, as well as justification of the omission or substitution of the said particulars;

2. a copy of the approved prospectus.

2.38 The issuer, the offeror or the person asking for admission of the securities to trading on a regulated market shall be obliged to make the prospectus available to the public. Where the prospectus has not been drawn up in the Bulgarian language, the issuer, the offeror or the person asking for admission of the se-curities to trading on a regulated market shall be obliged to make a translation of the summary into the Bulgarian language available to the public together with the prospectus.

2.39 In case the Commission finds out any significant new information, material mistake or inaccuracy in the prospectus, the Commission shall draw the atten-tion of the competent authority of the host Member State to the need of a supplement to the prospectus. Such notification shall also be made in case the Commission finds that the issuer or the persons commissioned to carry out the offer to the public in Bulgaria violates the applicable legislation and/or its obligations.

If, despite the measures taken by the competent authority of the home Member State, or because such measures have proved inadequate, the issuer or the person commissioned to carry out the offer to the public in Bulgaria persists in committing violations, the Commission may, after informing the competent authority of the home Member State, take the appropriate meas-ures in order to protect investors. The Commission shall inform the European Commission of the measures taken within seven days after the application of the said measures.

2.40 Where Bulgaria is the home Member State of an issuer having its registered office in a third country, the Commission may approve a prospectus for an offer to the public or for admission to trading on a regulated market, drawn up in accordance with the legislation of a third country, provided that:

1. the prospectus has been drawn up in accordance with international standards set by international securities commission organisations;

2. the information requirements, including information of a financial nature, are equivalent to the requirements under the POSA and its sec-ondary legislation.

VI Publication

2.41 The issuer or offeror shall give public notice of the public offering, the earliest and latest date for the subscription or the earliest and latest date for the sale,

36


as the case may be, the registered number of the confirmation as granted by the Commission, and the place, time and manner of inspection of the pro-spectus, as well as other particulars and information as may be prescribed by the Ordinance.

Any notice for the information above shall be promulgated in the State Gazette and shall be published in one national daily newspaper not less than seven days prior to the earliest date for the subscription or the commencement of the sale.

Furthermore, the Ordinance explicitly states that the prospectus shall be deemed as made public if it is:

1. published in one or more central newspapers; or 2. printed in sufficient number of copies, which are freely distributed in

the places where the securities are offered for subscription or trade, the office premises of the issuer, the offeror, the investment intermediaries and banks included; or

3. published via the internet on the website of the issuer and, if possible, on the websites of the investment intermediaries and banks;

4. published via the internet on the website of the regulated market on which the securities are to be offered/traded.

In addition, in the register of public companies and other issuers of securities to the Commission, all confirmed prospectuses shall be published for a term of at least twelve months.

2.42 According to the Ordinance, all the requirements of acquis communautaire with respect to the publishing of a prospectus, on the internet included, shall be directly applicable.

2.43 The earliest date as stated in the notice, whereon the issuer’s securities can be subscribed for or purchased, as the case may be, shall be deemed as com-mencement of the subscription or sale, as the case may be.

The issuer, the offeror or the person asking for admission of the secur-ities to trading on a regulated market shall be obliged to make the prospectus available to the public via its publication in the press, in the form of a leaflet or in another appropriate manner not later than the initial date of the public offering or the admission of the securities to trading on a regulated market.

In the case of an initial public offer of a class of shares not already admit-ted to trading on a regulated market and whose admission to trading is to be demanded for the first time, the prospectus shall be made available to the pub-lic at least six working days before the end of the offer.

2.44 Any advertisement and publication in connection with a public offer of securi-ties or admission of securities to trading on a regulated market shall state that the prospectus is or will be made available to the public, as well as the man-ner in which investors can inspect the said prospectus. Such an advertisement

37

Bulgaria 2.46

and publication may not contain any untrue or misleading information, or any information inconsistent with the information contained in the prospectus as submitted to the Commission. The Commission shall exercise supervision as to the conformity of the advertisements and publications with the requirements of the legislation and the instruments on the application thereof.

2.45 The issuer, the offeror and the person asking for admission of the securities to trading on a regulated market are not allowed to make any statements which are inconsistent with the information contained in the prospectus as submitted to the Commission or which contain any material information which is not available in the prospectus.

VII Powers of the Commission

2.46 In order to ensure compliance with the provisions of the legislation regarding the confirmation/refusal of a prospectus, the Commission shall be empowered to:

1. require from the issuers, offerors or persons asking for admission to trading on a regulated market to include in the prospectus specific infor-mation, if necessary for investor protection;

2. require from the issuers, offerors or persons asking for admission to trading on a regulated market, and the persons that control them or are controlled by them, to provide specific information and documents;

3. require the auditors, the members of the management and supervisory bodies and the managers of the issuers, offerors or persons asking for admission to trading on a regulated market, as well as the persons com-missioned to carry out the offer to the public or to ask for admission to trading, to provide specific information;

4. suspend a public offer or admission to trading for a maximum of ten consecutive working days on any single occasion if there are reasonable grounds for suspecting that the provisions of the applicable legislation have been infringed;

5. prohibit or suspend a specific advertisement for a maximum of ten con-secutive working days on any single occasion if there are reasonable grounds for suspecting that the provisions of the applicable legislation have been infringed;

6. prohibit the carrying out of a public offer if there are reasonable grounds for suspecting that the provisions of the applicable legislation have been or would be infringed;

7. make public the fact that a specific issuer is failing to comply with its obligations under the applicable legislation.

The Commission may disclose to the public each measure applied and sanc-tion imposed for infringement of the provisions of the applicable legislation, unless such disclosure would seriously jeopardise the stability of the financial markets or cause disproportionate damage to the parties involved.

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VIII Disclosure of information

1 General

2.47 The POSA establishes requirements for disclosure of information by issuers for which Bulgaria is a home country and whose securities are admitted to trading on a regulated market as well as by issuers who have conducted public offering of securities in the Republic of Bulgaria.

For the purposes of the Regulations of the disclosure of information

1. ‘home country’ shall be: a) for an issuer of shares or debt securities with single nominal value

of less than the BGN equivalent of €1,000 or equivalent amount in another currency in which the securities are denominated at the date of issue thereof:

aa) for an issuer from a Member State – the Member State where its registered office is located;

bb) for an issuer from a third country – the Member State in which the issuer is obliged to provide to the relevant competent author-ity a document which contains or makes reference to all the information it has published or has made public otherwise over the last twelve months in accordance with the requirements of Article 10 of the Prospectus Directive;

b) apart from the cases under ‘a’, the Member State where the registered office of the issuer is located or in which its securities are admit-ted to trading on a regulated market, at the option of the issuer; the issuer may specify only one home country and its choice shall be valid for a period of no less than three years, unless the securities are already traded on a regulated market in Bulgaria or in another Member State;

2. ‘host country’ shall be the Member State in which the securities are admitted to trading on a regulated market where this country is different from the home country;

The provisions for disclosure of information shall not apply to:

1. units of collective investment undertakings other than the closed end type, or for units acquired or transferred within such collective invest-ment undertakings;

2. money market instruments with a maturity of less than twelve months.

2.48 All the reports, notifications and the other information that shall be made public according to the disclosure of information rules, shall contain informa-tion as investors may need to make a reasonable investment decision. Any such reports, notifications and information may not contain untrue, misleading or deficient particulars.

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Bulgaria 2.50

The management body of the issuer shall be responsible for the preparation and public disclosure of the financial statements. The members of the management body of the issuer as well as its procurator (if any) shall be jointly liable for any detriment as may be inflicted by reason of any untrue, mislead-ing or deficient particulars in the reports, notifications and any other infor-mation disclosed. The drawers of financial statements shall be jointly liable with the persons referred above for any detriment as may be inflicted by any untrue, misleading or deficient particulars in the financial statements of the issuer, and the registered auditors shall be jointly liable with the said per-sons for any detriment as may be inflicted by the financial statements thereby audited.

2.49 Any issuer shall disclose publicly its annual financial report within ninety days after the end of each financial year. Any issuer who is obligated to prepare consolidated financial statements shall disclose publicly its annual consoli-dated financial statements on its activity within 120 days after the end of each financial year. The issuer shall be obligated to ensure that the annual financial statements and the consolidated financial statements remain publicly available for a period of at least five years.

The annual financial report shall contain:

1. annual financial statements under the Accountancy Act of 2001 as amended, audited by a registered auditor as well as an audit report;

2. an annual report; 3. a programme for application of the internationally recognised standards

of good corporate governance, as prescribed by the Deputy Chairman of the Commission;

4. declarations by the responsible persons within the issuer, specifying their names and functions, certifying that to the best of their knowledge:

a) the financial statements, prepared in accordance with the applicable accounting standards, present correctly and fairly the information about the issuer’s assets and liabilities, financial standing and profit or loss and of the companies included in the consolidation;

b) the activity report shall contain a truthful review of the development and results from the activity of the issuer, as well as the condition of the issuer and the companies included in the consolidation, together with a description of major risks and uncertainties faced thereby;

5. any other information as explicitly specified by the Ordinance.

2.50 Where the issuer is obligated to prepare consolidated financial statements, the financial statements shall be prepared in accordance with the International Accounting Standards and shall be presented together with the annual audited financial statements of the parent company, prepared in accordance with the national legislation of the Member State at the registered office of the

40


parent company. In case the issuer is not obligated to prepare consolidated financial statements the audited financial statements shall be prepared in accordance with the national legislation of the Member State at its registered office.

2.51 The annual activity report shall include in addition to the information under the Accountancy Act information about:

1. implementation of the programme for application of internationally rec-ognised standards of good corporate governance, as well as informa-tion about the compliance of management and supervisory bodies of the issuer with these standards during the year;

2. the reasons for non-compliance of management and supervisory bodies of the issuer with the programme or the standards under item 1, as the case may be, if such non-compliance exists;

3. the measures taken for eliminating the reasons under item 2 and for im-plementation of the programme for good corporate management;

4. revision of the programme and proposal for changes thereof to ensure better application of the standards of good corporate governance in the company;

5. any other information, as explicitly specified by the Ordinance.

2.52 Any issuer shall make public a three-month report on its activity within thirty days after the end of each quarter. Any issuer who is obligated to prepare annual consolidated financial statements shall make public its consolidated financial statements within 60 days after the end of each quarter. The issuer shall be obligated to ensure that the quarterly financial report and the quarterly consolidated financial statements remain publicly available for a period of at least five years.

2.53 Exclusions exist with respect to some of the provisions regarding the disclosure of information when an issuer is from a third country and if the Commission deems that the law of such third country stipulates requirements equivalent to the requirements of the legislation and the statutory instruments for applica-tion thereto. The Commission publishes on its website a list of the countries in respect of which it considers that their laws set out requirements equivalent to the requirements of the Bulgarian legislation.

Other group of entities to which the rules for disclosure of information (with respect to provision of accounting balances and reports on the activity) shall not fully apply are as follows:

1. Bulgaria, district or local authorities in Bulgaria, public international organisations in which at least one Member State is a member, the European Central Bank, the Bulgarian National Bank and the central banks of the other Member States regardless of whether they are issuers of shares or other securities;

41

Bulgaria 2.57

2. issuers of shares who only issue debt securities admitted to trading on the regulated market with a nominal value of no less than the BGN equivalent of €50,000 or in the cases of debt securities denominated in currency other than euro, with a nominal value at the date of their issue of no less than the BGN equivalent of €50,000.

The provisions of the legislation with respect to the reports on the activities shall not apply to banks whose shares are not admitted to trading on a regu-lated market and which have issued only debt securities issued by them on a continuous basis or periodically, provided that:

1. the total nominal value of the debt securities is lower than the BGN equivalent of €100,000,000;

2. they have not published a prospectus.

2.54 The issuer of securities other than shares shall disclose publicly without delay: (i) any changes in the rights of the holders of securities other than shares, including changes in the time limits and conditions of such securi-ties, which could affect indirectly such rights, resulting from a change in the conditions of the loan or the interest rate; (ii) information about issu-ance of a new issue of debt securities and any related guarantees and col-lateral. This requirement shall not apply to international institutions or other similar organisations in which at least one Member State is a member thereof.

2.55 The issuer or the person who has requested, without the consent of the issuer, admission of the securities to trading on a regulated market shall disclose the regulated information to the Commission and to the public at the same time. The issuer who has conducted only a public offering of securities shall disclose this information first on the territory of Bulgaria. This requirement shall also apply to issuers whose securities are admitted to trading on a regulated market in Bulgaria but are not admitted to trading on a regulated market in the home country. In this case the regulated information shall meet the minimum condi-tions of EC Directive 2004/109/EC.

2.56 The regulated information shall be disclosed to the public in such a manner so as to cover simultaneously as wide a circle of people as possible and in a non-discriminating manner. The issuer shall use a news agency or another media to ensure the efficient dissemination of the regulated information to the public in all Member States. The issuer or the person who has requested admission of the securities to trading on a regulated market may not collect charges from investors for access to the regulated information.

2.57 The Commission has created and keeps a centralised storage database of the regulated information received from issuers whose securities are admitted to trading on a regulated market and whose home country is the

42


Republic of Bulgaria. The information is made public and access is free of charge.

2 Language

2.58 In case the securities are admitted to trading only on a regulated market in Bulgaria and Bulgaria is the home country, the information shall be disclosed in Bulgarian. The same rule applies if the securities are publicly offered on the territory of Bulgaria.

Where the securities are admitted to trading on a regulated market in one or more Member States simultaneously, including Bulgaria, and Bulgaria is the home country, the regulated information shall be disclosed in Bulgarian and in a language adopted by the competent authority of such Member States, or in the customary language in the sphere of international finance, at the option of the issuer.

In case the securities are admitted to trading on a regulated market in one or more Member States simultaneously, Bulgaria excluded, and Bulgaria is the home country, the regulated information shall be disclosed in a language adopted by the competent authority of such Member States, or in the custom-ary language in the sphere of international finance, at the option of the issuer. For the purposes of the Commission’s supervisory functions the information shall also be disclosed either in Bulgarian or in English, at the option of the issuer.

In case the securities with a single nominal value of at least the BGN equivalent of €50,000 or debt securities with a nominal value in a currency other than euro of at least the BGN equivalent of €50,000 at the date of their issue are admitted to trading on a regulated market in one or more Member States, the regulated information shall be disclosed in a language adopted by the home and the host Member States or in a customary language in the sphere of international finance, at the option of the issuer or of the person who has requested the securities to be admitted to trading on a regulated market.

3 Supervision requirements

2.59 The issuer shall notify the Commission of: (i) any changes in its articles of association (statutes) (ii) any changes in its management and supervisory bod-ies; (iii) the decision on transformation of the company; and (iv) other signifi-cant circumstances.

The obligation shall be performed by the issuer by close of the working day following the day of taking the decision or having knowledge of the specific circumstance, and where it is subject to entry in the commercial register, by the close of the working day following the day of having knowledge of the entry but no later than seven days after the entry.

43

Bulgaria 2.60

IX Competence of the Commission

2.60 With the purpose of ensuring compliance with POSA provisions regarding the disclosure of information, the Deputy Chairman of the Commission may:

1. require from auditors, the issuer and the persons controlling or which are controlled to provide specific information and documents; the auditor shall be exempt from the limitations on disclosure of information set out in law, by-law or a contract thus not liable for disclosure of information to the Commission and the Deputy Chairman;

2. require from the issuer to disclose publicly the information under item 1 in a manner and within a time limit as set out by the Deputy Chairman;

3. publish, after presentation of an explanation by the issuer, the informa-tion under item 1 at his own initiative in the cases where the issuer or the persons that control it or are controlled by it have not fulfilled their obligation under item 2;

4. require from the members of the management and supervisory bodies and the procurators of the issuer (if any) to provide information and where necessary, additional information and documents;

5. ban trading in specific securities on a regulated market for a period not exceeding ten days if he has reasonable grounds to assume that the pro-visions regarding the disclosure of information are violated;

6. ban trading on a regulated market if the provisions regarding the dis-closure of information are violated or there are reasonable grounds for him to assume that they are violated;

7. oblige the issuer to take specific measures for timely disclosure of infor-mation to ensure public access to it simultaneously in all Member States in which the issuer’s securities are admitted to trading;

8. inform the public that a particular issuer does not meet its obligations; 9. oblige the issuer within a reasonable time limit set by it to remove any

deficiencies or non-conformities with the applicable legislation, includ-ing the International Accounting Standards, established in the financial statements, records and other accounting documents.

The Commission may disclose any measure taken or penalty imposed, save where such disclosure would seriously jeopardise the stability of financial markets or cause disproportionate damage to the parties involved.

In case Bulgaria is a host country and the Commission establishes that an issuer violates the legislation it shall notify the competent authority in the home country thereof. If, despite the measures taken by the competent authority in the home country or where such measures prove inadequate, the issuer persists in infringing the legislation, the Commission may, after informing the compe-tent authority of the home country, take all the appropriate measures in order to protect investors. The Commission shall notify the European Commission of the measures taken within seven days after their implementation.

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X Judicial control

2.61 One of the main principles of the Bulgarian legal system is the possibility of the acts of the administration being subject to judicial control. With this respect, the POSA and the other pieces of legislation explicitly state that:

– the individual administrative acts of the Commission (such as denials for granting confirmation of prospectuses) can be appealed before the Supreme Administrative Court;

– the individual administrative acts of the Deputy Chairman of the Commission can be appealed under the procedure established with the Administrative Procedures Code – before the Chairman of the Commission and the decision of the Chairman of the Commission – before the Supreme Administrative Court.

It shall be noted that the Court can decide on the legality of the appealed act but not on its objective (unless unlawful). However, in case an act is not well-reasoned the Court may abrogate it on these grounds. The appeal of an act of the Commission does not stop its execution automatically but such request may be filed too.

As mentioned above the Commission may impose sanctions for breaches of the legislation. The procedure is regulated by the Administrative Violations and Sanctions Act. The sanctioned entity has the right to appeal the sanction imposed before the Court too.

Notes

1. According to the Financial Supervision Commission Act, financial supervision includes the supervision over:

(i) activities of the regulated securities markets, the Central Depository, investment intermediaries, investment and management companies, natural persons who are directly engaged in securities transactions and investment consultancy, public companies and other issuers of securities under the Public Offering of Securities Act and the Markets in Financial Instruments Act;

(ii) activities of insurers, insurance brokers and insurance agents accord-ing to the Insurance Act and of health insurance companies according to the Health Insurance Act;

(iii) activities of supplementary social insurance companies and of the funds managed thereby according to the Social Insurance Code.

2. The Bulgarian official currency; 1 BGN equals €1.95583 by virtue of a fixed exchange rate.

3. Under the POSA, ‘Public offering of securities’ shall be a communication on offer of securities addressed to 100 or more persons or to an unrestricted circle of persons in any form whatsoever and by any means whatsoever, presenting

45

Bulgaria 2.61

sufficient information on the terms of the offer and the securities to be offered, so as to enable investors to decide to subscribe to or purchase the said secur-ities. The placing of securities through a financial intermediary shall like-wise be treated as public offering if it fulfils the conditions under the previous sentence.

4. Under the Bulgarian POSA, the exception applies only to the banks, i.e., not to all financial institutions.

5. This is not applicable to issuers of non-equity securities whose denomination per unit amounts to at least the BGN equivalent of €50,000.

46

I Introduction 46 II Competent authority 47 III Prior approval and appeal procedures 48 1 Offering of securities to the public 48 A Procedure 48 B Exemptions 49 2 Admission to trading on a regulated market 50 A Procedure 50 B Exemptions 50 IV Content and format, language and supplements of the prospectus 50 1 Content 50 2 Format 52 3 Supplements 52 4 Language 53 V Publication and advertisements 53 1 Method of publication 53 2 Advertisements 55 VI Use of a prospectus approved in other (non-EU and non-EEA) countries 56 VII Sanctions 56 VIII Prospectus liability 57 IX Rules applicable to transactions and securities not subject to the Directive

and Regulation 58 X Conclusion 58

I Introduction

3.1 The Prospectus Directive was transposed into Cypriot law by way of Law 114(I)/2005 (the ‘Public Offer and Prospectus Law’ or ‘Law’), which was pub-lished on 9 September 2005 and took effect on the same day.1 In addition to implementing the Prospectus Directive, the Public Offer and Prospectus Law facilitates the empirical application of the Prospectus Regulation. The Cyprus Securities and Exchange Commission (the ‘CySEC’), which, as will shortly be

3CyprusAlexandros Tsadiras

European University, Cyprus

47

Cyprus 3.3

noted, is designated as the competent national supervisory authority, has the power to issue directives with a view to regulating a variety of matters pertain-ing to the function of the Public Offer and Prospectus Law in practice .2 No such directives have been adopted to date.3

3.2 The Public Offer and Prospectus Law repeals the Investments Invitation to the Public Law of 2002.4 The latter is still valid in respect of: (i) sanctions regard-ing its infringement; and (ii) offers to the public which took place up until the coming into force of the Public Offer and Prospectus Law (Art. 47 Law) .


3.3 The competent authority for the approval of prospectuses in Cyprus is the ‘CySEC’. That is a public corporate body established and operating pursuant to the Cyprus Securities and Exchange Commission (Establishment and Responsibilities) Law.5 The provisions of the foregoing legislative instrument governing the CySEC’s authority, including investigative powers, remedial competence and cooperation with regulatory entities abroad, are also applic-able to matters treated by the Public Offer and Prospectus Law (Art. 36 Law).

The CySEC is competent inter alia to:

(a) require issuers, offerors or persons asking for admission to trading on a regulated market to include in the prospectus supplementary informa-tion if necessary for the protection of the investors;

(b) require external auditors and managers of the issuer, offeror or person asking for admission to trading on a regulated market, as well as invest-ment firms commissioned to carry out the offer to the public or ask for admission to trading, to provide information required for the examina-tion of the application for approval of a prospectus;

(c) prohibit or suspend advertisements of a public offer or admission of securities to trading for a maximum of ten consecutive working days on any single occasion if it has reasonable grounds for believing that the provisions of the Public Offer and Prospectus Law have been infringed;

(d) prohibit a public offer if it finds that the provisions of the Public Offer and Prospectus Law have been infringed or if it has reasonable grounds for suspecting that they are infringed;

(e) suspend or ask the relevant regulated markets to suspend trading on a regulated market for a maximum of ten consecutive working days on any single occasion if it has reasonable ground for believing that the provi-sions of the Public Offer and Prospectus Law have been infringed;

(f) prohibit trading on a regulated market if it finds that the provisions of the Public Offer and Prospectus Law have been infringed;

(g) make public the fact that an issuer is failing to comply with his obliga-tions (Art. 37(1) Law and 21(3) Dir.).

48


3.4 The CySEC may transfer its competence to approve a prospectus to any com-petent regulatory authority of another Member State subject to the agreement of that authority. The criteria that the CySEC should apply when exercising that discretion are not indicated. The decision to transfer must be notified to the offeror or the person asking for admission of securities to trading within three working days starting from the date when the decision was taken. In those cases any applicable time limits commence from the date of the notifica-tion of the decision (Art. 26(8) Law) .

III Prior approval and appeal procedures

1 Offering of securities to the public

A Procedure

3.5 No offer of securities to the public can be made in Cyprus without the pub-lication of a prospectus which meets the prior approval by the CySEC or by the competent regulatory authority of another Member State pursuant to the Prospectus Directive (Art. 4(1) Law). That restriction also applies to the place-ment of securities through market intermediaries, including investment firms, provided that the placement falls under the definition of public offer and is not exempted from publication (Art. 4(1)(2) Law). The approval procedure con-templated in the Public Offer and Prospectus Law basically mirrors that set forth in Article 13 of the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 25). It is useful to recall the main steps of the procedure.

The decision of the CySEC regarding the approval or rejection of the pro-spectus is notified to the issuer, the offeror or the person asking for admission of securities to trading on a regulated market, as the case may be, within ten working days of the submission of the draft prospectus (Art. 26(3) Law). The time limit is extended to twenty working days if the public offer involves secur-ities issued by an issuer who does not have any securities admitted to trading on a regulated market and who has not previously offered securities to the public (Art. 26(6) Law). If the CySEC does not respond within the aforementioned time limits, the draft prospectus will not be deemed approved (Art. 26(3)(2) Law).

In case the CySEC finds that the documents submitted to it are incom-plete, it notifies the issuer within ten working days of the submission of the application (Art. 26(4) Law). The same authority may require that reasonable adjustments or corrections in the draft prospectus be made with a view to securing the transparency in the capital market and may subject the approval to the compliance of those responsible for the drafting of the prospectus to its instructions (Art. 26(5) Law) .

3.6 In every public offer that takes place in Cyprus, an underwriter must partici-pate. His duties include the collection of the purchase value of the securities

49

Cyprus 3.8

offered, the safe keeping of the moneys paid by the participants to the public offer and the making of the moneys available to the offeror at the soonest simultaneously with the allotment of the offered securities to the investors who participated in the public offer (Art. 22 Law) .

3.7 The Public Offer and Prospectus Law does not contain any provisions per-taining to the administrative or judicial challenge of the CySEC’s decisions to approve or reject, either explicitly (through a negative decision) or impli-citly (through the expiry of the statutory time limit), the draft prospectus. The general substantive and procedural rules of administrative proceedings and litigation in Cyprus will therefore apply .6

B Exemptions

3.8 Two categories of exemptions from the obligation to publish a prospectus for offers to the public or to any other placement are contemplated. On the one hand, Article 4(3) of the Public Offer and Prospectus Law introduces a number of exemptions which relate to the type of the intended offer and replicate those included in Article 3(2) of the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 11). That category comprises for example:

(a) offers of securities addressed solely to qualified investors; (b) offers of securities addressed to a limited number of persons; (c) offers of securities addressed to investors who acquire securities for a

consideration of at least €50,000 per investor, for each separate offer; (d) offers of securities whose denomination per unit amounts to at least

€50,000, provided that the same unit cannot be acquired by more than one investor .

Any resale of securities which were previously the object of one or more types of offer mentioned above will be considered as a separate offer and it will be examined with a view to ascertaining whether it constitutes a public offer of securities (Art. 4(4) Law and Art. 3(2)(2) Dir.).

On the other hand, Article 5 of the Public Offer and Prospectus Law exempts certain types of securities, which are basically those provided for in Article 4(1) of the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 13). That category includes inter alia:

(a) shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued share capital;

(b) securities offered in connection with a takeover by means of an exchange offer, provided that, in the framework of the takeover, a document is made available to the public containing information, which is regarded by the CySEC as being equivalent to that of the prospectus, taking into account the requirements of the relevant legislation in force;

50


(c) shares offered, allotted or to be allotted free of charge to existing share-holders, and dividends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available to the public con-taining information on the number and nature of the shares and the rea-sons for and details of the offer, or any other form of placement.

The CySEC is entrusted with the issuance of directives to tackle any matters relating to the implementation of the above exemptions (Art. 5(2) Law) .


A Procedure

3.9 No admission of securities on the Cyprus Stock Exchange or any other regu-lated market operating in Cyprus can be made without the approval of a pro-spectus by the CySEC. The procedure is identical to that which applies to public offerings (see no. 5 of this chapter) (Art. 6 Law).

B Exemptions

3.10 Article 7 of the Public Offer and Prospectus Law sets out the exemptions to the obligation to publish a prospectus for the admission to trading on the Cyprus Stock Exchange or any other regulated market operating in Cyprus of certain types of securities. The list faithfully reproduces the textual content of Article 4(2) of the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 15). The following are, for example, exempted:

(a) shares representing, over a period of twelve months, less than ten per cent of the number of shares of the same class already admitted to trad-ing on the same regulated market;

(b) securities offered in connection with a takeover by means of an exchange offer, provided that a document is made available to the public contain-ing information which is regarded by the CySEC as being equivalent to that of the prospectus, taking into account the requirements of the relevant legislation in force.

The CySEC is empowered to issue directives with a view to regulating any special matters pertaining to the application of the above exemptions (Art. 7(2) Law) .


1 Content

3.11 The requisite content of the prospectus is set out in Article 8 of the Public Offer and Prospectus Law, which stipulates that the prospectus must contain

51

Cyprus 3.12

all the information which, according to the particular nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities.7 The information contained in the prospectus must be presented in an easily analysable and comprehensible form (Art. 8(2) Law). It is obvious that the requirements of the Prospectus Regulation must also be complied with.

The prospectus issued for a public offer must in principle include the final offer price and the amount of securities that will be offered. In the event that this is not possible the prospectus must indicate the maximum offer price and the criteria and/or conditions pursuant to which the number of offered secur-ities will be determined. Investors have the right to withdraw the acceptance of the purchase or cancel their registration for the purchase of the securities for not less than two working days after the date of designation and publication of the final offer price and/or the amount of securities which will be offered to the public. That right should be expressly stated in the prospectus. The final offer price and the amount of securities offered to the public must be filed with the CySEC and published in the same manner as the prospectus (Art. 13 Law and Art. 8(1) Dir.).

3.12 Following an application by the issuer, offeror or person asking for the admis-sion of securities to trading on a regulated market, the CySEC may authorise the omission from the prospectus of certain information contemplated in the Public Offer and Prospectus Law and any subordinate directives, if it con-siders that any of the following scenarios apply:

(a) the disclosure of such information would be contrary to the public inter-est; or

(b) the disclosure of such information would be seriously detrimental to the issuer, provided that the omission would not be likely to mislead the public with regard to facts and circumstances essential for an informed assessment of the issuer, offeror or guarantor, if any, and of the rights attached to the securities to which the prospectus relates; or

(c) such information is of minor importance, only for a specific offer or admission to trading on a regulated market and is not such as will influ-ence the assessment of the financial position and prospects of the issuer, offeror or guarantor, if any (Art. 15(1) Law and Art. 8(2) Dir.).

Where, exceptionally, certain information that ought to have been included in the prospectus pursuant to the Prospectus Regulation is omitted as it is inap-propriate to the issuer’s sphere of activity or to the legal form of the issuer or to the securities to which the prospectus relates, the prospectus must contain information equivalent to that which is required with a view to ensuring the proper information of the investors (Art. 15(2) Law and Art. 8(3) Dir.) .

52


3.13 The prospectus may incorporate information by reference to one or more pre-viously or simultaneously published documents that have been approved by the CySEC or filed with it. The information referred to in the prospectus must be the latest available to the issuer and continue to be accurate. When information is incorporated by reference, a cross-reference list must be provided in order to enable investors to identify easily specific items of information (Art. 18 Law and Art. 11 Dir.) .

2 Format

3.14 It is at the discretion of the issuer, the offeror or the person asking for the admission to trading on a regulated market to draw up the prospectus as a single document or as separate documents (Art. 9(1) Law and Art. 5(3) Dir.). The prospectus which is drawn up as a single document consists of: (i) the main body, containing information concerning the issuer and the securities to be offered to the public or to be admitted to trading on a regulated market and (ii) a summary note (Art. 9(2) Law) . The prospectus which is drawn up as separate documents comprises: (i) a registration document, containing the information relating to the issuer; (ii) a securities note, containing the information concerning the securities offered to the public or to be admitted to trading on a regulated market; and (iii) a summary note (Art. 9(3) Law and Art. 5(3) Dir.) . The precise content of the single and separate docu-ment prospectus is prescribed in Annex Two and Three of the Public Offer and Prospectus Law, respectively, which comply with the provisions of the Prospectus Regulation .

For specific types of securities, such as non-equity securities, including warrants in any form, issued under an offering programme or non-equity securities issued in a continuous or repeated fashion by credit institutions the issuer, offeror or person requesting admission to trading on a regulated market may opt for a prospectus which consists of a base prospectus and contains all relevant information concerning the issuer and the securities offered to the public or to be admitted to trading on a regulated market (Arts. 11 and 12 Law and Art. 5(4) Dir.) .

3 Supplements

3.15 In case of a significant factor or a material mistake or inaccuracy relating to the information included in the prospectus which is capable of affecting the assess-ment of the securities offered and which arises or is noted in the period be-tween approval of the prospectus and the final closing of the offer to the public or, as the case may be, the time when trading of the securities on a regulated market begins, the issuer, the offeror or the person asking for the admission of securities to trading must prepare a supplement to the prospectus (Art. 14(1) Law and Art. 16(1) Dir.). The CySEC approves the supplement within a maxi-mum period of seven working days beginning from the day of its submission.

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Cyprus 3.17

The procedures for the approval and the publication of the supplement are identical to those that are applicable to the original prospectus (Art. 14(3) and (4) Law and Art. 16(1) Dir.). The summary note and any translations thereof must also be amended, if necessary, with a view to taking into account the new information included in the supplement to the prospectus (Art. 14(5) Law and Art. 16(1) Dir.).

In the event a supplement to the prospectus is issued which contains significant new elements as to the issuer or as to the securities or reveals material mistakes or inaccuracies relating to the information included in the prospectus, investors who have agreed or have been bound in any manner prior to the publication of the supplement to purchase or acquire by registration securities, in respect of which the prospectus refers to, based on the information therein, may withdraw and be released with no liability for them in respect of the promise and commitment they have undertaken. The withdrawal must be exercised within three working days starting from the publication of the supplement (Art. 14(6) and (7) Law and Art. 16(2) Dir.) .

4 Language

3.16 Article 34 of the Public Offer and Prospectus Law faithfully reflects Article 19 of the Prospectus Directive and regulates in detail the language in which the prospectus must be drafted (see Chapter 1, vol. I, of this book, no. 51). The requisite language depends on whether or not Cyprus is the home and/or the host Member State. The languages accepted by the CySEC are the two official languages of the Republic of Cyprus, namely Greek and Turkish.8 English, but not French or German, qualifies as a language customary in international financial circles and will also be accepted.

In the event the prospectus is drawn up in English, the CySEC may require that the summary note be translated in either Greek or Turkish .



3.17 Once approved by and registered with the CySEC, the prospectus must be published by the offeror, the person asking for admission to trading on a regu-lated market or the underwriter who is responsible for the drawing up of the prospectus as soon as practicable and in any event at a reasonable time (i) in advance of, or, at the latest, at the beginning of the offer to the public of the securities involved; or (ii) prior to their admission to trading on the Cyprus Stock Exchange or other regulated market operating in Cyprus or, at the latest, upon their admission to it, as the case may be (Art. 27(1) Law). In the event of an initial public offer of a class of shares not already admitted to trading on a regulated market that is to be offered to the public for the first time, the

54


prospectus must be made available at least six working days before the end of the offer, provided that any commitment of investors to acquire that class of shares is forbidden before the prospectus is made available to the public (Art. 27(2) Law and Art. 14(1) Dir.) .

3.18 Article 27(3) of the Public Offer and Prospectus Law draws heavily upon Article 14(2) of the Prospectus Directive and provides different ways of publi-cation (see Chapter 5, vol. I, of this book, no. 57). The prospectus is deemed to be published when it is made available in at least one of the following forms:

(a) by insertion in one or more newspapers circulated throughout Cyprus; (b) in a printed form to be made available, free of charge, to the public: (i)

at the offices of the Cyprus Stock Exchange or of the other regulated market on which the securities are being admitted to trading; or (ii) at the registered office of the issuer and at the registered offices of the underwriters and the investment firms placing, by sale or registra-tion, the securities, including all those that have been authorised to accept the moneys of the investors deposited for the acquisition of the securities;

(c) in an electronic form, on the internet site of the issuer and the internet site of the underwriters of the issuing, placing or offering to the public, including the investment firms placing or selling the securities, as well as those that have been authorised to accept the moneys of the investors deposited for the acquisition of the securities, if they exist;

(d) in an electronic form, on the internet site of the Cyprus Stock Exchange or the other regulated market where their admission to trading is asked for; or

(e) in an electronic form, on the internet site of the CySEC .

The offeror or the person asking for admission of securities to trading on a regulated market is free to choose between the foregoing ways of publication and must notify the CySEC accordingly at the latest at the beginning of the offer to the public or the admission to trading (Art. 27(4) Law). Cyprus has exercised the options contained in Articles 14(2) and 14(3) of the Prospectus Directive and that has a twofold consequential implication. First, the issuers publishing their prospectus in the manner prescribed in the above paragraphs (a) and (b) are also obliged to publish their prospectus in an electronic form in accordance with paragraph (c) (Art. 27(3) Law). Second, the offeror or the person asking the admission of securities to a regulated market, is required to publish an announcement in which he states in which form the prospectus has been made available and where the public may obtain it (Art. 27(4) Law) .

The published prospectuses as well as their supplements must at all times be identical to the original versions approved by the CySEC (Art. 27(6) Law and Art. 14(6 Dir.). That authority is under the obligation to publish on its website over a period of, at least, twelve months from the date of the first

55

Cyprus 3.19

publication (i) the full text of every prospectus it has approved or (ii) the list of the prospectuses approved with an explicit and specific reference to the website of the Cyprus Stock Exchange or of the other regulated market, as well as of the issuer and/or the underwriter responsible for the drawing up of the prospectus, where the full text of the approved prospectuses is published, provided that it has ensured that the full text of prospectuses will be published in the sug-gested website for a period of at least twelve months from the date of the first publication of the prospectus. In case of admitted securities to trading on the Cyprus Stock Exchange or on other regulated market in Cyprus, a full text of the prospectus must be published on the website of the Cyprus Stock Exchange or of the other regulated market for the same period (Art. 28 Law and Art. 14(4) Dir.) .

The prospectuses are valid for a period of twelve months following their publication, provided they are duly supplemented (Art. 16(1) Law and Art. 9(1) Dir.) .

2 Advertisements

3.19 Any type of advertisement relating to an offer of securities to the public in Cyprus or to an admission to trading on the Cyprus Stock Exchange or on other regulated market must comply with Article 30 of the Public Offer and Prospectus Law, which is heavily inspired by Article 15 of the Prospectus Directive (see Chapter 1, vol. I, of this book, no. 62). The various methods of disseminating advertisements are set out in Chapter V of the Prospectus Regulation.

In any case of an offer of securities to the public or of an admission to trading on the Cyprus Stock Exchange or on other regulated market, any type of advertisement announcing the offer or the admission to trading must be previously filed with the CySEC, which examines whether the advertising activity complies with applicable rules. It is worth noting that the foregoing control is carried out even in cases where the prospectus has been approved in another Member State of the European Economic Area which qualifies as the home Member State for the purposes of the Prospectus Directive .

In the event that the issuer, the offeror or the person applying for admission of securities to trading on the Cyprus Stock Exchange or on other regulated market is under the obligation to draw up a prospectus, the relevant advertise-ment must meet the following requirements: (i) it must state that a prospectus has been or will be published and indicate where investors are or will be able to obtain it, or how investors will be able to have access to its full text; (ii) it must be clearly recognisable as such; and (iii) the information it contains must not be inaccurate or misleading, but consistent and without any conflict or discrepancy with the information contained in the prospectus if already published, or with the information required to be in the prospectus, if the pro-spectus is published afterwards.

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In case no publication and approval of a prospectus is required, material information provided by an issuer or an offeror and addressed to qualified investors or special categories of investors, including information disclosed in the context of meetings relating to offers of securities, must be disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed .

VI Use of a prospectus approved in other (non-EU and non-EEA) countries

3.20 Where Cyprus is the home Member State of issuers incorporated in a third country, the CySEC may approve a prospectus for an offer to the public or for admission to trading on a regulated market, drawn up pursuant to legislation of the third country, under the condition that (i) the prospectus has been drafted in accordance with international standards set by international securities commission organisations, including the IOSCO disclosure standards; and (ii) the information requirements under the law, in accordance with which the prospectus was drafted, including information of a financial nature, are at least equivalent to those under the Public Offer and Prospectus Law (Art. 35(1) Law and Art. 20(1) Dir.).

Where Cyprus is not the home Member State and securities of an issuer which has been incorporated in a third country are the object of an offer to the public or admission to trading on the Cyprus Stock Exchange or other regulated market in Cyprus, the prospectus and any supplement thereto will be deemed valid, provided that (i) their approval by the competent regula-tory authority of the third country meets the requirements of the Prospectus Directive; (ii) they have been duly notified to the CySEC; and (iii) they are published in Cyprus in either Greek, Turkish or English (Art. 35(2) Law and Art. 20(2) Dir.) .

VII Sanctions

3.21 Two types of sanction may be imposed either alternatively or cumulatively. On the one hand, criminal sanctions will be imposed upon whoever proceeds to the offer of securities to the public without respecting the requisite approval and publication procedures of the prospectus. The perpetrator is liable to imprisonment not exceeding two years or a fine not exceeding €170,860 or both. In case of a second or repeated conviction of the same offence the afore-mentioned ceilings are doubled (Art. 4(2) and 39 Law).

On the other hand, the CySEC is empowered to impose a range of ad-ministrative sanctions following an investigation which might be proactive (own- initiative inquiries) or reactive (inquiries sparked by a complaint). Those sanctions will be imposed either:

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Cyprus 3.22

(a) only to legal persons; or (b) only to directors, managers, officials, if it is proved that the violation was

due to their own fault, wilful omission or negligence; or (c) to legal persons and to their directors, managers or officials if it is proved

that the violation was due to their own fault, wilful omission or negli-gence (Art. 40 Law).

There exist three tiers of maximum amount the administrative fine can reach, namely €42,715, €85,430 or €170,860 (Arts. 41(3), 41(2) and 41(1) Law). In case of relapse, the above ceilings are doubled. Which tier is applicable in every case depends on the subject matter of the established violation. A practical example will illustrate the point. While irregularities of the supplement to the prospectus may attract a fine of up to €85,430, admission of securities on the Cyprus Stock Exchange without prior publication of a prospectus may lead to a fine of up to €170,860. If despite the imposition of the administrative sanction the infringement persists and after a reasonable period of time (which may not be less than one month) has elapsed the CySEC may impose a new adminis-trative fine and may do so repeatedly, treating non-compliance as a relapse of the breach (Art. 41(4) Law). In all cases, where an administrative fine has been imposed, the offender is in addition liable for any damages, including loss of profits, caused to any person who responded to the public offer and purchased securities on the regulated market based on inaccurate or incomplete informa-tion of the prospectus (Art. 41(5) Law).

The collection of unpaid administrative fines is effected by application of the relevant provisions of the Cyprus Securities and Exchange Commission (Establishment and Responsibilities) Law (Art. 42(2) Law) .


3.22 The prospectus must clearly identify the persons responsible for the provi-sion of information presented in it (e.g., the issuer, offeror or person asking for the admission of securities to trading) and must compulsorily state their names and functions or, in the case of legal persons, their names and registered offices (Art. 20(5) Law and Art. 6(1) Dir.). Those persons are under the obli-gation to provide a statutory declaration, which is included in the prospectus, stating that, having exercised due care so as to form a responsible opinion, they confirm that the information contained in the prospectus is true and correct and that in the prospectus there are no omissions likely to alter its content and or mislead the investors. They must also exercise due care in the preparation of the prospectus particularly in relation to the accuracy, completeness, clarity and update of its contents so as to make sure that investors are given true, full and objective information. In addition, they are liable to investors fully, jointly and severally for loss the latter have sustained as a result of any omissions in the prospectus (Art. 20(6) Law) .

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The persons who submitted the summary note and any of its translations, and asked for its publication or its notification, bear civil liability only if the note is misleading, inaccurate or inconsistent when read together with the main part of the prospectus and no liability can arise solely on the basis of the summary note (Art. 21(2) Law and Art. 6(2)(2) Dir.).

3.23 Special provision is made for the liability of the underwriter responsible for the drawing up and signing of the prospectus in the case of public offer or first admittance to trading on a regulated market (Art. 23 Law).

3.24 In any claim for damages for prospectus liability the burden is placed upon the persons who have signed it to prove that it is accurate, complete, clear and updated or free from any omissions or errors (Art. 21(1) Law). The claim must in principle be brought within two years starting from the date the securi-ties were made available or were admitted to trading on a regulated market (Art. 21(3) Law).

IX Rules applicable to transactions and securities not subject to the Directive and Regulation

3.25 Public offerings and admissions on the Cyprus Stock Exchange of secur-ities that fall outside the material scope of application of the Public Offer and Prospectus Law do not require the publication of a prospectus, except if such an obligation is laid down by specific legislation.

X Conclusion

3.26 The preceding discussion has focused on the transposition of the Prospectus Directive into the legal regime of the Cyprus Republic. The domestic legis-lative instrument appears to reflect faithfully its parent European Act and it can be argued with a reasonable degree of certainty that no major problems of incompatibility should be expected to arise.

The picture would however be incomplete without brief consideration of the practical application of the prospectus legislation, domestic and European, in Cyprus. Empirical investigation yields a number of positive findings. At the time of writing more than sixty five prospectuses and supplements thereto have been published without any considerable administrative delays being recorded. In addition, CySEC’s cooperation with the competent authorities of other Member States has proven to be smooth and untroubled as more than fifty-five notifications of already approved prospectuses have been effected without any particular difficulties being raised.9 The emerging success of the prospectus legislation in the domestic securities market of Cyprus should not, however, blind us to the fact that the creation of a real common space for public offerings and admissions to trading in the European Union is a Herculean task, whose complexity and enormity can hardly be overlooked. Whether the Prospectus

59

Cyprus 3.26

Directive has achieved its stated objectives at the European level is an engaging question; it cannot, however, be safely answered unless adequate empirical data is gathered and sufficient time elapses allowing for better informed and composed reflection .

Notes

1. Law 114(I)/2005 providing for the conditions for making an offer to the public of securities, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and other incidental matters of 2005, Official Gazette of the Republic of Cyprus 2005, Issue no. 4031, Appendix 1, Part I, p. 783, of 9 September 2005. It will be recalled that the deadline for the transposition of the Prospectus Directive was 1 July 2005.

2. See, e.g., Arts. 5(2) and 7(2) Law concerning the exemptions from the obliga-tion to publish a prospectus for making an offer of securities to the public and for admission of securities to trading on a regulated market, respectively; Arts. 25, 26(9) and 29 Law relating to details and technical issues in connection with the drafting, approval and publication of the prospectus, respectively.

3. The CySEC has, however, issued circular E01/2006 of 24 January 2006 in order to draw attention to Article 17 Law (Art. 10 Dir.), which provides for the publication of at least an annual Bulletin containing or referring to all the information published by the issuers or made available to the public over the preceding twelve months .

4. Law 149(I)/2002, Issue No. 3626, Appendix 1, Part II, p. 2547, of 26 July 2002.5. Law 64(I)/2001, Issue No. 3491, Appendix 1, Part I, p. 383, of 20 April 2001, as

amended.6. See Article 146 of the Cyprus Constitution, pursuant to which the Supreme

Constitutional Court has exclusive jurisdiction to adjudicate on complaints that a decision, an act or an omission of any organ, authority or person, exercising any executive or administrative authority, is contrary to any of the provisions of the Constitution or of any law or is made in excess or in abuse of powers vested in such organ or authority or person. The applicant must prove that the chal-lenged decision, act or omission has adversely and directly affected an existing legitimate interest of his and the application must be filed within seventy-five days starting from the date when the decision or act was published or, if not published and in the case of an omission, when it came to the knowledge of the applicant.

7. The wording is identical to Art. 5(1) Dir. (see Chapter 1, no. 28 of vol. I of this book).

8. Art. 3 of the Cyprus Constitution.9. Empirical data can be derived from the CySEC’s informative website at www.

cysec.gov.cy/default_en.aspx under ‘issuers’ and the authority’s helpful and responsive staff.

www.cysec.gov.cy/default_en.aspx

www.cysec.gov.cy/default_en.aspx

60

I Introduction 60 II Application 61 III Scope 61 IV Obligation to prepare and publish a prospectus and exemptions 62 1 Obligation to prepare a prospectus 62 2 Exemptions 62 V Prior approval of the competent authority 63 1 Competent authority 63 2 Approval procedure 64 VI Content, format and language of the prospectus and related documents 65 1 Content and incorporation by reference; permissible omission of

information 65 A Inclusion of all necessary information 65 B Schedules and building blocks 65 C Financial information presented in accordance with IFRS 65 D Summary 66 E Permitted omissions 66 F Incorporation by reference 66 2 Language 66 3 Term of validity 67 VII Publication and advertisements 67 VIII Supplements and new information 67 IX Annual information 68 X Cross-border offerings and admissions to trading 69 XI Issuers incorporated outside the European Economic Area 69 XII Special powers of the competent authorities and sanctions 70 XIII Prospectus liability 70 XIV Conclusion 71

I Introduction

4.1 Finland has implemented the Prospectus Directive as of 1 July 2005 by intro-ducing amendments mainly to the Finnish Securities Markets Act and regula-tion related thereto.1

4FinlandM ik ko Heinonen and K laus Ilmonen

Hannes Snellman, Attorneys-at-law Ltd

61

Finland 4.4

The main statute applied to the issuance of securities to the public and to public trade in securities is the Finnish Securities Markets Act (Arvopaperimarkkinalaki, 495/1989, the ‘SMA’). The Ministry of Finance and the Financial Supervision Authority have issued further regulation and guid-ance applicable to securities offerings .

The Finnish Financial Supervision Authority (Rahoitustarkastus) is re-sponsible for monitoring the securities markets as well as the activities of key market participants. The Financial Supervision Authority is respon sible for approving offering documents in Finland. The Financial Supervision Authority has also issued further regulation and guidance on the interpretation of the SMA to the offering of securities in Finland.

II Application

4.2 Finland implemented the Prospectus Directive by 1 July 2005 as required by the Prospectus Directive. The Prospectus Regulation was also in force and applied in Finland as of that date.

The Finnish Financial Supervision Authority has revised its detailed guidance related to the issuance of securities and prospectuses to reflect the requirements of the Prospectus Directive. The guidance has been issued in the form of a revised Standard of the Financial Supervision Authority consisting of recommendations for market practice and interpretative guid-ance related to the SMA. The revised standard took effect as of 1 February 2007.2

III Scope

4.3 The SMA applies to the issuance of securities to the public, the transfer and clearing of securities issued to the public, as well as to public trade in securi-ties in Finland. Certain provisions of the SMA, mainly related to notification obligations of shareholders, also apply to a Finnish limited company whose shares have been admitted to public trade on a regulated market elsewhere within the European Economic Area as well as to a shareholder and a person corresponding to a shareholder of such a company.

4.4 The SMA applies to a security which is transferable and issued or meant to be issued to the public together with several other securities with similar rights.3 This may, for example, be a certificate that is issued for:

(i) a share or other participation in a company or the right to a dividend, interest or other proceeds or to subscription connected thereto;

(ii) a unit in a bond or other corresponding obligation of the debtor or the right to interest or proceeds connected to the said unit or obligation;

(iii) a combination of the rights referred to in paragraphs 1 and 2;

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(iv) a right to purchase or to sale relating to the said rights; (v) a unit in a fund or a unit in an undertaking for collective investment in

transferable securities comparable thereto; as well as for (vi) a right other than one referred to above based on a contract or an

obligation.

4.5 The SMA also applies to a standardised option and future in accordance with the Act on Trade in Standardised Options and Futures (772/1988), and other comparable derivatives contracts.

The SMA does not apply to a security which alone or together with other securities produces:

(i) the right to dispose of a certain apartment, other premises or real estate or a part of real estate; or

(ii) the right to use or to obtain commodities referred to in the Consumer Protection Act (38/1978) other than securities, if the value of the security is based mainly on the said right .

IV Obligation to prepare and publish a prospectus and exemptions

1 Obligation to prepare a prospectus

4.6 Anyone who offers securities to the public or applies for the admission to public trading of securities shall be under an obligation to publish a prospectus relating to the securities before the entry into force of the offer or the admission to public trading and to have it available for the public during the validity of the offer. In addition to the offeror and the issuer, the party managing the offer or the application for admission to public trading on the basis of an engagement shall also be liable for the preparation and publication of the prospectus.4

The obligation to publish a prospectus shall not apply to a situation where the issuer of a non-equity security is the State of Finland, the Bank of Finland, a Finnish municipality or joint municipal authority or another State belonging to the European Economic Area, its central bank or its regional administrative unit or a public international body whose members include at least one State belong-ing to the European Economic Area, or the European Central Bank. Nor does the obligation apply to a situation where the securities offered or applied to be admitted to public trading are covered by an absolute guarantee by the State of Finland, a Finnish municipality or joint municipal authority or another Member State of the European Economic Area or its regional administrative unit .

2 Exemptions

4.7 Exemptions from the obligation to publish a prospectus in connection with the offering of securities in Finland are based on the principles set out in the

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Finland 4.8

Prospectus Directive.5 There is no obligation to publish a prospectus if the offering or listing concerns securities identified in Article 1(2) of the Prospectus Directive.6 An exemption from the obligation to publish a prospectus is also automatically available if securities are offered:7

(i) solely to experienced investors; (ii) in Finland to under 100 investors who are not experienced investors

referred to above; (iii) to be acquired for a consideration of at least €50,000 per investor with

regard to an offer or in portions of at least €50,000 in nominal or counter value; or

(iv) so that the total consideration is under €100,000 calculated for a twelve-month period .

In addition, the FSA may grant an exemption from the obligation to publish a prospectus upon application in specific circumstances .8

V Prior approval of the competent authority

1 Competent authority

4.8 In Finland, the competent authority, as provided in the Prospectus Directive, is the Finnish Financial Supervision Authority, an independent governmen-tal entity operating in connection with the Bank of Finland.9 The Financial Supervision Authority supervises financial markets in Finland, as well as certain supervised entities, such as securities, intermediaries and credit institutions.

The Financial Supervision Authority has jurisdiction and competence to consider the approval of a prospectus if:

(i) the home Member State of the issuer of the securities is Finland; or (ii) the competent authority of another Member State of the European

Economic Area has requested that it takes over the approval of the prospectus and the Financial Supervision Authority has consented thereto.

The Financial Supervision Authority may decide on the transfer the appli-cation to another competent authority belonging to the European Economic Area. The decision may be made if the applicant requests a transfer or if, due to the circumstances of the offering, the offer or the admission to trad-ing has a significant connection to another Member State of the European Economic Area and the competent authority of the receiving Member State consents to the transfer. The Financial Supervision Authority shall inform the applicant of its decision within three banking days from the making of the decision .

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2 Approval procedure

4.9 The prospectus may be published only after the Financial Supervision Authority has approved it. The prospectus is filed with the Financial Supervision Authority when the document meets the prospectus criteria based on the Prospectus Directive and the Regulation. Typically, the Financial Supervision Authority will issue comments and requests for amendments to the draft pro-spectus, and minor changes can still be made during the prospectus review process.

The review period by the Financial Supervision Authority is ten bank-ing days from the submission of the prospectus for approval. If the pro-spectus relates to the securities of an issuer whose securities have not earlier been offered to the public or admitted to public trading or to cor-responding trading in a Member State of the European Economic Area, the review period is twenty banking days from the submission of the prospectus .

If the Financial Supervision Authority deems the filed documents to be incomplete or that additional information is needed, the review period is cal-culated from the date when the additional information is submitted to the Financial Supervision Authority. The Financial Supervision Authority shall ask the applicant to supplement its application within ten banking days from the submission of the application. If the prospectus has to be supplemented after the approval, the Financial Supervision Authority shall decide on the approval of the supplement within seven banking days from the submission of the supplement for approval .

A copy of the prospectus shall be submitted to the Financial Supervision Authority when it is published by the issuer. The Financial Supervision Autho-rity publishes the prospectus on its home pages.

4.10 In addition to the prospectus, advertising materials related to the offering must be submitted to the Financial Supervision Authority in connec-tion with listings and initial public offerings. Pursuant to the SMA, any marketing material relating to such an offer or the admission to public trading shall be submitted to the Financial Supervision Authority within two banking days from the submission of the prospectus to the Financial Supervision Authority for approval . The marketing material shall include a reference to the prospectus and state the place where the prospectus is available .10

In connection with the listing of securities on the Helsinki Stock Exchange, an application for the listing shall also be made with the stock exchange sep-arately from filing the prospectus with the Financial Supervision Authority. The purpose of the listing process is mainly to establish that the listing criteria of the exchange are met .

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Finland 4.14

VI Content, format and language of the prospectus and related documents

1 Content and incorporation by reference; permissible omission of information

A Inclusion of all necessary information

4.11 Regulation on prospectus contents is mainly based on the Prospectus Regulation. The SMA provides that the prospectus shall, in addition to this SMA, be governed by the Prospectus Regulation.

Under the general rule in the SMA, reflecting the requirements of the Prospectus Directive, anyone who offers securities or applies for admission of a security to public trading shall be liable to keep sufficient information on factors that may have a material effect on the value of the security which is equally available to the investors.11 The prospectus shall provide suffi-cient information to the investor for the making of a founded assessment on the securities and their issuer, as well as on the possible guarantor. The pro-spectus shall contain essential and sufficient information on the assets, liabil-ities, financial position, result and future outlook of the issuer and the possible guarantor, as well as on the rights attached to the securities and other factors with a material effect on the value of the securities.

4.12 When securities are applied to be admitted to public trading or when they are included in an offer of at least €2.5 million in counter-value calculated for a twelve-month time period, the prospectus shall present the information required in the SMA and the provisions issued thereunder as well as in the Prospectus Regulation.12 With regard to offerings that do not trigger the appli-cation of the Prospectus Regulation, domestic rules are applied .13

B Schedules and building blocks

4.13 The SMA provides that the information in a prospectus shall be presented in a logical and easily comprehensible form.14 The prospectus shall be published either as one document or as a document consisting of three parts, as provided in the Prospectus Directive (Art. 12 Dir.). The sections of the three-part docu-ment are: (i) the base prospectus; (ii) the securities note; and (iii) the summary note. In a three-part document, the base prospectus shall contain information on the issuer and the securities note on the securities offered to the public or intended to be admitted to public trading.

C Financial information presented in accordance with IFRS

4.14 Financial information shall be included in the prospectus for the past three financial periods. Financial statements for issuers within the European Union shall be drawn up pursuant to International Financial Reporting Standards (IFRS). However, financial statements need not be restated for any period prior to 1 January 2004. In initial public offerings, financial statements for the past two financial periods are typically drawn up in accordance with IFRS, while

66


the third financial period is allowed to be presented under Finnish accounting standards.

With regard to financial statements drawn up under IFRS, the financial statements, as defined under standard IAS 1, are included in the prospectus. It can be noted that the Finnish Financial Supervision Authority requires that, with regard to Finnish issuers, the complete financial statements pursuant to the Finnish Accounting Act (1336/1997) be included in the prospectus. Consequently, both consolidated and parent company financial statements are to be included, as well as the annual operating review of the Board of Directors .

D Summary

4.15 A prospectus shall generally contain a summary note. The summary note shall present, in a short form and in common terminology, the material information and risks relating to the issuer and the possible guarantor as well as to the said securities.

In accordance with Decree 452/2005 of the Ministry of Finance, the summary shall further explicitly state that it is to be deemed as an intro-duction to the prospectus, and that issuers should acquaint themselves with the prospectus in whole. Furthermore, it shall be stated that in case legal claims are made in Finland on the basis of the prospectus, the claimant may be required to cover any costs related to the translation of the prospectus, if required .

E Permitted omissions

4.16 The Financial Supervision Authority may grant an exemption from the con-tents of a prospectus. The exemption may be granted on condition that it is not in violation of the provisions of the Prospectus Directive or the Prospectus Regulation. The circumstances in which omissions may be permitted are set out in more detail in secondary regulation in the Ministry of Finance Decree 452/2005.15

F Incorporation by reference

4.17 Finnish regulation allows for information to be incorporated by reference in the prospectus. Such information shall be published previously or at the same time as the prospectus is published. Furthermore, the relevant information shall have been previously approved by the Financial Supervision Authority, or provided to the Financial Supervision Authority together with the applica-tion for the approval of the prospectus .16

2 Language

4.18 The prospectus shall be published in Finnish or Swedish if the securities are offered to the public or applied to be admitted to public trading solely in

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Finland 4.21

Finland.17 The Financial Supervision Authority may, however, upon applica-tion, consent to the prospectus being drafted in another language as well.

The language of the prospectus shall, on the basis of Article 19 of the Prospectus Directive, be governed by a Decree of the Ministry of Finance when offering securities to the public or applying for their admission to public trading also or solely outside Finland.

3 Term of validity

4.19 The prospectus shall remain valid throughout the offer period, or until the securities referred to in the prospectus have been admitted to public trading. However, a prospectus can remain valid for twelve months after its publication at the most.18

A prospectus approved and published earlier with less than twelve months from its publication, may be used when offering or applying for the admission to public trading of securities provided that the information in the prospectus is supplemented.

An approved base prospectus is valid for twelve months from its publication.

VII Publication and advertisements

4.20 Detailed rules on the publication of the prospectus are contained in a Decree of the Ministry of Finance on prospectuses. Pursuant to the decree, a prospec-tus shall be published no later than two banking days before the beginning of the public offering period. In the event of an offering of a class of shares not already admitted to trading on a regulated market in the EEA, the prospectus must be made available no later than six banking days before the earliest pos-sible end of the offering period .19

The prospectus can be published and made available to the public, for example, by keeping printed copies of the prospectus available for the public without cost at the premises of the issuer or the managers of the offering, or electronically on the homepages of the issuer or the managers. A printed copy of the prospectus must always be provided to offerees at request .20

VIII Supplements and new information

4.21 Pursuant to the SMA,21 a fault or omission in the prospectus which is discovered before the end of the period of validity of an offer or the admission of the security to public trading and which may be material to the investor, shall be communicated to the public by publishing a supplement to the prospectus in the same manner as the prospectus. Investors who have committed to

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subscribe or buy the securities before the publication of a supplement to the prospectus, shall be granted the right to withdraw their decisions generally within two banking days.

If securities are offered conditionally so that the final decision on the sub-scription or purchase price or the amount of the securities has not yet been made, the prospectus may be published without this information. The offeror of the securities shall, however, supplement the prospectus with the said information by publishing it in the same manner as the prospectus without undue delay after making the decision to offer the securities. If the basis for determining the amount and price of the securities or the maximum price are not disclosed in the prospectus, the investors shall have the right to withdraw their decision to subscribe or purchase the securities within two banking days from the publication of the information on the final amount and price of the securities .

IX Annual information

4.22 Pursuant to the Prospectus Directive, issuers whose securities are admitted to trading on a regulated market must prepare, at least annually, a docu-ment containing or referring to all information published over the preced-ing twelve months, both in and outside the European Union (Art. 10(1) Dir.).22

In this regard, the Finnish SMA provides that an issuer of a security subject to public trading shall publish a document of the information published during the previous financial period (annual summary). The annual summary shall at least contain a reference to the information which the issuer has published under the provisions of the SMA, the provisions issued thereunder or con-firmed rules or under similar foreign provisions or rules. When only making a reference to the information, it shall be stated where the information is easily available.

The annual summary shall be published as well as submitted to the Financial Supervision Authority and the relevant organiser of public trad-ing within the time period provided for in the Commission Prospectus Regulation. If the prospectus relating to a security of an issuer subject to public trading has been scrutinised by an authority of a State belong-ing to the European Economic Area other than the Financial Supervision Authority, the annual summary shall be submitted, in addition to the Financial Supervision Authority, also to the said authority. The provisions of the Prospectus Regulation shall be complied with in the publication of the annual summary.

The issuer of securities other than equity securities subject to public trad-ing with a nominal value or counter-book-value of at least €50,000 shall not be liable to publish an annual summary .

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Finland 4.25

X Cross-border offerings and admissions to trading

4.23 The Finnish Financial Supervision Authority is the competent authority in Finland also as regards the procedures for notification of prospectuses to other EEA Member States, or when prospectuses approved by competent authorities in other Member States are used in Finland .

Where an issuer intends to offer or apply for the admission to public trad-ing of securities in one or more Member States of the EEA, the Financial Supervision Authority shall, upon the request of the applicant, submit a cer-tificate to the competent authority of the said Member States to the effect that the prospectus has been drawn up in accordance with the Prospectus Directive together with a copy of the prospectus and any supplements. The certificate shall be submitted to the relevant competent authority within three banking days from the presentation of the request to the Financial Supervision Authority, or, if the request is presented simultaneously with the submission of the prospectus or its supplement for approval, within one banking day from the approval of the prospectus or its supplement . If exemptions from the contents of the prospectus have been granted, this shall be mentioned in the certificate.

4.24 The Financial Supervision Authority will recognise a prospectus approved in another Member State of the EEA, provided that the competent authority of the other Member State submits copies of the prospectus and any supplements to the Financial Supervision Authority together with a certificate to the effect that the documents have been drawn up in accordance with the Prospectus Directive. If the authority of another State has consented to the omission of information required by the Prospectus Directive, the exemption and the reasons therefore shall be stated in the certificate.

The prospectus used by the foreign issuer in Finland shall be drawn up in a language commonly used in international financial markets or in another language approved by the Financial Supervision Authority. The Financial Supervision Authority may request that a summary of the prospectus is trans-lated into Finnish or Swedish .

XI Issuers incorporated outside the European Economic Area

4.25 The Financial Supervision Authority can under certain circumstances approve a prospectus of a non-EEA issuer that has been drawn up under rules other than the Prospectus Directive and regulation given thereunder. In such cases, the Financial Supervision Authority shall approve the prospectus provided that it meets criteria set by international regulatory bodies of supervisory authorities of the securities markets which correspond to the SMA, the Prospectus Directive and provisions issued thereunder. The applicant shall present a clarification of the conformity of the criteria as well as of whether an authority of the place of registered office of the issuer or another authority has approved the prospectus.

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XII Special powers of the competent authorities and sanctions

4.26 The Financial Supervision Authority has the explicit authority to monitor the issuance of and trading in financial instruments. The Financial Supervision Authority also has authority over issuers of publicly-traded securities, or for which admission to public trading has been sought, as well as to other parties with an obligation to publish a prospectus.

For supervisory purposes, the Financial Supervision Authority is entitled to obtain from issuers such documents and other records concerning the issuer as the Financial Supervision Authority considers necessary for the perform-ance of its responsibilities, of which documents and records the Financial Supervision Authority shall be entitled to obtain copies as deemed necessary. If necessary, the Financial Supervision Authority also has the right to summon a person to a hearing conducted for the purpose of supervising compliance with the provisions of the Securities Markets Act on, inter alia, the disclosure of information affecting the value of publicly-traded securities.

The Financial Supervision Authority can impose certain administrative penalties on parties it supervises, including an administrative fine, a public reprimand or a public warning. The Financial Supervision Authority can also initiate action in the Finnish market court .

XIII Prospectus liability

4.27 Under the SMA, anyone who offers securities to the public or applies for the admission to public trading of a security shall be under an obligation to pub-lish a prospectus relating to the securities. In addition to the offeror and the management of the issuer, the party managing the offer or the application for admission to public trading on the basis of an engagement shall also be liable for the preparation and publication of the prospectus. Pursuant to the SMA, then, an offeror of securities, as well as the manager, has an obligation to pre-pare and make public a prospectus in a securities offering.

The SMA provides that anyone who causes damage by breaching the SMA or provisions issued thereunder shall be liable to compensate the damage he has caused. In Finland, prospectus liability is generally based on negligence and assessed separately for each party participating in drawing up the pro-spectus. It has been unclear, however, to what extent an investor who has sub-scribed for shares in an offering can make claims against the issuer company, as the distribution of funds from a limited liability company to its shareholders is subject to specific regulation in the Companies Act. In this respect, prospec-tus liability has been subject to recent discussion in Finland. A legal analysis of prospectus liability was conducted in connection with the implementation of the Prospectus Directive in Finland.23 New regulation is expected regarding prospectus liability that would clarify the prospectus liability of the issuer .

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Finland 4.28

XIV Conclusion

4.28 Since the Prospectus Directive was implemented in Finland in 2005, prac-tice has largely settled in key areas covered by the new rules. Prospectuses for equity offerings largely follow, in form and content, international market practice for offering documents. The possibility of using a base prospectus has been taken advantage of mainly by issuers of debt instruments, while notifi-cations have remained quite low as the possibility of executing international offerings as private placements in Member States of the European Economic Area has been clarified by the new definitions of a public offering introduced by the Prospectus Directive.

Notes

1. The amendments were introduced by the Act on Amending the Securities Markets Act 23.6.2005/448 (Laki arvopaperimarkkinalain muuttamisesta) based on government bill 38/2005.

2. Standard on Securities Offerings and Listing 5.2.a), as amended. 3. SMA, Chapter 2, section 2. 4. SMA, Chapter 2, section 3. 5. See Art. 4(1) of the Prospectus Directive. 6. See Chapter III.2 Excluded Securities. 7. Ministry of Finance Decree 452/2005, section 7. 8. Ministry of Finance Decree 452/2005, section 8 and section 9. 9. The Act on the Financial Supervision Authority (2003/587), section 6.10. SMA, Chapter 2, section 4c.11. SMA, Chapter 2, section 2.12. SMA, Chapter 2, section 3a.13. Ministry of Finance Decree 14.7.2005/538.14. SMA, Chapter 2, section 3a.15. Decree of the Ministry of Finance 23.6.2005/452, sections 8 and 9.16. Decree of the Ministry of Finance 23.6.2005/452, section 11.17. SMA, Chapter 2, section 3d.18. SMA, Chapter 2 section 4d.19. Decree of the Ministry of Finance 23.6.2005/452, section 4. See also Chapter

VII 1., Publication of the Report.20. Decree of the Ministry of Finance 23.6.2005/452, section 2.21. SMA, Chapter 2, section 3b.22. See Chapter IX, Annual Information of the Report.23. Report of the Prospectus Liability Working Group, 18 October 2005, The

Ministry of Finance, Working Papers 10/2005.

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I Introduction 73 1 Legal framework and legislative history 73 2 Definitions 74 A Securities 74 B Offer of securities to the public or admission to trading on a regu-

lated market 74 II Competent authority 74 III Procedure of prior approval and appeal 75 1 Offer of securities to the public and admission to trading on a regulated

market 75 2 Exemptions regulation 75 A Transactions that do not constitute a public offer: private

placements 76 B Transactions that do not constitute a public offer: the quality of the

guarantor or the issuer 77 C Transactions that constitute a public offer but exempted from the

obligation to publish a prospectus 77 3 No individual exemptions 78 4 Procedure 78 IV Content and format, language and supplements of the prospectus 78 1 Content 78 2 Format 80 3 Supplements 80 4 Language 81 V Publication and advertisements 82 1 Method of publication 82 2 Advertisements relating to an offer of securities to the public 83 VI Sanctions 84 1 Right of the AMF to suspend and prohibit a transaction 84 2 Right of the AMF to control prospectuses approved by a foreign super-

visory authority when irregularities were committed in connection with a public offering made in France 84

VII Prospectus liability 85 VIII Conclusion 85

5FranceJean-Marc Desaché

Gide Loyrette Nouel

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France 5.3

I Introduction

1 Legal framework and legislative history

5.1 The Autorité des Marchés Financers (‘AMF’) is France’s financial regula-tory authority.1 The AMF, an independent public authority with legal per-sonality and financial autonomy, deals with protection of savings invested in financial instruments and all other investments which give rise to public offerings, the information provided to investors and the proper function-ing of the financial instruments markets. In the performance of its duties, the AMF applies a General Regulation (the ‘AMF General Regulation’) which is published in the Official Journal of the French Republic fol-lowing approval by order of the Minister for the Economy. The AMF may make decisions of individual scope when applying its AMF General Regulation and exercising its other competences. It may also publish instructions and recommendations to clarify interpretation of the AMF General Regulation.

5.2 In France, transposition of European Community legislation with respect to financial matters is carried out by law and decree amending the French Monetary and Financial Code (Code monétaire et financier, ‘Monetary and Financial Code’) proposed by the French Government or Parliament, and by order of the Minister for the Economy proposed by the AMF amending its AMF General Regulation.

Implementation of the Prospectus Directive and the Prospectus Regulation in France has been achieved by:

(i) a law dated 26 July 2005 known as the ‘loi Breton’,2 which amended the Monetary and Financial Code;

(ii) decrees dated 2 August 20053 and 16 May 2006,4 which amended in particular the decree dated 1 October 1998,5 containing the definition of ‘qualified investors’;

(iii) an order of the Minister for the Economy dated 1 September 2005, which amended the AMF General Regulation;

(iv) implementing measure (instruction) of the AMF General Regulation no. 2005–11 dated 13 December 2005, as amended, relating to the informa-tion to be provided in relation to a public offering.

The AMF also published a guide on the drawing-up of a registration docu-ment, dated 27 January 2006, and a specific guide on the drawing-up of a registration document for mid- and small-cap companies, dated 25 February 2008.

5.3 Obviously, all the French rules resulting from the implementation of the Prospectus Directive and Prospectus Regulation shall be construed in the light of the Committee of European Securities Regulators’ Recommendations of February 2005 (‘CESR’s Recommendations’).

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2 Definitions

5.4 In this paragraph, some remarks will be made with respect to the way in which certain key concepts have been defined under French law, i.e., securities and the offer of securities to the public or admission to trading on a regulated market.

A Securities

5.5 The Prospectus Directive provides that it applies to ‘securities’ offered to the public or admitted to trading on a regulated market. Under French law, ‘secur-ities’ subject to the rules of the Prospectus Directive include, pursuant to Article L.211-1 of the Monetary and Financial Code, in particular: (i) shares and other securities which give, or could give, direct or indirect access to the share cap-ital or voting rights and which are transferable by book entry or delivery; and (ii) debt securities, each of which represents a right against the legal entity or securitisation fund which issues them, and are transferable by book entry or delivery, with the exception of bills exchange and certificates of deposit. Key elements of these securities are the transferability and the negotiability.

B Offer of securities to the public or admission to trading on a regulated market

5.6 The purpose of the Prospectus Directive is to harmonise requirements for the drawing-up, approval and distribution of the prospectus to be published when securities are: (i) offered to the public; or (ii) admitted to trading on a regulated market situated or operating within a Member State (Art. 1(1) Dir.).

Under French law, both events were already included through a legal def-inition of public offer (appel public à l’épargne) provided for by Article L.411-1 of the Monetary and Financial Code, which therefore remains unchanged fol-lowing the implementation of the Prospectus Directive.

5.7 Article L.411-1 of the Monetary and Financial Code defines the appel public à l’épargne as either:

– an admission to trading of securities on a regulated market;6 or – the issue or sale of securities to the public by means of advertising, solic-

itation (démarchage)7 or use of a financial intermediary. Even though the French definition of ‘offer of securities to the public’ is close to the Prospectus Directive definition, they are not identical and a reform is currently underway in France to bring the French definition into line with the European definition.


5.8 The AMF is the competent authority to approve prospectuses in France where France is the home Member State for the purposes of the Prospectus Directive,

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France 5.10

i.e., pursuant to Article 2(1)(m) of the Prospectus Directive implemented by Article 212-2 of the AMF General Regulation.

For an issuer having its registered office in France, the AMF will always be the competent authority to approve a prospectus relating to equity secur-ities, or non-equity securities with a nominal value per security of less than €1,000.

The issuer of debt securities with a nominal value more than or equal to €1,000 can choose the AMF to approve its prospectus provided that its regis-tered office is in France or the transaction is carried out in France (offer and/or listing).

The AMF may agree to approve the draft prospectus at the request of the competent authority of another Member State of the European Community or a State party to the EEA agreement.

When the AMF is not the competent authority to approve the prospectus and a person or an entity wishes to offer financial instruments to the public in France, the supervisory authority having approved the prospectus may send to the AMF, at the request of the persons or entities wishing to offer financial instruments to the public in France, a certificate of approval8 and a copy of the prospectus, together with a French translation of the summary note, where appropriate.


1 Offer of securities to the public and admission to trading on a regulated market

5.9 In accordance with the Prospectus Directive, French law provides that any offer of securities to the public in France and any admission to trading of securities on a regulated market in France is subject to the drawing-up of a prospectus to be approved by the AMF or by a competent regulatory authority of another Member State, and subsequently published.

However, French law provides some exemptions from the obligation to publish a prospectus most of which derive from the implementation of the Prospectus Directive.

2 Exemptions regulation

5.10 Certain transactions may be performed in France without triggering the rules on public offers of securities either because they constitute a private place-ment (A) or because of the quality of the person who guarantees or issues them (B).

Alternatively, other transactions may constitute public offers of securities, but may benefit from an exemption from the obligation to publish a prospectus (B).

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A Transactions that do not constitute a public offer: private placements

(i) Offers above or below certain thresholds9

5.11 The following offers do not constitute public offers of securities:

– where the total consideration is less than €100,000 (or its equivalent in another currency);

– where the total consideration is more than €100,000 and less than €2.5 million (or its equivalent in another currency) if the shares offered do not represent more than fifty per cent of the share capital of the issuer;

– where the offer is addressed to investors who acquire securities for a total consideration of at least €50,000 (or its equivalent in another cur-rency) per investor, for each separate transaction; and

– where the nominal value of each of the securities offered is at least €50,000 (or its equivalent in another currency).

(ii) Offers restricted to portfolio managers (gestionnaire de portefeuille)

5.12 Resorting to advertising, solicitation or a financial intermediary does not con-stitute a public offer if the offer is restricted to persons providing portfolio management investment services for third parties (personnes fournissant le service d’investissement de gestion de portefeuille pour compte de tiers).10

(iii) Offers restricted to qualified investors

5.13 The advertisement, solicitation or applying to a financial intermediary does not constitute a public offer if it concerns an offer made to ‘qualified investors’. A qualified investor is defined as a person or entity possessing the expertise and facilities required to understand the risks inherent in transactions relating to securities.11

French law provides for a list of persons recognised as qualified investors (to the extent they are acting for their own account).12 This list includes in particular:

– credit institutions, investment firms, investment companies, collective investment schemes (organismes de placement collectif en valeurs mobilières, fonds communs de créance and sociétés civiles de place-ment immobilier);

– insurance and reinsurance companies and mutual insurance companies; – certain public institutions (such as the Trésor Public, the Banque de

France, La Poste or the Caisse des Dépôts et Consignations and the Caisse d’amortissement de la dette sociale); and

– venture capital companies.

5.14 Moreover, following their election and registration on a designated file main-tained by the AMF, the following persons may also be recognised, provided that they act for their own account, as qualified investors:13

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France 5.17

– entities fulfilling at least two of the three following criteria: (i) more than 250 employees; (ii) a total balance sheet of more than €43 million; and (iii) a turnover in excess of €50 million; and

– natural persons fulfilling at least two of the three following criteria: they (i) hold a portfolio of securities of a value exceeding €500,000; (ii) carry out an average of ten transactions per quarter over the last four quarters of a value exceeding €600 per transaction; and (iii) have held for at least one year a professional position in the financial sector requir-ing a knowledge of investment in securities.

(iv) Offers restricted to a limited circle of investors

5.15 The advertisement, solicitation or applying to a financial intermediary does not constitute a public offer if it concerns an offer made to a ‘limited circle of investors’, i.e., persons, other than qualified investors, the number of which is less than 100.

The exemptions mentioned above from (i) to (iv) are only available in rela-tion to the issue or sale of securities which qualify as a private placement (without any listing), and are not available where the securities are admitted to trading on a regulated market.

B Transactions that do not constitute a public offer: the quality of the guarantor or the issuer

5.16 French law excludes from the scope of the public offer rules the issue, the sale, as well as the admission to trading on a regulated market of securities:

– unconditionally and irrevocably guaranteed or issued by a Member State of the European Economic Area;

– issued by a public international organisation to which France belongs; – issued by the European Central Bank or by a central bank of a Member

State of the European Economic Area; or – issued by collective investment schemes or real estate collective invest-

ment schemes.

C Transactions that constitute a public offer but exempted from the obligation to publish a prospectus

5.17 Following the implementation in the AMF General Regulation (Art. 211-3 et seq.) of Article 4 of the Prospectus Directive, certain offers to the public (for example, under certain conditions, the offer of securities allotted or to be allotted in connection with a merger, a demerger or a contribution of assets) or admissions to trading (for example, the admission to trading of shares representing, over a period of twelve months, less than ten per cent of the number of shares of the same class already admitted to trading on the same regulated market) are considered as public offers of securities but benefit from an exemption from the obligation to publish a prospectus. However, for most

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exemptions, the AMF General Regulation provides for the publication of an information document the content of which is detailed in its regulation.

Whether or not the admission to trading on a French regulated market enjoys a prospectus exemption,14 the issuer shall publish a notice in an official legal gazette (Bulletin des annonces légales obligatoires (BALO))15 summa-rising the main characteristics of the operation. However, a recent Decree16 suppressed this publication as from 1 September 2008.

In case the issuer is not a French company, it shall file the French transla-tion of its constitutive documents with the Tribunal de Commerce de Paris. This formality shall soon be cancelled too.

The exemption to publish a prospectus does not prevent an issuer from complying with the other obligations attached to the listing on a regulated market, including its information requirements.17

3 No individual exemptions

5.18 In accordance with the Prospectus Directive, which only includes generally applicable exceptions and exemptions from the obligation to publish a prospectus, the AMF is not allowed to grant individual exemptions from the prohib ition to offer securities or to admit securities to trading on a regulated market without making an approved prospectus available.

4 Procedure

5.19 The AMF shall announce its decision regarding the approval of the pro-spectus to the applicant within a time limit of ten trading days after hav-ing received the application for approval (Art. 212-21 of the AMF General Regulation).

This time limit is extended to 20 trading days in case of a first public offer of securities.18

If the documents submitted by the applicant are incomplete, the AMF shall give the applicant the opportunity to supplement the application.


1 Content

5.20 Article 212-7 of the AMF General Regulation provides that the prospectus shall contain all the information which, depending on the particular nature of the issuer and of the relevant financial instruments, is necessary to en able investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor of the relevant financial instruments, as well as the rights attach-ing to such financial instruments and the conditions in which the instruments are issued. Thus, the main rule for contents of the prospectus contained in

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France 5.22

Article 5 of the Prospectus Directive is almost grammatically implemented into national law.

In this respect, Article 212-7 of the AMF General Regulation directly refers to the schedules and additional building blocks of the Prospectus Regulation (applicable in France since 1 July 2005), with regards to the form and content of prospectuses, depending on the contemplated financial in-strument. On that basis, contents of prospectuses are different whether the company issues shares, asset-backed securities, depository receipts issued over shares, debt securities or derivative securities. The AMF also applies the distinction between ‘retail’ and ‘wholesale’ debt issues, which means that requirements are different depending on whether debt securities’ denom-ination per unit amounts to more or less than €50,000. Prospectuses specific to certain issuers, notably banks, are also required the same way as in the Prospectus Directive. The AMF General Regulation also specifies that the AMF will take into account CESR’s Recommendations relating to the way the Prospectus Regulation should be applied as published in February 2005. In practice, the AMF ensures that prospectuses fully comply with these rec-ommendations, especially regarding financial information and profits or estimates.

5.21 Additionally, Article 212-8 of the AMF General Regulation provides that the prospectus shall include a summary note, except where the applica-tion for admission to trading on a regulated market concerns debt securities with a minimum denomination of €50,000 or the foreign currency equiva-lent. The summary note shall, in a brief manner (i.e., 2,500 words) and in non-technical language, convey the essential characteristics and main risks associated with the issuer, any guarantor and the relevant financial instruments.

The summary must also contain a warning to the effect that it should be read as an introduction to the prospectus and any decision to invest in the issuer should be based on consideration of the prospectus as a whole. The warning must contain a statement to the effect that the persons who presented the sum-mary note, including any translation and/or request for notification within the meaning of Article 212-42 of the AMF General Regulation may be only civilly liable where the summary note is misleading, inaccurate or inconsistent when read with other parts of the prospectus.

5.22 Article 212-11 of the AMF General Regulation provides for the possibility to incorporate information in the prospectus by reference. Reference can only be made to documents published previously or simultaneously with the pro-spectus which have been filed with or approved by the AMF. Consequently, in accordance with the system of Article 11 of the Prospectus Directive, future information cannot be incorporated by reference.19 It is not allowed to incorp-orate information by reference in the summary.

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2 Format

5.23 Article 212-9 of the AMF General Regulation provides that a prospectus can be drawn up at the discretion of the issuer, as a single document or as three separate documents. A prospectus consisting of one single document should at least contain the information referred to in Article 212–7 of the AMF General Regulation and a summary complying with Article 212–8 of the AMF General Regulation.

A prospectus consisting of three separate documents should include a base document (‘document de base’) for companies which are contemplating an initial public offering (IPO) , and for companies already listed on a regulated market a registration document (‘document de référence’), together with infor-mation relating to the issuer , a securities note with information relating to the securities to be offered or admitted to trading and a summary note. Using a prospectus containing three parts may be useful if the issuer intends to make multiple offerings of different types of securities within one year (being the term within which the approval by the competent authority of a registration document remains valid). In practice, many listed companies prepare a regis-tration document each year which either follows the format of the Prospectus Regulation or uses a more friendly annual report format with a reconciliation table.

All three parts of such a prospectus need to be approved by the AMF. However, issuers who have had continuously, during three years, their regis-tration document approved by the AMF, are authorised to merely file their registration document which is then thereafter subject to review by the AMF (Art. 212-13, II of the AMF General Regulation). In addition, as far as practi-cable, a prospectus can validly refer to a previous prospectus (twelve months) (Article 212–24 of the AMF General Regulation). If the information relating to the issuer has changed at the time of making the offering, the securities note may update the registration document (Article 212–10 of the AMF General Regulation).

Article 212-32 of the AMF General Regulation allows issuers to draw-up a ‘base prospectus’ for debt securities issued within a debt issuance pro-gramme, such as a Euro Medium Term Note (EMTN) programme. The AMF approves the base prospectus and the draft ‘final terms’ of the offering which are completed and published separately and filed with the AMF at the time of each individual offering. To the extent they comply with the terms of the base prospectus and the draft ‘final terms’ included in the base prospectus, those completed ‘final terms’ do not need to be approved by the AMF.

3 Supplements

5.24 Article 212-25-I of the AMF General Regulation provides that, in the event of a significant new factor, material mistake or inaccuracy occurring in the

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period between the approval of the prospectus and the closing of the offer of securities, the issuer or offeror should draw up a document supplementing the prospectus. This supplementary prospectus requires approval by the AMF or the competent regulatory authority of another Member State. If the AMF has previously approved the prospectus, it will also be competent to approve any supplementary prospectus. The AMF should take the decision whether or not to approve the supplementary prospectus within seven trading days after receipt of the document. Subsequently, the supplementary prospectus must be published.

Article 212-25-II of the AMF General Regulation provides that any inves-tor who has already agreed to purchase or subscribe for financial instruments before the supplement is published shall have the right, exercisable within a time limit no shorter than two trading days after the publication of the supple-ment, to withdraw his acceptance.

4 Language

5.25 The appropriate language for offering documents has always been a sen-sitive issue in France. In December 2000, a ruling of the French Conseil d’Etat,20 based on Articles 2 and 4 of law No. 94–955 of 4 August 1994 relating to the use of French language, made the use of French lan-guage mandatory for prospectuses published in France. However, a law of 20 November 2001 allowed English language documents to be re-in-troduced into the Paris market, under certain conditions and in certain circumstances.

Moreover, the AMF General Regulation provides that, as a matter of principle, prospectuses shall be drafted in the French language, but they can also, in numerous circumstances, be drawn up in a language customary in the sphere of international finance (i.e., English, as construed by the AMF). Circumstances where the prospectus may be drawn-up in English include in particular: (i) offers to the public of non-equity securities whose denomina-tion per unit amounts to at least €1,000; (ii) admissions to trading in France without any offer to the public in France; and (iii) public offerings or admis-sions to trading in one or many EU or EEA Member States other than France (where France is the home Member State). When prospectuses are drawn up in English, the AMF requires the summary to be translated into the French language, except in the case of (i) the admission to trading of non-equity secu-rities whose denomination per unit amounts to at least €50,000 (i.e., ‘wholesale securities’ under the Prospectus Directive), since no summary is required for that kind of transaction (Art. 5.2 Dir.); or (ii) when France is the home Member State and neither an offer to the public nor an admission to trading is sought in France.

Furthermore, the AMF has accepted, on the ‘professional investors market’ segment of the French regulated market which was put in place on December

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2007, the use of the English language for the listing prospectus including the summary for any type of securities offering including equity offerings. This segment is eligible for issuers applying to admit their financial instruments to trading on such market without a public offering.

It should be pointed out that when a prospectus of equity securities is pass-ported to the AMF, a French summary is required, except if the passporting relates to a listing on the ‘professional investors market’ segment.



5.26 The publication requirements mirror very closely those proposed by the Prospectus Directive (Art. 14). The prospectus is required to be made avail-able to the public through one of the following means:

(i) by insertion in at least one national newspaper or in a newspaper widely circulated in France; or

(ii) by being made available in printed form free of charge at the registered office of the issuer or of the market operator on which the securities are being admitted to trading and of the financial intermediaries placing or selling the securities, including paying agents; or

(iii) in electronic form on the issuer’s website and, if applicable, on the website of the financial intermediaries placing or selling the securities, including paying agents; or

(iv) in electronic form on the website of the regulated market where the admission to trading is being sought.

5.27 In all cases, a copy must be sent to the AMF for publication on its website. The twelve-month time limit suggested in the Prospectus Directive has not been introduced in France. Historically, the AMF has left prospectuses on its website for longer periods and intends to retain the flexibility to do so.

Where publication is made in accordance with (i) or (ii) above, the issuer is also required to publish the prospectus on its website. Such information must remain available on the internet website for at least a five-year period and the information be easily accessible to any investor (e.g., any investor must be able to find the issuer’s financial information starting his research from google).

Where publication is made under one of the means mentioned from (ii) to (iv) above, the issuer must publish either the summary of the prospectus in a newspaper (as in (i) above) or publish a notice indicating how the prospectus is being made available. Finally, where a prospectus is made available in elec-tronic form under one of the means mentioned in (iii) or (iv) above, a paper copy must be delivered free of charge to any person upon his request.

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France 5.31

2 Advertisements relating to an offer of securities to the public

5.28 There is a general prohibition to disclose information relating to a potential offer of securities to the public or listing on a regulated market until the AMF has granted its approval (‘visa’) on the prospectus. This prohibition does not apply to institutional advertising in France (i.e., advertising designed to promote a company’s brand, image or activities). The AMF has indeed ruled that it is not restricted as long as ‘it contains no indication or discussion of a placement or subscription of securities, nor any suggestion that it is con-templating a placement of securities’. Accordingly, institutional advertising in France is unrestricted as long as its objective is not to solicit or encourage the subscription or acquisition of securities. Thus, a routine communication based solely on the activity and financial results of the company and released in the ordinary course of business do not raise any problem as long as it is carried out in a manner compliant with past practice.

After the approval is granted, the release of such information relating to an offer of securities to the public or listing is authorised under certain conditions.

5.29 Articles 212-28 through 212-30 of the AMF General Regulation, implementing Article 15 of the Prospectus Directive, provides for certain rules with respect to advertisements relating to an offer of securities to the public or admission of securities to trading on a regulated market. An advertisement should be recog-nisable as such and the information contained in the advertisement should be consistent with the information included in the prospectus.

Articles 212-28 of the AMF General Regulation provides that any adver-tisement, regardless of its form and method of dissemination, that relates to a public offering of financial instruments shall be communicated to the AMF before being disseminated.

The above advertisements shall state that a prospectus has been or will be published and indicate where investors are or will be able to obtain it. They must be clearly recognisable as advertisements and contain no false or mislead-ing statements. The information contained must be consistent with the infor-mation in the prospectus, if already published, or with information required to be in the prospectus, if the prospectus is published afterwards.

5.30 A notice shall alert the public of the section of the prospectus dealing with ‘risk factors’ and, where applicable, and at the request of the AMF, the adver-tisements must contain a warning about certain exceptional characteristics of the issuer, its guarantors, if any, or the relevant financial instruments.

5.31 Article 212-29 of the AMF General Regulation states that all informa-tion about a public offering of financial instruments that is disclosed in oral or written form shall be consistent with the information given in the prospectus.

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5.32 Where no prospectus is required, material information provided by an issuer and addressed to qualified investors, or to special categories of investors, including information disclosed in the context of meetings relating to the sale or the issue of securities, shall be disclosed to all qualified investors or special categories of investors to whom the transaction is addressed. Where a pro-spectus is required to be published, such information shall be included in the prospectus or in a supplement to the prospectus in accordance with Article 212-25 of the AMF General Regulation.

VI Sanctions

1 Right of the AMF to suspend and prohibit a transaction

5.33 The AMF can suspend the transaction, for no more than ten consecutive trad-ing days each time that it has reasonable grounds to suspect that the transaction infringes its applicable laws and regulations.

The AMF may order a prohibition of the transaction:

– each time that it has reasonable grounds to suspect that an issue or a sale infringes its applicable laws and regulations; and

– each time that it states that an admission to trading on a regulated market infringes its applicable laws and regulations.

Moreover, the market regulator shall inform the AMF prior to any admis-sion of any security to trading.

2 Right of the AMF to control prospectuses approved by a foreign supervisory authority when irregularities were committed in connection with a public offering made in France

5.34 When the AMF is not the authority responsible for approving the prospec-tus and it establishes that irregularities were committed in connection with a public offering made in France by the person carrying out the transaction or the institutions responsible for its distribution, it shall inform the supervisory authority of the European Economic Area Member State which approved that prospectus of such irregularities.

If, despite the measures taken by that authority or on account of their inad-equacy, the issuer or the institutions responsible for distribution of the pro-spectus continue to violate the laws or regulations applicable thereto, the AMF may, having informed the supervisory authority and approved the document, take all necessary measures to protect the investors.

The AMF shall inform the European Commission of such measures as soon as possible.

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France 5.36

VII Prospectus liability

5.35 The Prospectus Directive clearly limits the liability for the information included in the prospectus to the issuer. The prospectus shall indeed contain a statement made by the persons responsible within the issuer to the effect that, after taking all reasonable measures for this purpose and to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that there is no material omission in that respect. This state-ment is slightly different if the prospectus is used as a financial report since the European Directive 2004/109/CE of 15 December 2004, known as the Transparency Directive, provides that the annual financial report shall com-prise a statement made by the persons responsible within the issuer relating to the true and fair view of the financial statements,21 which is added to the standard liability statement mentioned above.

However, as in the past, the AMF General Regulation requires a comfort from the listing sponsor(s) to the AMF and from the statutory auditors to the issuer.

Regarding the auditors, the AMF no longer requires a statement in the prospectus but only a comfort letter to which the issuer refers in its statement included in the prospectus. Consequently, the scope of the responsibility of the statutory auditors remains basically unchanged. In this comfort letter, the statutory auditors: (i) inform the issuer about the reports appearing in the prospectus and, where such is the case, the updates or corrections thereto; (ii) state that they reviewed the financial information and the financial statements contained in the prospectus, completed an overall reading of the prospectus and proceeded any specific verifications in accordance with the professional standards; and (iii) indicate, if any, their observations.

As in past practice, the listing sponsors keep on delivering to the AMF a letter by which they confirm that they have conducted professional due diligence and found no inaccuracies or material omissions likely to mislead investors or affect their judgement in a material respect.

Those supplementary requirements from the statutory auditors and the list-ing sponsors which are not in the Prospectus Directive nor in the Prospectus Regulation have been waived by the AMF for listing on the segment ‘profes-sional investors market’.

VIII Conclusion

5.36 The implementation of the Prospectus Directive has not substantially changed the legal regime applicable to securities offerings in France from former French law requirements. Compliance with the requirements as to the content of pro-spectuses is not substantially more onerous than under the former regime. The

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only new requirements are the publication of key figures and selected financial infor-mation, as well as the disclosure on material contracts (that were not entered into in the ordinary course of the issuer’s business). Nevertheless, this does not represent an important change for issuers and their counsel who are already familiar with such requirements as in practice such information was already disclosed in equity transactions. Other new requirements under the Prospectus Directive regarding the information on legal and arbitration proceedings, any potential significant change in the issuer’s financial and trading position since the end of the last audited finan-cial period and any administrative, management and supervisory bodies potential conflicts of interests were already commonly applied on the French market.

The regime applicable to prospectuses in France after the implementation of the Prospectus Directive shows many similarities with the former French regime and the clear and flexible approach of the AMF has indeed enabled a smooth transition for French market participants.

The French legislation on public offerings and admission to trading on regu-lated market is now very close to the European body of rules, even though some differences remain such as the definition of the ‘offer of securities to the public’ and supplementary requirements from the AMF from the statutory auditors and listing sponsors. However, France is currently undertaking a reform to adjust its definition of an ‘offer of securities to the public’ on the European definition, and the AMF has recently created the segment ‘professional investors market’ which enjoys lighter disclosure requirements including the exemption for statu-tory auditors and listing sponsors to deliver a due diligence statement.

Notes

1. The AMF was established by the Financial Security Act of 1 August 2003. It was formed from the merger of the Commission des opérations de bourse (COB), the Conseil des marchés financiers (CMF) and the Conseil de dis-cipline de la gestion financière (CDGF). The objective of this merger was to improve the efficiency of France’s financial regulatory system and to give it greater visibility.

2. Law Nos. 2005–842 of 26 July 2005 for the confidence and modernisation of the economy.

3. Decrees Nos. 2005–1006 and No. 2005–1007 dated 2 August 2005, the ob-jective of which were the codification of several decrees in the Monetary and Financial Code.

4. Decree Nos. 2006–557 dated 16 May 2006.5. Decree Nos. 98–880 dated 1 October 1998.6. Upon the proposition of the AMF, the ‘Ministre chargé de l’Economie’

decides which markets shall be considered as ‘regulated markets’ in France. Euronext Paris is the sole regulated market in France (Article L. 421-4 of the Monetary and Financial Code and ministerial order No. 2007–544 dated 12 April 2007).

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7. Solicitation for banking or financial services in France is governed by Article L. 341-1 et seq. of the Monetary and Financial Code and it may be forbidden for certain products (such as notes indexed on funds that have not been author-ised in France or notes for which the risk of loss is greater than the amount of the initial financial contribution).

8. The certificate of approval declares that the prospectus has been drawn up in accordance with the Prospectus Directive.

9. Art. L. 411-2-II-1 et seq. of the Monetary and Financial Code as supplemented by Art. 211-2 of the AMF General Regulation.

10. Article L. 411-2-II, 4°, a, of the Monetary and Financial Code.11. Article L. 411-2-II, 4°, b.12. Article D. 411-1, I, of the Monetary and Financial Code.13. Article D.411-1, II, of the Monetary and Financial Code.14. Notwithstanding any additional publications required by corporate law.15. Art. 3 of Law dated 30 January 1907.16. Decree No. 2008–258 dated 13 March 2008, published on 15 March 2008.17. As provided for in the AMF General Regulation Book II, Title II, ‘Periodic

and Ongoing Disclosure Obligations’.18. Article 212-22 of the AMF General Regulation.19. It should be noted that the possibility of incorporating future information

could increase the flexibility of making securities offerings under offering programmes, as is allowed under the US shelf registration system, which per-mits the incorporation of information contained in future filings with the SEC in advance by reference thereto in the prospectus.

20. Arrêt Géniteau.21. Article 4(2)(c) of the Transparency Directive provides that the annual financial

report shall comprise a statement made by the persons responsible within the issuer to the effect that, to the best of their knowledge, the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the consolidation taken as a whole and that the management report includes a fair review of the develop-ment and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

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I Introduction 88 II Competent authority 89 III Prior approval and appeal procedures 90 1 Procedure 90 2 Exemptions 91 IV Content and format, supplements and language of the prospectus 92 1 Content 92 2 Format 93 3 Supplements 94 4 Language 94 V Publication and advertisements 95 1 Method of publication 95 2 Advertisements 96 VI Use of a prospectus approved in other (non-EU and non-EEA) countries 97 VII Sanctions 97 VIII Prospectus liability 98 IX Rules applicable to transactions and securities not subject to the Directive


I Introduction

6.1 In Germany, the Prospectus Directive has been implemented by the Prospectus Directive Implementation Act of 22 June 2005, which introduced the Securities Prospectus Act1 (the ‘Prospectus Act’) and amended a number of existing laws, including the Securities Sales Prospectus Act (Wertpapier-Verkaufspros- pektgesetz) and the Stock Exchange Act (Börsengesetz). The Prospectus Act entered into force on 1 July 2005 .2

6.2 Prior to implementation of the Prospectus Directive, the public offering of securities was regulated by the Securities Sales Prospectus Act and the Securities Sales Prospectus Ordinance (Wertpapier-Verkaufsprospektverordnung), which

6GermanyDr Andr eas W üsthoff and Bor is Kläsener

SJ Berwin LLP

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Germany 6.5

applied to public offerings, as well as by the Stock Exchange Act and the Stock Exchange Admission Ordinance (Börsenzulassungsverordnung), which applied to admissions to trading of securities on a regulated market, setting out different rules for sales prospectuses and listing prospectuses. Additionally, the Frankfurt Stock Exchange had issued its (non-mandatory) Going Public Principles, which set forth the German market standard for the layout as well as the structure for prospectuses relating to shares or share certificates. Abolishing the Securities Sales Prospectus Ordinance and significantly reduc-ing the scope of the Securities Sales Prospectus Act and the Stock Exchange Act as well as of the Stock Exchange Admission Ordinance, the Prospectus Directive Implementation Act concentrated the legal framework for all securi-ties prospectuses in the Prospectus Act. Consequently, the Frankfurt Stock Exchange suspended its Going Public Principles as of the date the Prospectus Act came into effect.

6.3 The Prospectus Act applies to all prospectuses for securities (as defined in Article 2(1)(a) of the Prospectus Directive) to be offered publicly or to be admit-ted to trading on a regulated market. The public offering of any other securi-ties is regulated outside the Prospectus Act, namely in the Securities Sales Prospectus Act and in the Investment Act (Investmentgesetz), as described in no. 23 of this chapter .


6.4 The competent authority for the approval of prospectuses in Germany is the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, ‘BaFin’). Subject to the non-applicability of the Prospectus Act to certain kinds of investment instruments (Art. 1(2) Prospectus Act) and to the exemptions for certain kinds of securities (Art. 4 Prospectus Act), the BaFin is generally competent for:

(i) the approval of a prospectus with regard to a public offering of securities in Germany;3

(ii) the approval of a prospectus with regard to the admission to trading of securities on a regulated market in Germany;4

(iii) the approval of a prospectus with regard to a public offering of securities in another European Economic Area Member State if Germany is the home Member State;

(iv) the approval of a prospectus with regard to the admission to trading of securities on a regulated market in another European Economic Area Member State if Germany is the home Member State.

6.5 Although the Prospectus Act does not explicitly mention the competence of the BaFin for prospectuses for public offerings or admissions to trading

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outside of Germany, it is commonly agreed that Article 13 of the Prospectus Act, which sets forth the competence of the BaFin for the approval of pro-spectuses in general, is to be read in connection with Article 2, No. 13, of the Prospectus Act, which contains the definition of the home Member State. A supporting argument for this understanding can be found in Article 13(1) of the Prospectus Directive, which clearly states that the competent authority of the home Member State is responsible for the approval of prospectuses.

The Prospectus Act also does not contain an explicit provision regarding the possibility to transfer the competence for the approval of a prospectus to the competent authority of another Member State, as stated in Article 13(5) of the Prospectus Directive. It is unclear whether the German legislature meant to exclude such transfer, despite Article 13(5) being a mandatory provision of the Prospectus Directive, or whether it just did not consider it necessary to include a respective provision in the Prospectus Act, so that the BaFin would nonetheless be able to transfer the competence for the approval of a prospec-tus to another competent authority (and to accept such transfers from another authority). If an issuer is faced with a situation where there are one or more other competent authorities besides the BaFin, it should therefore approach the BaFin and the other authorities as early as possible before the submission of the prospectus in order to bring about an agreement on the competence for the approval .


1 Procedure

6.6 A public offering of securities in Germany or an admission to trading of secur-ities on a regulated market in Germany may only take place upon the publish-ing of a prospectus that has been approved by the BaFin prior to publication.5 The draft prospectus to be filed with the BaFin has to be accompanied by a cross-reference list if its structure does not entirely conform to the structure of the relevant appendix of the Prospectus Regulation. It also has to be ac-companied by a formal written application for the approval of the prospectus. The draft prospectus has to be filed in print or through the BaFin’s electronic filing facility (reporting and publishing platform, MVP). A filing by advance fax is also possible if the original documents are subsequently filed in print without delay. If the prospectus incorporates other documents by reference, those documents also have to be filed together with the draft . Even if the draft prospectus was filed through the MVP, the final approved document has to be submitted in print, signed by all applicants .

The BaFin reviews the draft prospectus for completeness, comprehensi-bility and coherence; however, it does not verify factual information. It has to inform the applicant within ten working days (including Saturdays) of the submission of the required documents about whether its review has shown

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Germany 6.8

any deficiencies regarding completeness, comprehensibility or coherence (Art. 13(1) and (3) Prospectus Act). If the offered securities are not yet admitted to trading on a regulated market of another European Economic Area Member State and the issuer has never before offered its securities to the public, the BaFin has to decide within a period of twenty working days from the submis-sion of the draft whether or not to approve the prospectus. In any other case of an offering prospectus or in the case of a prospectus for the admission to trad-ing on a regulated market, the review period is ten working days.

However, if the BaFin has advised the applicant of any deficiencies of the draft prospectus (see above), the respective review period starts over. It should be noted that the BaFin generally only takes advantage of this extension of the review period to the full extent in extraordinary cases and usually attempts to make it possible for the applicant to achieve the approval within the intended period of time. In the case of a typical prospectus for shares, it can be expected that the review period (either ten or twenty working days) is exceeded by about ten working days in total due to deficiencies of the draft prospectus that have surfaced during the review process. If the BaFin does not inform the applicant of its decision on the approval of the prospectus within the given period, the prospectus is neither deemed to have been approved nor rejected. The appli-cant would consequently have to bring a court action against the BaFin to approve the prospectus. However, such a case is apparently unprecedented .

If the prospectus makes reference to the approval by the BaFin (which is typically the case in the timetable for the offering/admission to trading), the BaFin usually requires the prospectus to expressly state that the review carried out by the BaFin in the course of the approval process is limited to complete-ness, comprehensibility or coherence and does not involve any factual review .

2 Exemptions

6.7 The various exemptions to the obligation to publish a prospectus as specified in Article 4(1) and (2) of the Prospectus Directive6 for both public offerings as well as admissions to trading are fully mirrored in Article 4(1) and (2) of the Prospectus Act, respectively.

6.8 As the Prospectus Act does not stipulate an authority of the BaFin to assess whether an exemption pursuant to Article 4(2) applies in the case of an admis-sion to trading, this decision lies with the executive board of the respective stock exchange, which has to assess in the course of the admission proc-ess whether the Prospectus Act applies to the relevant securities at all and, if so, whether an exemption pursuant to Article 4(2) of the Prospectus Act applies. This represents a significant exception to the general principle of the Prospectus Act to concentrate the authority for all matters concerning pro-spectuses for securities at the level of the BaFin. In the case of the exemptions pursuant to Article 4(2), Nos. 3 and 4, of the Prospectus Act (which correspond to Article 4(2)(c) and (d) of the Prospectus Directive), the executive board of

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the respective stock exchange is even responsible for the assessment of whether or not a submitted document contains information that is equivalent to a pro-spectus. In other words, the executive board of the stock exchange has to con-duct the same review of the document as the BaFin would do in the case of a regular prospectus .

IV Content and format, supplements and language of the prospectus

1 Content

6.9 The provisions of the Prospectus Act regarding the content of the prospec-tus conform almost literally to the respective provisions of the Prospectus Directive.7 Article 5(1) of the Prospectus Act stipulates that the prospectus shall contain, in an easily analysable and comprehensible form, such infor-mation with regard to the issuer and the securities offered to the public or admitted to trading on a regulated market that is necessary to allow the pub-lic to make an appropriate assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities, and that it shall in particular contain information concerning the issuer and the securities to be offered to the public or to be admitted to trading on a regulated market. The last sen-tence of Article 5(1) stresses that the prospectus shall be drafted in a way that facilitates its comprehension and analysis. While this statement essentially repeats the descriptive phrase at the beginning of the provision, it shows that the German legislature has given particular emphasis to the importance of the topic.

Regarding the minimum information to be provided in the prospectus, the Prospectus Act directly refers to the Prospectus Regulation (Art. 7 Pros-pectus Act).

As set forth in the corresponding provision of the Prospectus Directive (Art. 8(2)), Article 8(2) of the Prospectus Act allows for the authorisation by the BaFin to omit certain information from the prospectus that would other-wise be required pursuant to the Prospectus Act or the Prospectus Regulation. This authorisation may be given in the event that (i) disclosure of such infor-mation would be contrary to the public interest; or (ii) disclosure of such infor-mation would be seriously detrimental to the issuer, provided that the omission would not be likely to mislead the public with regard to facts and circum-stances essential for an informed assessment of the issuer, offeror, guarantor and the securities to which the prospectus relates; or (iii) such information is of minor importance for a specific offering or a specific admission to trading on a regulated market and is not such as will influence the assessment of the financial position and prospects of the issuer, offeror or guarantor. However, the BaFin is bound to actually give such an authorisation only under extraor-dinary circumstances .8

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Germany 6.11

Furthermore, the BaFin may permit to include equivalent informa-tion if certain information that would otherwise be required pursuant to the Prospectus Act or the Prospectus Regulation is inappropriate to the issuer’s sphere of activity or to the legal form of the issuer or to the securities to which the prospectus relates (Art. 8(3) Prospectus Act and Art. 8(3) Dir.). Although the provision does not elaborate on whether or not to include an explicit state-ment if equivalent information does not exist, the BaFin routinely requires the prospectus to contain negative affirmations in such cases .

6.10 The prospectus does not need to state the final offer price (nor a price range) and the number of offered securities, provided that it does state the maximum number of offered securities and the criteria or the conditions in accordance with which the final offer price and the number of offered securities will be determined (as in the case of a so-called decoupled bookbuilding) (Art. 8(1) Prospectus Act and Art. 8(1) Dir.). As soon as the price range is determined, it has to be published in the form of a supplement to the prospectus (see no. 12 of this chapter). If, in the case of a decoupled bookbuilding, the final offer price is only determined after the end of the offering period, it has to be pub-lished in accordance with general publication requirements for price-sensitive information, but not in the form of a supplement, as the obligation to publish a supplement only applies until the end of the offering period. For a brief period in 2006, the BaFin went so far as to allow issuers to even omit the maxi-mum number of offered securities from the published prospectus (‘enhanced decoupled bookbuilding’ ). However, currently, decoupled bookbuilding is only allowed in a more restricted manner. Issuers are required to state both the maximum number of offered securities and that the final number will be decided by resolution of the issuer’s shareholders (‘modified enhanced de-coupled bookbuilding’). As is the case with all supplements to the prospectus, shareholders may withdraw their acceptance of the offering or subscription within a period of two working days after the publication of the supplement (i.e., in this case of the final offer price) .

Information may also be incorporated into the prospectus by reference (Art. 11 Prospectus Act and Art. 11 Dir.) (see no. 40 of Chapter 1, vol. I, of this book), for which specific approval by the BaFin is not required .

2 Format

6.11 A prospectus may be drawn up either in the form of a single document or as several separate documents consisting of a registration document, a securities note and a summary note (Art. 12 Prospectus Act and Art. 12 Dir.). In the latter case, the registration document shall contain information relating to the issuer and the securities note shall contain information relating to the securities to be offered or admitted to trading .

Based on the requirement that the summary shall be drawn up in a brief and generally understandable manner (Art. 5(2) Prospectus Act), the BaFin

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does not permit any cross references to be used in the summary, and it disen-courages the use of definitions.

Alternatively, in the case of certain types of non-equity securities, a base prospectus may be published in the form of a single document (Art. 6 Prospectus Act and Art. 5(4) Dir.). The main advantage of a base prospectus is that the issuer or offeror may omit the final terms of the offering from the prospectus and does not have to publish such final terms until the first day of the offering (or, in certain cases, even later). Unlike in the case of a decoupled offering (see no. 10 of this chapter), the determination of the final terms of the offering is as such not regarded as information to be published as a supple-ment to the prospectus, and their publication does therefore not require prior approval by the BaFin .

3 Supplements

6.12 The Prospectus Act has implemented the provisions on supplements to the prospectus as set forth by the Prospectus Directive (Art. 16 Prospectus Act and Art. 16 Dir.), requiring the publication of any significant new circumstance or material inaccuracy relating to the information included in the prospectus that could affect the assessment of the securities and that arises or is noted in the period between the approval of the prospectus and the closing of the offering or the beginning of trading. The summary (and any translations thereof) must also be supplemented.

Prior to publication, the draft supplement has to be filed for approval by the BaFin, which has to decide on the approval within a period of seven working days. However, the BaFin generally attempts to approve the supplement within a significantly shorter period of time.

As provided for by the Prospectus Directive, investors have the right to withdraw their acceptances within a period of two working days fol-lowing the publication of the supplement. The Prospectus Act furthermore stipulates that the acceptance can only be withdrawn if the respective pur-chase orders have not yet been fulfilled. It also states an obligation to prom-inently place a special notice in the supplement informing about the right of withdrawal .

4 Language

6.13 In the case of a public offering of securities in Germany or an admission to trading of securities on a regulated market in Germany, the language of the prospectus (and the supplements, if any) must be German if the issuer’s home Member State is Germany. The Prospectus Act (Art. 19) only pro-vides for a right to publish the prospectus in another language customary in the sphere of international finance (i.e., in English) if a public offering or admission to trading takes place in another Member State of the European Economic Area. This is also the case if a public offering or admission to

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Germany 6.14

trading takes place in Germany at the same time, in which case an add-itional summary has to be drawn up in the German language. Although the Prospectus Act provides for the discretion of the BaFin to permit the publication of a non-German language prospectus even in the case where there is no public offering or admission to trading outside of Germany, the BaFin is bound to exercise its discretion in a very restrictive way,9 which it has actually done in the past, despite a continued strong interest of issuers and underwriters in using English language prospectuses. Issuers wishing to publish a prospectus for a public offering in Germany in the English language therefore usually resort to a parallel public offering in another Member State of the European Economic Area, taking advantage of the passporting regime .



6.14 The approved prospectus shall be made available to the public at the latest one working day prior to the beginning of the offering to the public or the admis-sion to trading. In the case of an initial public offering of a class of shares not already admitted to trading on a regulated market that is to be admitted to trading for the first time, the offering may not end sooner than six working days after the publication of the prospectus .10

The prospectus has to be published in either of the following ways:

(i) by insertion in one or more newspapers circulated throughout, or widely circulated in, the Member States in which the offering to the public is made or the admission to trading is sought; or

(ii) in a printed form to be made available, free of charge, to the public at the offices of the market on which the securities are being admitted to trading, or at the registered office of the issuer or at the offices of the financial intermediaries placing or selling the securities, including paying agents; or

(iii) in an electronic form on the issuer’s website or, if applicable, on the website of the financial intermediaries placing or selling the securities, including paying agents; or

(iv) in an electronic form on the website of the regulated market where the admission to trading is sought.

If the prospectus is published on the issuer’s website, printed copies must be made available to the public upon demand and free of charge. Advertisements for a public offering must include a notice stating where copies of the prospectus may be obtained free of charge. This is usually done by providing a link to the issuer’s website on which the prospectus is published as well as the fax numbers of the financial intermediaries where the prospectus can be obtained in print .

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The prospectus, the base prospectus and the registration document, as may be the case, are valid for a public offering or an application for admission to trading for a period of twelve months following their publication, provided they are updated or supplemented as required .

2 Advertisements

6.15 The German legislature has implemented the provisions of the Prospectus Directive regarding advertisements into the Prospectus Act in a literal sense. Prior to this implementation, the relationship between a prospectus and infor-mation regarding the offering being disseminated outside of the prospectus was not regulated. Under the new regime, any type of advertisement relating to an offering of securities to the public or to an admission to trading is subject to the requirements set forth in Article 15 of the Prospectus Act. Compliance with such requirements is supervised by the BaFin; its supervision being restricted to the German territory.11

6.16 If the public offering or the admission to trading is subject to the prospectus requirement pursuant to the Prospectus Act, any advertisement must comply with the following requirements: (i) the advertisement shall state that a prospectus has been or will be published and where investors can obtain it; (ii) the advertisement must be clearly recognisable as such; (iii) the informa-tion contained in the advertisement shall not be inaccurate and/or misleading; and (iv) the information shall be consistent with the information contained in the prospectus. In accordance with the Prospectus Directive, the Prospectus Act stipulates two general principles with respect to advertisements. First, all information concerning the offering to the public or the admission to trading on a regulated market disclosed in oral or written form, even if not for advertising purposes, shall be consistent with that contained in the prospectus. Second, material information regarding the issuer or the offeror directed to qualified investors or special categories of investors shall be included in the prospectus or in a supplement to the prospectus. If no prospectus is required under the Prospectus Act, such material information must be disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed.

6.17 Details regarding the circulation of advertisements are set forth in the Prospectus Regulation (see Annex II to this book). If the BaFin becomes aware of an infringement of the requirements applying to advertisements pursuant to the Prospectus Act, it can suspend advertisements for up to ten consecutive days. This suspension period includes Sundays and public holidays.12 According to the Prospectus Act, an approval of advertisements by the BaFin prior to their circulation is not required. The BaFin can prohibit advertisements that could be misleading with respect to the extent of the review and approval of a pro-spectus by the BaFin .

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6.18 In line with the Prospectus Directive, the Prospectus Act stipulates that the BaFin can approve a prospectus drawn up by an issuer in accordance with the applicable laws of a state that is not a Member State of the European Economic Area for an offering of securities to the public or for admission to trading, if (i) the prospectus has been drawn up in accordance with international stand-ards set by international securities supervision bodies, including the standards set by the International Organisation of Securities Commissions (IOSCO) and (ii) the information requirements, also with respect to financial information, are equivalent to the requirements pursuant to the Prospectus Act (Art. 20 Prospectus Act). The Prospectus Act furthermore provides for the Federal Ministry of Finance to issue a regulation setting forth how to determine whether or not such information requirements are in fact equivalent; however, such a regulation has not been issued so far.

With respect to the possibility of using a prospectus approved in another Member State of the European Economic Area in Germany, the German legislature has implemented the Prospectus Directive in Articles 17–19 of the Prospectus Act. Such a prospectus does not require BaFin approval if the BaFin is notified of the approval by the competent authority of the other Member State and if a German translation of the summary is included in the prospectus .

VII Sanctions

6.19 The powers of the BaFin listed in Article 21 of the Prospectus Act do not fully correspond to the powers set forth in Article 21(3) and (4) of the Prospectus Directive. The powers relating to the trading of securities on a regulated market pursuant to Articles 21(3)(g) and (h) and 21(4) of the Prospectus Directive, such as suspension and prohibition of trading, are not granted to the BaFin by virtue of the Prospectus Act. The reason for this can be seen in the particu-larities of the structure and supervision of the German stock exchanges. The powers that are equivalent to the powers mentioned in Articles 21(3)(g) and (h) and 21(4) of the Prospectus Directive are already contained in the German Stock Exchange Act.13 But, according to the German Stock Exchange Act, the executive board of the stock exchange and not the BaFin is authorised to suspend or prohibit trading and to stipulate post-admission information disclosure requirements. It is questionable if such division of powers between the BaFin and the stock exchanges is in line with the Prospectus Directive, which requires that each Member State designates a central competent admin-istrative authority responsible for carrying the obligations provided for in the Prospectus Directive .

6.20 In the event of a violation of any provision of the Prospectus Act, the BaFin can impose an administrative fine ranging from €50,000 to €500,000. The Prospectus Act does not, however, provide for criminal sanctions .

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6.21 The liability for a prospectus is not regulated in the Prospectus Act, but in the Stock Exchange Act.14 With respect to prospectuses for the admission of securities to trading on a regulated market, the provisions on prospectus liability stipulated in the Stock Exchange Act apply directly. With respect to prospectuses for a public offering of securities, the provisions on prospectus liability stipulated in the Stock Exchange Act apply indirectly, through a cross reference stipulated in Article 13 of the Securities Sales Prospectus Act, although otherwise this Act only applies to offers of securities not represented by securities within the meaning of the Prospectus Act (e.g., units in closed ended funds) .15

6.22 According to the Prospectus Act, the prospectus must state the names and functions of the persons assuming responsibility for the prospectus; in the case of legal entities the prospectus must state their respective names and corporate seats. In addition, the prospectus must contain declarations by the persons assuming responsibility for the prospectus that, according to their knowledge, the information contained in the prospectus is correct and that no material in-formation is omitted . The Prospectus Act requires the financial intermediaries that, together with the issuer, apply for admission to trading, to also assume responsibility for the prospectus . The persons assuming responsibility for the prospectus, as well as the persons that are to be regarded as the originators of the prospectus,16 are jointly liable to investors who have acquired securities on the basis of a prospectus containing incorrect or incomplete information of a material nature . Such investors can demand the re-purchase of the secur ities they have acquired within six months following the admission to trading or the offering against payment of the acquisition price plus customary expenses, unless the persons responsible for the prospectus can prove that the investors did not acquire the securities on the basis of the prospectus. A prospectus liability claim cannot be based solely on the summary or a translation thereof, unless the summary is misleading, inaccurate or inconsistent when read together with other parts of the prospectus .


6.23 The Prospectus Act only deals with the subject matter of the Prospectus Directive. Prospectus requirements applying to investment instruments other than securities within the meaning of the Prospectus Act are regulated in other Acts. The Securities Sales Prospectus Act stipulates a prospectus requirement for shares granting the investor a participation in a company’s profits, for shares in assets held or managed by the issuer or a third party on its own behalf for the account of a third party (trust assets), or for units in other closed-ended funds that are offered to the public and that are not represented

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by securities within the meaning of the Prospectus Act. According to the Investment Act, a prospectus is required for investment funds offered by an investment company .

X Conclusion

6.24 The German legislature closely followed, to a large extent, the wording (and even the structure) of the Prospectus Directive when implementing the Prospectus Directive. However, Germany has not fully complied with the requirement to designate a central competent administrative authority responsible for carry-ing out the obligations provided for in the Prospectus Directive. Some of the powers, which must according to the Prospectus Directive be granted to the central competent administrative authority (being the BaFin for Germany), are vested with the executive board of the respective stock exchange and not with the BaFin, such as the authority to assess whether or not an exemption applies regarding the obligation to publish a prospectus for the admission to trading of securities on a regulated market (see no. 8 of this chapter) as well as the authority to impose certain sanctions for violations of the Prospectus Act (see no. 19 of this chapter) .

Notes

1. Gesetz über die Erstellung, Billigung und Veröffentlichung des Prospekts, der beim öffentlichen Angebot von Wertpapieren oder bei der Zulassung von Wertpapieren zum Handel an einem organisierten Markt zu veröffentlichen ist (Wertpapierprospektgesetz).

2. Art. 4 (3), 20(3), 27(5) and 28(2) already entered into force on 28 June 2005. 3. Art. 3(1) in connection with Art. 13 Prospectus Act. 4. Section 3(3) in connection with section 13 Prospectus Act. 5. Art. 3(1) and (3) in connection with Art. 13 Prospectus Act. 6. See nos. 13 and 15 of Chapter 1, vol. I, of this book. 7. Article 5(1) Prospectus Act corresponds to Article 5(1) together with the first

sentence of Article 5(2) Dir. 8. Government’s statement of reasons (Regierungsbegründung) concern-

ing the Prospectus Directive Implementation Act, Parliamentary Paper (Bundestagsdrucksache) 15/4999, p. 33.

9. Government’s statement of reasons (Regierungsbegründung) the Prospectus Directive Implementation Act, Parliamentary Paper (Bundestagsdrucksache) 15/4999, p. 37.

10. Art. 14 Prospectus Act and Art. 14 Dir. All prospectuses approved by the BaFin are also available in PDF format on the BaFin’s website.

11. Government’s statement of reasons (Regierungsbegründung) concern-ing the Prospectus Directive Implementation Act, Parliamentary Paper (Bundestagsdrucksache) 15/4999, p. 36.

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12. Government’s statement of reasons (Regierungsbegründung) concern-ing the Prospectus Directive Implementation Act, Parliamentary Paper (Bundestagsdrucksache) 15/4999, p. 36.

13. This explanation is stated in the Government’s statement of reasons (Regierungsbegründung) concerning the Prospectus Directive Implemen-tation Act, Parliamentary Paper (Bundestagsdrucksache) 15/4999, p. 39.

14. Arts. 44–7 Stock Exchange Act (Börsengesetz).15. It would have been more obvious to include such cross-reference in the

Prospectus Act, but the German legislature decided on a different approach.16. Art. 44(1), sentence 1, No. 2 Stock Exchange Act (Börsengesetz) – this provision

covers persons with a ‘personal economic interest’ in the securities offer, such as the parent company or a major shareholder who intends to sell his shares.

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I Introduction 101 II The competent authority 102 III Prior approval procedure and appeal 102 1 Approval 102 2 Meaning of ‘offer to the public’ 104 3 Obligation to publish a prospectus 104 4 Exemptions from the prospectus requirement 105 IV Content, responsibility, language and supplements 106 1 General content requirements 106 2 Responsibility 106 3 Format 107 4 Detailed requirements 108 5 Prospectus supplements 108 6 Language 108 V Publication and advertisements 109 1 Publication method 109 2 Advertisements 109 VI Use of prospectuses approved in non-EU and non-EEA countries 110 VII Sanctions 110 VIII Prospectus liability 111 IX Listing rules 111 X Private companies 111

I Introduction

7.1 Prior to the implementation of the Prospectus Directive in Ireland, the regime with regard to the publication of prospectuses and offers of shares to the public was convoluted, inconsistent and at times inadequate with conflicting domestic and European legislation. The implementation of the Prospectus Directive has brought far greater certainty to the legal framework in respect of an offer of shares to the public.

7IrelandMichael A. Gr eene and Cian Mccourt

A&L Goodbody

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The Prospectus Directive, and the existing prospectus regime in Ireland, was implemented into Irish law by:

(i) the Investment Funds, Companies and Miscellaneous Provisions Act 2005 (the ‘2005 Act’) which made amendments to the Irish Companies Acts and provided for the implementation of the Prospectus Directive by statutory instrument and the creation of supplementary rules by the designated competent authority;

(ii) the Prospectus (Directive 2003/71/EC) Regulations 2005 (the ‘Pros-pectus Regulations’), which implemented the Prospectus Directive and Commission Regulation 809/2004 in Ireland;

(iii) the Prospectus Rules issued by the Irish Financial Services Regulatory Authority (the ‘Prospectus Rules’), which set out procedural and administrative requirements and guidance in respect of the Prospectus Regulations;

(iv) the direct effect of Commission Regulation 809/2004 (the ‘Commission Regulations’); and

(v) the adoption by the Irish Financial Services Regulatory Authority of the Committee of European Securities Regulators’ (‘CESR’) Recomm -endations for the consistent implementation of the Commission Regu-lations (the ‘CESR Recommendations’). The Prospectus Rules state that in considering whether the Prospectus Regulations have been complied with the Irish Financial Services Regulatory Authority will take into account whether a person has complied with the CESR Recommendations .

II The competent authority

7.2 The Irish Financial Services Regulatory Authority (also known as the Financial Regulator or IFSRA) was designated as the competent authority for the purposes of the 2005 Act and the Prospectus Regulations. The Financial Regulator is the Irish regulatory authority for the financial services industry. It is a distinct component of the Central Bank and Financial Services Authority of Ireland, with clearly defined regulatory responsibilities and has the power under legislation to make various rules, policies and codes affecting the finan-cial services industry from both a consumer and industry perspective .

III Prior approval procedure and appeal

1 Approval

7.3 Part 7 of the Prospectus Regulations provides for approval of prospectuses by the Financial Regulator.

Pursuant to its powers under the Prospectus Regulations, the Financial Regulator delegated a number of its tasks arising under the Prospectus

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Regulations to the Irish Stock Exchange Limited (‘ISE’). Pursuant to this dele-gation, the ISE is the authority that reviews and comments on a draft prospec-tus submitted for approval.

In order to have a prospectus approved, therefore, an applicant must submit a draft of the prospectus to the ISE with any other information and documents the ISE may require in accordance with the Prospectus Rules. In particular, the Prospectus Rules state that the following draft documents and information must be included with any prospectus application:

(i) the prospectus; (ii) if requested, where the order of items in the prospectus does not coincide

with the order in the schedules and building blocks in the Commission Regulations, a cross-reference list identifying the pages where each item can be found in the prospectus;

(iii) a letter identifying any items from the schedules and building blocks in the Commission Regulations that have not been included in the prospec-tus because they are not applicable;

(iv) if the applicant is requesting the Financial Regulator to authorise the omission of information from the prospectus, the information required by Rule 4.9 of the Prospectus Rules. In addition, the applicant is required to ensure that where such a request is not submitted to the ISE at the time of the initial submission of the prospectus for approval, the request is submitted to the ISE at least five business days before the end of the prospectus review process referred to below;

(v) the formal notice (in final draft form) stating how the prospectus will be made available and where it can be obtained by the public;

(vi) if the applicant wishes the Financial Regulator to provide a competent authority of a relevant host Member State with a certificate of approval in accordance with Regulation 56 of the Prospectus Regulations where the prospectus is approved (i.e., passporting of the prospectus), a letter requesting the Financial Regulator to provide this notification; and

(vii) any other information that the Financial Regulator and/or ISE may require .

The ISE must notify the applicant of its decision within ten working days or, in the case of a new issuer, twenty working days from the first working day after the date on which the application is received. If, however, the ISE requests spe-cific documents or information from the applicant in writing, this period starts to run the day after the applicant complies with the request. If the ISE fails to give a decision to approve a prospectus within the time limits, this failure is not deemed to constitute approval by it of the prospectus .

7.4 The ISE will scrutinise the prospectus submitted to it to assess whether or not it has been drawn up in accordance with the Prospectus Regulations and the Commission Regulation. On completion of its scrutiny of a prospectus, the ISE

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will issue a recommendation to the Financial Regulator as to whether or not the prospectus has been drawn up in accordance with the Prospectus Regulation and the Commission Regulation. On consideration of this recommendation the Financial Regulator will decide whether to approve the prospectus and will communicate its decision in writing to the registered office of the relevant person or their nominated agent. The Financial Regulator may not approve a prospectus unless it is satisfied that the applicable requirements imposed by it under the Prospectus Regulations and any other provision of Irish prospectus law have been complied with.

In the event that agreement between the applicant and the ISE cannot be reached in relation to whether or not a prospectus submitted to the ISE is drawn up in accordance with the Prospectus Regulations and the Commission Regulation, the applicant may refer the matter directly, in writing, to the Financial Regulator .

On a prospectus being approved, the applicant must file the prospectus with the Financial Regulator immediately and, if the Company is an Irish company, with the Companies Registration Office within fourteen days of the publica-tion of the prospectus .

7.5 If the Financial Regulator refuses to approve a prospectus, the applicant has twenty-eight days from that decision to appeal such decision to the Irish High Court .

2 Meaning of ‘offer to the public’

7.6 Prior to the implementation of the Prospectus Directive, there was no clear meaning of ‘offer to the public’. The Companies Act 1963 made reference to it without properly defining it, while the European Communities Transferable Securities and Stock Exchange Regulations 1992 made no reference to it at all while providing some guidance as to certain offers that could be excluded from the requirement to publish a prospectus.

The introduction, therefore, of the Prospectus Directive and the repeal of the pre-existing prospectus laws clarified matters greatly. Accordingly, all ‘offers of securities to the public’ or ‘public offers’ must be accompanied by a prospectus (unless such offer falls within an exemption from publishing a pro-spectus). The Financial Regulator did, however, clarify the definition to make clear that it does not apply to a communication in connection with trading on a regulated market or any other market operated by an approved stock exchange (being an exchange prescribed as such by the Irish Government) .

3 Obligation to publish a prospectus

7.7 Regulation 12 of the Prospectus Regulations states that, subject to the exemp-tions set out in Regulations 9 and 10, no offer of securities to the public may be made in Ireland without the publication of a prospectus in respect of that

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Ireland 7.8

offer, unless, where Ireland is the home Member State, the prospectus has been approved by the Financial Regulator or, where Ireland is a host Member State, the prospectus has been approved by the competent authority of the relevant home Member State, pursuant to the relevant implementing legislation in that state, of the Prospectus Directive .

In addition, Regulation 13 states that no securities shall be admitted to trading on a regulated market in Ireland (being the ISE’s main market) without the publication of a prospectus unless, where Ireland is the home Member State, the prospectus has been approved by the Financial Regulator or, where Ireland is a host Member State, the prospectus has been approved by the com-petent authority of the relevant home Member State, pursuant to the relevant implementing legislation in that state, of the Prospectus Directive.

4 Exemptions from the prospectus requirement

7.8 There are a number of exemptions, set out in Regulations 9 and 10 of the Prospectus Regulations, from the requirement to publish a prospectus where there is an offer of securities to the public. These exemptions, which can be classified as relating to the offer or the securities, are as follows:

(i) an offer of securities addressed solely to qualified investors; (ii) an offer of securities addressed to fewer than 100 persons, other than

qualified investors; (iii) an offer of securities addressed to investors where the minimum consid-

eration payable pursuant to the offer is at least €50,000 per investor, for each separate offer;

(iv) an offer of securities whose denomination per unit amounts to at least €50,000;

(v) an offer of securities where the offer expressly limits the amount of the total consideration for the offer to less than €100,000;

(vi) securities that are not in fact being ‘offered’ because existing sharehold-ers receive them by way of an existing right, for example (1) shares issued in substitution for outstanding shares of the same class; (2) an issuance of new shares that does not involve an increase in the company’s share capital; and (3) shares offered free of charge to existing shareholders and dividends paid in the form of shares of the same class as those for which the dividends are paid;

(vii) securities offered in connection with certain transactions, such as take-overs or mergers, provided a document is made available containing information the Financial Regulator regards as ‘equivalent’ to that con-tained in a prospectus; importantly an ‘equivalent document’ is not a prospectus for the purposes of the Prospectus Directive and is therefore not eligible for the European passport; and

(viii) securities offered to employees or former employees which are already admitted to trading on a regulated market .

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7.9 Regulation 13 lists the exemptions from the obligation to publish a prospectus where there is an admission to trading of securities on a regulated market in Ireland. The exempt securities listed in Regulation 13 fall into two main cat-egories: those that mirror the securities which are exempt in a public offering (see (vi) to (viii) above); and additional exemptions which companies may use in connection with the exemption for offerings, including:

(i) an exemption for the admission of shares representing, over a twelve-month period, less than ten per cent of shares of the same class already admitted to trading on the same regulated market;

(ii) an exemption for shares resulting from the conversion, exchange or sub-stitution of other securities or the exercise of rights (i.e., warrants, options or convertibles, so long as it does not result in a public offering); and

(iii) an exemption that permits the admission of securities where there is no prospectus to passport into Ireland but the offeror nevertheless meets certain conditions (e.g., the securities have been traded on another regu-lated market for at least eighteen months) .

IV Content, responsibility, language and supplements

1 General content requirements

7.10 Part 5 of the Prospectus Regulations, and in particular Regulation 19, provides that a prospectus must contain all information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to the securities. The prospectus must be consistent and pre-sented in an easily analysable and comprehensible form, contain information concerning the issuer and the securities to be offered or admitted to trading and must contain the minimum information required under the Commission Regulations. A prospectus must also contain a summary which briefly and in non-technical language conveys the essential characteristics and risks associ-ated with the issuer, any guarantor and the securities. Unlike other jurisdic-tions (such as the UK), the ISE does not set a limit of 2,500 words on the summary .

2 Responsibility

7.11 Schedule 1 of the Prospectus Regulations sets out those persons who are responsible for a prospectus. The responsible persons for prospectuses relating to equity securities are:

(i) the issuer; (ii) all persons that are directors of the issuer when the prospectus is pub-

lished and those that have authorised themselves to be named as direct-ors or having agreed to become directors of the issuer;

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(iii) each person that accepts, and is stated in the prospectus as accepting, responsibility for the prospectus;

(iv) the offeror of the securities (if there is an offer to the public and the offeror is not the issuer);

(v) the person seeking admission of the securities (if not the issuer); and (vi) every other person that has authorised the contents of the prospectus

(other than the Financial Regulator).

The issuer is not responsible if it does not authorise the application for admis-sion to trading or the offer to the public. In addition, directors are not respon-sible when a prospectus is published without their consent and they have given reasonable public notice that it has been issued without their knowledge or consent.

7.12 Certain persons (for example, experts) can state in the prospectus that they accept responsibility only for specific parts of the prospectus or only in spe-cific respects, and such persons must give written confirmation regarding statements made by them in the prospectus. In these written confirmations such person will state that they are only responsible to the extent specified and only if the material in question is included in (or substantially in) the form and context to which they had agreed .

3 Format

7.13 The Prospectus Regulations provide for two primary options as regards the for-mat of a prospectus. It may either be a single document (including a summary) or a tripartite prospectus consisting of a registration document, a secur ities note and a summary note . The registration document contains the required information in respect of the issuer and the securities note details the required information as regards the securities to be offered and/or admitted to trading.

Where separate documents are used, where a person has a registration document approved by the Financial Regulator, it need only draw up the securities note and the summary when its securities are offered to the public or admitted to trading. The registration document once approved is valid for twelve months provided it is updated with a supplement where required . If the tripartite document approach is taken, the securities note must provide the information that is normally included in the registration document if there has been a material change or recent developments which could affect investors’ assessments since the last updated registration document or supplement was approved.

7.14 In addition to the two options above, where the securities in question are non-equity securities being issued under an offering programme or in a continu-ous or repeated manner, a base prospectus can be filed with the Financial Regulator and supplemented as necessary with information on the issuer and/or the relevant securities .

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4 Detailed requirements

7.15 The detailed prospectus content requirements are as set out in the Commission Regulations and, more particularly, the Annexes to those Regulations.

The Prospectus Regulations also provide for the incorporation of informa-tion by reference. Only information that has been approved by the Financial Regulator or filed with it in accordance with the issuer’s annual information requirements (see below) may be incorporated in this way. The information included in this manner must be the latest available to the issuer and the pro-spectus summary may not incorporate information by reference. Where infor-mation is incorporated by reference, a cross-reference list must be provided in order to enable investors to easily identify specific items of information .

7.16 Where Ireland acts as a home Member State, issuers whose securities are admitted to trading are required, pursuant to the Prospectus Rules, to file an annual update with the ISE within twenty working days of the publication of the issuer’s annual financial statements. This statement must contain or refer to all information published or made available to the public over the previ-ous twelve months pursuant to obligations imposed on the issuer by securities regulators in the EEA and elsewhere. In order to satisfy this requirement, the Financial Regulator permits issuers to file a list stating where this information can be obtained, indicating the date of its publication and filing, and including a short description. Appropriate disclaimers are usually included to ensure that investors do not rely on information which may be out of date. The Financial Regulator maintains a page on its website (www.financialregulator.ie) where annual information updated can be obtained .

5 Prospectus supplements

7.17 Regulation 51 of the Prospectus Regulations requires the publication of a sup-plement to a prospectus if any significant new fact arises or material mistake or inaccuracy in the prospectus comes to light which is capable of affecting the assessment of the securities, and which arises or is noted from the time of approval of the prospectus to either the close of the offering or the commence-ment of trading, as the case may be. The same approval process as applies for a prospectus will apply to a supplement save that the ISE is required to review and comment on the supplement within seven working days . It is an implied term of every prospectus that where a person has agreed to purchase or sub-scribe for the securities concerned (or agreed to do so) before a supplement is published, that person has two working days to withdraw their application or acceptances by notice in writing .

6 Language

7.18 Rule 6 of the prospectus Rules states that the Financial Regulator will accept a prospectus drawn up in either the Irish or English languages. It will also require

www.financialregulator.ie

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an Irish or English translation of the summary of a non-Financial Regulator approved prospectus if the issuer is making a public offering of securities or seeking an admission to trading .


1 Publication method

7.19 Pursuant to Regulation 45 of the Prospectus Regulations, a prospectus is deemed to have been made available to the public when published either:

(i) in one or more newspapers circulated throughout, or widely circulated in, Ireland or in the Member States in which the offering is made or the admission to trading sought;

(ii) in a printed form to be made available, free of charge, to the public at the offices of the market on which the securities are being admitted to trading or at the issuer’s registered office and at the offices of the finan-cial intermediaries placing or selling the securities, including paying agents;

(iii) in electronic form on the issuer’s website and, if applicable, on the web-site of financial intermediaries placing or selling the securities, includ-ing paying agents; or

(iv) in electronic form on the website of the regulated market where admis-sion to trading is being sought; or

(v) on the Financial Regulator’s website (the prospectus will be published in this manner by the Financial Regulator unless the issuer requests otherwise) .

Pursuant to Regulation 46, where the securities being offered are equity secur-ities, the issuer must publish a notice stating how the prospectus has been made available to the public . Where the prospectus has been made available in electronic form, the issuer must send a paper copy to any investor, free of charge, on request .

Prospectuses approved by the Financial Regulator are available on the Approved Prospectuses page of its website .

2 Advertisements

7.20 Part 12 of, and Schedule 2 to, the Prospectus Regulations deal with advertise-ments relating to a public offer or an admission to trading. Advertisements that comply with Part 12 and Schedule 2 are not considered to be a prospectus.

Schedule 12 sets out the principles that apply to any advertisements. These include principles that advertisements must state that a prospectus has been or will be published and indicate where it can be obtained, that information in the advertisement must be consistent with that contained in the prospectus and

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that where material information is given to select investors, it must be given to all investors .

VI Use of prospectuses approved in non-EU and non-EEA countries

7.21 Where Ireland is the home Member State for a third-country issuer (not being an issuer from a Member State), the Prospectus Regulations permit the Financial Regulator to approve a prospectus drawn up by a third-party issuer in accordance with its national law provided the prospectus has been drawn up in accordance with appropriate international standards (including IOSCO disclosure standards) and the information requirements including information of a financial nature are equivalent to the requirements under the Prospectus Directive.

Pursuant to Regulation 55 of the Prospectus Regulations, a prospectus approved by the competent authority of a Home Member State (other than Ireland) shall be deemed valid in Ireland provided a notification is given to the Financial Regulator by that other authority which notification must include (1) a certificate of approval (certifying compliance with the Prospectus Directive); (2) a copy of the prospectus as approved; and (3) if requested by the Financial Regulator, a translation of the summary of the prospectus into the Irish or English languages .

VII Sanctions

7.22 Pursuant to Part 15 of the Prospectus Regulations, the Financial Regulator has the authority and power to appoint a person (an assessor) to determine if any relevant provision of the Prospectus Regulations, the Prospectus Rules or any other provision enacted in accordance with the Prospectus Directive has been breached. The assessor has the power to call witnesses and seek documentation and a right to apply to the High Court to seek cooperation from any persons being assessed. If an adverse finding is made against a person, the Financial Regulator may impose such of the following administrative sanctions as it may determine:

(i) a private caution or reprimand; (ii) a public caution or reprimand; (iii) a direction to pay a fine to the Financial Regulator (maximum

€2,500,000); (iv) a direction disqualifying that person from being involved in the manage-

ment of any regulated financial service provider; (v) a direction to cease committing the contravention; or (vi) a direction to pay all or part of the Financial Regulator’s costs.

Any sanctions may be appealed by a person to the Irish High Court .

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7.23 The 2005 Act provides for civil liability for misstatement in a prospectus and for criminal sanctions where there has been a breach of the 2005 Act or the Prospectus Regulations. Criminal penalties include fines of up to €1,000,000 and/or a maximum jail sentence of five years.

Where a person suffers loss on the faith of a prospectus where the loss may have been sustained by reason of an untrue statement or any omission of infor-mation required by the Prospectus Directive and the Commission Regulations, section 41 of the 2005 Act provides that compensation must be paid by:

(i) the issuer of the prospectus; (ii) the offeror of the securities to which the prospectus relates; (iii) every person who has sought the admission of the securities to which the

prospectus relates to a regulated market; (iv) the guarantor of the issue; (v) every director of the issuer; (vi) every promoter of the issuer; and (vii) every person who has authorised the issue of the prospectus (not includ-

ing the Financial Regulator) .

7.24 Persons cannot be liable solely on the basis of the summary unless it is inac-curate, misleading or inconsistent when read together with other parts of the prospectus. Further, a person cannot be liable if they can prove that: they did not consent to the issue of the prospectus (or withdrew consent before publica-tion or acquisition of any securities by an investor); or they have reasonable grounds to believe that the information in the prospectus was true or that the omission causing loss was rightly omitted .

IX Listing rules

7.25 The Prospectus Directive only harmonises rules in relation to prospectuses. The listing rules of the ISE contain a number of obligations which are super-equivalent to the requirements of the Prospectus Directive. In particular, a company listed on the ISE’s main market must comply with super-equivalent eligibility requirements, continuing obligations and rules in relation to spon-sors. This means that a prospectus which is passported into Ireland is no guar-antee of admission to the ISE’s main market, as the issuer must still satisfy the super-equivalent listing rules requirements .

X Private companies

7.26 Section 21 of the Companies (Amendment) Act 1983 and section 33 of the Companies Act 1963 prohibit the offering of shares or debentures ‘to the

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public’ by an Irish private company. If a company wishes to offer shares to the public, the issuing company must be a public limited company prior to the offering in question, or the private company should re-register as such prior to such offering. If this is not possible, the private company will need to consider if the offering is being made to ‘the public’ .

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I Introduction 114 II Main provisions of the Prospectus Directive and the Prospectus

Regulation implemented within the Italian legal system before the Implementation Decree 115

1 The EU passport 115 2 Annual update document 116 3 Incorporation of information by reference 116 4 Form of prospectuses 117 III The Implementation Decree in brief 118 IV The regulatory framework in Italy 119 V Range of application 119 1 New definitions of EC financial instruments, public offering of

financial products, home Member State and host Member State 119

VI Exemptions from the obligation to publish a prospectus 123 VII Approval of the prospectus by the competent authority and the

related drafting procedures 124 1 Prohibition on publishing a prospectus without the prior

authorisation of Consob 124 2 Right of Consob to transfer the approval of the

prospectus to another competent authority of an EU State 125

3 Procedure for the approval of the prospectus 126 4 Prospectus composed of several documents 126 VIII Contents of the prospectus and language 127 1 Contents of the prospectus 127 2 Language 127 IX Revocation of subscriptions 128 X Advertisements 128 XI Prospectus liability 129 XII Financial statements of the issuer 130 1 Offence of falsification of the prospectus 131

8ItalyF rancesco Gianni, Andr ea Marani and Gaudiana Giust i

Gianni, Origoni, Grippo & Partners

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I Introduction

8.1 The deadline for implementing the Prospectus Directive and the Prospectus Regulation expired on 1 July 2005. However, like other Member States, Italy has not yet complied with such deadlines.

8.2 On 28 December 2005, the Italian Parliament adopted Law No. 262 (the ‘Law on Savings’),1 as subsequently modified, setting forth Provisions for protecting savings and regulating the financial markets. In particular, Article 12 of the Law on Savings, among others, authorised the Government to adopt a legisla-tive decree, within eighteen months as of the date of its entering into force, in order to implement the provisions of the Prospectus Directive.

8.3 On 28 March 2007, the Government, availing itself of such authorisation, issued Legislative Decree No. 51 (the ‘Implementation Decree’), by means of which the Prospectus Directive was finally implemented within the Italian legal system.

8.4 In the period between the expiry of the deadline for implementing the Prospectus Directive and the Prospectus Regulation, the general principles of the EC system, as implemented in Italy, have been applied.

8.5 In particular, according to Italian case law,2 unconditional directives having a sufficiently clear content – but which have not been implemented yet by Member States within the prescribed deadlines – are considered immediately applicable (so-called ‘self-executing directives’, i.e., those directives which do not require further actions for their implementation).

8.6 Based on this principle, the competent authority of a Member State that has not formally implemented the Prospectus Directive will not be able to exempt itself from the application of the principles set by the same Prospectus Directive and the Prospectus Regulation, if so requested, even if different national rules apply.

8.7 In view of the above principle, the Commissione Nazionale per le Società e la Borsa (i.e., the independent administrative authority responsible for protecting investors, efficiency, transparency and the development of the Italian securi-ties market) (‘Consob’), as of 5 July 2005, has applied the prospectus schemes provided by the Prospectus Regulation. In fact, the contents of such schemes appeared to be detailed and unconditional.3

8.8 Moreover, while awaiting the necessary amendments to the most important Italian legislative Act governing financial matters (i.e., Legislative Decree no. 58 of 24 February 1998, the ‘TUF’ or ‘Unified Financial Act’), in order to ensure the consistency of the TUF with the provisions of the Prospectus Directive, Consob has approved some amendments to Consob Prospectus Regulation No. 11971 regarding issuers (the ‘RE’ or ‘Issuer Regulation’) in order to partially implement the Prospectus Directive, with respect to those

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matters on which Consob has been already vested with regulatory authority in accordance with Article 94, paragraph 3, Article 95 and Article 100, paragraph 2, of the TUF.4

8.9 In particular, the provisions of the Prospectus Regulation and those regard-ing the EU passport and the exemptions from the obligation to publish a prospectus (with respect to the latter aspect, see Paragraph VI hereinafter) have been implemented.

8.10 Conversely, some provisions of the Prospectus Directive were not implemented under the Issuer Regulation, such as those relating to: (i) some definitions, among which, in particular, we note those of financial instruments, public offerings and qualified investors (Art. 2 of the Prospectus Directive); (ii) the possibility to revoke the subscriptions in the event of publication of a supple-ment to the prospectus or of the omission from the same of the definitive offer price and the amount of financial instruments offered (Art. 8(1) and Art. 16(2) Dir.); (iii) civil liability for the information provided in a prospectus (Art. 6 Dir.); (iv) sanctions (Art. 25 Dir.); and (v) advertisements in the context of offering financial products to the public (Art. 15 Dir.).

II Main provisions of the Prospectus Directive and the Prospectus Regulation implemented within the Italian legal system before the Implementation Decree

8.11 The main provisions of the Prospectus Directive and the Prospectus Regulation directly applied within the Italian legal system, before the Implementation Decree, are analysed below.

1 The EU passport

8.12 The provisions of Article 17 of the Prospectus Directive regarding the EU passport have been reflected in Articles 10 and 10bis of the Issuer Regulation, which have been issued to implement the provisions of Article 98 of the TUF, which sets forth, among others, that Consob is responsible for ruling, by means of regulations, the recognition in Italy of prospectuses approved, in compli-ance with EC rules, by the competent authorities of other Member States.

8.13 The principle of the EU passport provides that a prospectus, which has obtained the approval of the competent authority of the home Member State of the issuer, does not require further authorisation by the competent authority of the host Member State, provided that the latter receives an approval certificate issued by the first authority.

8.14 In the event that Italy is the home Member State, Article 10 of the Issuer Regulation provides that prospectuses and any related supplements – the publi-cation of which has been authorised by Consob – are valid for public offerings

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or admission to negotiations in any other Member State. In such a case, upon request by the issuer or the offeror, Consob must transmit, within three days of such request or, in the event that the request is presented together with the draft of the prospectus, within one business day of issuance of authorisation, to the competent authorities of the Member States in which the offering has to be carried out, the following documentation: (i) a certificate attesting that the pro-spectus complies with the provisions of the Prospectus Regulation; (ii) a copy of the prospectus; and (iii) if requested by such authorities, a translation of the summary box in the official language of the Member State in which the offer-ing is made. It is specified, moreover, that the issuer, the offeror or the other persons responsible for drafting the prospectus shall assume responsibility for the truthfulness of the translation and its compliance with the version approved by Consob.

8.15 Conversely, in accordance with Article 10bis of the Issuer Regulation, in the event that the offering is made in Italy as the host Member State, subject to the prior approval of the competent authority of the originating Member State, the prospectus can be published in Italy subject to the condition that Consob receives the documentation mentioned under (i), (ii) and (iii) above.

8.16 However, the intervention of Consob on the Issuer Regulation gave rise to numerous uncertainties with respect to the applicability of some other provi-sions (contained in the same Issuer Regulation) to public offerings made in Italy as host Member State on the basis of a duly passported prospectus (e.g., Arts. 13 and 14 of the Issuer Regulation regarding the execution of the offering and its fairness).

2 Annual update document

8.17 In implementing Article 10 of the Prospectus Directive, Article 54 of the Issuer Regulation provides that issuers shall be obliged to file with Consob, at least on an annual basis, a document that contains or refers to all the information regu-larly published by the same, whether inside or outside the European Union, during the preceding twelve months.

8.18 In the event that the annual update document refers to information already published or made available to the public during the previous twelve months, the same must indicate: (i) the nature of such information; (ii) the date of pub-lication; and (iii) the place where such information is available.

8.19 The document shall be filed with Consob after the publication of the annual financial statements.

3 Incorporation of information by reference

8.20 According to what is provided for by the twenty-ninth recital of the Prospectus Directive, the right granted to issuers to incorporate information into the

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Italy 8.25

prospectus by reference to documents containing the information to be dis-closed in a prospectus – provided that such documents have been previously filed with the competent authority or approved by it – should simplify the procedure for drafting a prospectus and reduce the costs for issuers, without compromising the protection of investors.

8.21 Article 8 of the Issuer Regulation has effectively allowed the incorporation of information by reference in an offering or listing prospectus, in the event that the documents to be incorporated have previously been filed with the compe-tent authority or approved by it. In particular, in the event that the prospectus is composed of several documents or contains information, included by refer-ence, such documents and the information composing it may be published and distributed severally, providing that such documents are made available to the public, free of charge, alternatively: (i) by means of an announcement in one or more newspapers of national or widespread circulation; (ii) in printed form at the registered office of the issuer and at the offices of the intermediaries responsible for placement or of those operating on their behalf; or (iii) in elec-tronic form on the website of the issuer and, where applicable, on the website of the intermediaries responsible for the placement. In this case, the issuer, the offeror and the responsible intermediaries or those operating on their behalf shall deliver a copy of the prospectus in printed form, free of charge, to those requesting it. The foregoing are the same procedures established by the Issuer Regulation for the publication of the prospectus itself.

8.22 The possibility of incorporating documents/information by reference makes the drafting of a prospectus less burdensome as Consob also allows the incor-poration by reference into Italian prospectuses even if the documents are writ-ten in English.

4 Form of prospectuses

8.23 Article 5 of the Issuer Regulation establishes that the prospectus for financial instruments, other than the units or shares of open UCITS,5 shall be drawn up in accordance with the provisions of the Prospectus Regulation. Furthermore, in the event that the offering is carried out exclusively within Italy as home Member State, the prospectus shall be drawn up in Italian.

8.24 Pursuant to Article 5 of the Issuer Regulation, the indications as to the price and amount of the financial products – if not known at the moment of publica-tion of the prospectus – may be inserted into supplementary announcements published pursuant to Article 9 of the Issuer Regulation.6 In this case, the prospectus must indicate the criteria and conditions on the basis of which the price and amount of the financial products shall be determined or, in the case of the price, the maximum price.

8.25 Article 5 of the Issuer Regulation also provides that the prospectus must con-tain a summary drawn up in non-technical language and compliant with the

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terms of Article 24 of the Prospectus Regulation. The summary shall briefly present the essential risks and characteristics associated with the issuer, the possible guarantors and the financial instruments, in the language in which the prospectus was originally drafted, and shall contain a warning, according to which: (i) it shall be read as an introduction to the prospectus; (ii) any deci-sion to invest in the financial instruments shall be based on an examination by the investor of the complete prospectus; (iii) whenever an action is proposed before a judicial authority regarding the information contained in the prospec-tus, the appealing investor may be obliged to bear the translation costs for the prospectus before the start of the proceedings; and (iv) the civil liability shall only be borne by the persons who have drafted the summary and its transla-tion, if any, only when such summary is misleading, imprecise or inconsistent, if read together with the other parts of the prospectus.

8.26 Article 5 of the Issuer Regulation also provides that the placement manager shall attest, through a declaration attached to the notice, that the prospectus has been drawn up in accordance with the Prospectus Regulation and contains the significant information to the aims of its preparation or of which it has become aware during its investigations. The issuer or the offeror and the other parties responsible for the prospectus shall sign the declaration of liability set forth by the Prospectus Regulation to be reproduced as an attachment to the notice.7

8.27 In exceptional cases, and without prejudice to the observance of the objectives indicated by Article 94, second paragraph, of the TUF8 and by the EC regula-tions, Article 5 of the Issuer Regulation allows Consob to exclude the publica-tion of some of the information established in the scheme of the prospectuses upon request of the offeror, the issuer and the placement manager.

8.28 Article 5 of the Issuer Regulation also provides that, when certain information prescribed in the schemes of the prospectus is not appropriate in light of the activity of the issuer or its legal form or for the financial products being the object of the prospectus, the same prospectus must contain equivalent infor-mation, where available.

8.29 Finally, Article 5 of the Issuer Regulation provides that, if the offering relates to financial products for which suitable schemes are not provided, Consob shall establish the contents of the prospectus at the request of the offeror.

III The Implementation Decree in brief

8.30 With the Implementation Decree the Government has intervened by modi-fying the TUF in the following areas: (i) definitions (Art. 1 and Art. 93bis TUF); (ii) regulations relating to the offering prospectus and the approval of the prospectus (Art. 94 TUF and Art. 94bis TUF); (iii) provisions for imple-mentation (Art. 95 TUF); (iv) revocation of purchases and subscriptions (Art.

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95bis TUF); (v) financial statements of the issuer (Art. 96 TUF); (vi) disclosure obligations (Art. 97 TUF); (vii) validity of the prospectus (Art. 98 TUF); (viii) issuers from non-EU countries (Art. 98bis TUF); (ix) offering to the public of units or shares in open-ended UCITSs (Art. 98ter TUF); (x) provisions for implementation relating to the preceding point; (xi) disclosure obligations (Art. 98quinquies TUF); (xii) powers of Consob (Art. 99 TUF); (xiii) cases of non-applicability of the provisions to the public offering (Art. 100 TUF); (xiv) provisions relating to the circulation of financial products (Art. 100bis TUF); (xv) announcement activities (Art. 101 TUF); (xvi) admission to trading of EU financial instruments (Art. 113 TUF); (xvii) admission to trading of units or shares in open UCITSs (Art. 113bis TUF); (xviii) sanctions in the case of violation of the provisions relating to the public offering of financial products or to admission to trading (Art. 191 TUF and Art. 191bis TUF).

8.31 Hereinafter the principal provisions of the Implementation Decree, as imple-mented in the TUF, are illustrated.

IV The regulatory framework in Italy

8.32 The regulatory framework consists of: (i) the Prospectus Directive and the Prospectus Regulation; (ii) document CESR/05-054-b of 10 February 2005, containing recommendations for the consistent application of the regulations mentioned above; (iii) the TUF, as modified by the Implementation Decree; and (iv) the Issuer Regulation.

V Range of application

1 New definitions of EC financial instruments, public offering of financial products, home Member State and host Member State

8.33 Prior to the issuance of the Implementation Decree, Article 2 of the Issuer Regulation introduced only the definitions of: (i) home Member State; (ii) host Member State; (iii) equity securities; and (iv) instruments other than equity securities, in so far as the same were not defined within the TUF but their area of application was limited to the regulations on offerings of investments. Following the issuance of the Implementation Decree, in addition to the above definitions, the new definitions contained in the TUF shall henceforth be applied.

8.34 For the purposes of applying the provisions on public subscription and sale offerings, it is useful to illustrate the following definitions.

8.35 In accordance with Article 3 of the Implementation Decree, EC financial instruments are: (i) equity securities tradable in the capital markets; (ii) bonds, government securities and other debt securities tradable in the capital markets; (iii) any other normally traded security which allows the instruments described

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in (i) and (ii) to be purchased through subscription or exchange or which entail cash settlement, determined with regard to EC financial instruments, curren-cies, interest rates or yields, commodities or other indices or measures, as well as units of closed-end funds.

8.36 Financial instruments are further subdivided into equity securities and instru-ments other than equity securities. In particular, equity securities are defined as: equity and other tradable instruments equivalent to shares in companies as well as any other type of tradable EC financial instrument which assigns the right to purchase the above instruments through conversion or the exercise of rights provided that the latter instruments are issued by the issuer of the underlying shares or by an entity belonging to the group of the same issuer. Conversely, instruments which differ from equity securities consist of all the financial instruments which are not included within the definition of equity securities. According to the twelfth recital of the Prospectus Directive and the Prospectus Regulation, certificates representing shares and convertible bonds should be considered as instruments differing from equity securities.

8.37 For the purpose of being qualified as EC financial instruments and as equity securities, the instruments described above must be negotiable. The notion does not only refer to the suitability of such instument to be traded on regulated markets. Neither Article 3 of the Implementation Decree nor the Prospectus Directive contain any reference to the circumstances in which the instrument is admitted to listing on a market or meets the requirements for obtaining such a listing. Conversely the reference is made to the broadest notion of cap-ital markets, which includes – but does not coincide with – that of regulated markets. As a consequence, even unlisted instruments may be EC financial instruments provided that they are negotiable.

8.38 Thus, the negotiability of an instrument must be understood as its suitability to be the object of transactions, and hence of transfer, on capital markets.9 The notion of capital markets is not identified in the regulations, but is gath-ered from practice. Since, unlike regulated markets, the capital market is not a defined market, nor even less regulated as such, it is not required that the instruments must be transferred according to certain rules or procedures (which instead are applied to negotiations carried out in official markets). The important aspect is that the instrument is normally and generally transferable, and suitable to be the object of transactions.

8.39 Article 2 of the Implementation Decree replaces the definition of investment solicitation10 with that of the public offering of financial products, being ‘any notice aimed at persons, in any form and with any means, which presents suf-ficient information on the conditions of the offering and the financial products offered, in order to allow an investor to decide whether or not to purchase or subscribe such financial products, including the placement through authorised subjects’.

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8.40 The notion of public offering, as implemented in Italy, is broader than that of EC law (Art. 2(1) Dir.) since this latter notion refers only to financial instruments and not to financial products. Indeed, the financial instruments are a species of the genus financial products. Financial products are defined by Article 1, lett. u) of the TUF as: financial instruments and any other form of investment having a financial nature. Public offers of financial products other than EC financial instruments cannot benefit by the so-called European passport.

8.41 Unlike the provisions in force before the issuance of the Implementation Decree, financial announcements no longer constitute a form of public offer-ing of financial products. In order to be considered as such, the aforementioned announcements must present sufficient information on the conditions of the offering and the financial products offered in order to allow an investor to decide whether or not to acquire or subscribe such financial products.

8.42 Article 2 of the Implementation Decree specifies that the placement of finan-cial products through financial intermediaries is also subject to the publication of the prospectus, unless the placement falls within one of the cases expressly exempted from such publication. This provision is intended to prevent cases of elusion of the obligation of a prospectus in the event of subsequent sale to the retail market of securities originally placed with institutional investors, for which the obligation in question does not apply. In this respect, the Law on Savings introduced Article 100bis of the TUF, which provides that an offer-ing is also made to the public when the financial products – which have been the object of a placement reserved to professional investors in Italy or abroad – are systematically resold over the following twelve months to subjects other than professional investors, and the same resale does not fall under any of the exemptions established by Article 100 of the TUF. Furthermore, in the above event, when no prospectus has been published, the purchaser who is acting for purposes other than business or professional activity may assert the null-ity of the contract, and the authorised subjects, who carried out the resale of the financial products, shall be liable for the damages caused. This is clearly an explicit restriction on resale in the secondary market carried out in a way which does not comply with the provisions relating to the prospectus. The adoption of such a provision has been suggested by the scandals that occurred in Italy in the past in the context of certain offers (one may recall the offer-ing of notes issued by the Argentinean State in 2001, by Cirio-del Monte in 2002 and by Parmalat in 2003, which ended up in the portfolios of many non-professional investors, even though the offering had originally been carried out without the preparation of any prospectus, taking advantage of the exemption relating only to offers addressed to professional investors).

8.43 Pursuant to the old regime, in order to qualify an activity of offering to the public of financial products as an investment solicitation, it was required that the offering, the invitation to an offering or the promotional messages had

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to be aimed at the sale or subscription of financial products.11 Conversely, in order to qualify an offering, pursuant to the new regime, as an offering to the public of financial products, it is now sufficient that the notices include at least core information about the conditions of the offering and the financial products in order to allow the investor to decide whether or not to acquire or underwrite such financial products; the specific purposes which are pursued by the offering are no longer relevant.

8.44 In accordance with Article 3 of the Implementation Decree, home Member State means:

1) for all the European Community issuers of Community financial instru-ments not mentioned in point (2) below, the Member Sate in which the issuer has its registered office;

2) for the issuance of EC financial instruments other than equity secur-ities, whose unit nominal value is at least €1,000, and for the issuance of EC financial instruments other than the equity securities which give the right to acquire negotiable securities or to receive an amount in cash through the conversion or exercise of rights given by the same securities, provided that the issuer of EC financial instruments other than equity securities is not the issuer of the underlying EC financial instruments or an entity belonging to the group of such issuer, the Member State in which the issuer has its registered office, or in which the EC financial instruments have been or are intended to be admitted to trading on a reg-ulated market or in which the EC financial instruments are offered to the public at the choice of the issuer, the offeror or the person requesting the admission of the same, as the case may be. The same regime shall apply to EC financial instruments other than equity securities denominated in a currency other than Euro, provided that the value of such a minimum denomination is approximately equivalent to €1,000;

3) for all issuers of EC financial instruments which are not mentioned in point 2) with their registered office in a third country, the Member State in which the EC financial instruments are intended to be offered to the public for the first time after the date of coming into force of the Prospectus Directive, or in which the first request has been presented for admission to trading on a regulated market at the choice of the issuer, the offeror or the person requesting admission, as the case may be, except-ing a subsequent choice by the issuers having their registered office in a third country, if the home Member State has not been determined by their choice.

8.45 Finally, pursuant to Article 3 of the Implementation Decree, ‘host Member State’ is the Member State in which a public offering is made or the admission to trading of EC financial instruments is requested, if it is different from the home Member State.

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VI Exemptions from the obligation to publish a prospectus

8.46 The new Article 100 of the TUF, as modified by the Implementation Decree, provides that the provisions regarding the offering to the public of financial products such as, among others, the obligation to publish a prospectus, shall not apply to offerings:

(a) aimed only at qualified investors, including individuals and small- and medium-sized enterprises, as defined by Consob based on the criteria set forth by EC provisions;

(b) aimed at a number of subjects not exceeding that indicated by Consob; (c) of an overall amount not exceeding that indicated by Consob; (d) regarding financial instruments other than equity securities issued by

or which benefit by the unconditional and irrevocable guarantee of a Member State or issued by public international entities to which one or more Member States belong;

(e) regarding financial instruments issued by the European Central Bank or by the national central banks of Member States;

(f) regarding financial instruments continuously or constantly issued by banks, provided that such instruments: (i) are not subordinated, convert-ible or exchangeable; (ii) do not give the right to subscribe or purchase other types of financial instruments and are not linked to a derivative instrument; (iii) represent, by way of certificates, reimbursable debts; (iv) are covered by a system of deposit guarantees, pursuant to Articles 96 to 96quater of Legislative Decree No. 385 of 1 September 1993;

(g) regarding money market instruments issued by banks with a maturity of less than twelve months.

8.47 With regard to the notion of qualified investor under letter (a) above, Consob decided not to carry out a review of such definition as adopted under the old provisions of Article 100 of the TUF. Such a choice was justified by: (i) the need to evaluate whether it was appropriate to create two distinct notions of qualified investor, between intermediation activities and activities of public offerings of financial products; as well as (ii) the circumstance of weighing the possibility of authorising certain individuals and small- and medium-sized enterprises to be considered, at their request, as qualified investors. Furthermore, Consob was not authorised to establish the register of individ-uals and small- and medium-sized enterprises considered as qualified invest-ors, provided by Article 2(3) of the Prospectus Directive, which was open to consultation by all issuers.

8.48 The notion of qualified investor contained in Article 2(1) of the Prospectus Directive does not coincide with that of Article 31 of Consob Regulation No. 11522 on intermediaries,12 as subsequently amended (the ‘Intermediary Regulation’). First, according to the Intermediary Regulation, in order to be considered as qualified investors, individuals must hold the professional

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requirements established by the TUF for those individuals carrying out admin-istrative, management and control functions within intermediation companies. Conversely, Article 2(2) of the Prospectus Directive establishes that subject to a request by an individual and provided that there is a reciprocal recognition between Member States, in order to be considered as a qualified investor such individual must fulfil at least one of the following criteria: (i) to have car-ried out transactions of significant size on the security market with an average frequency of at least ten transactions per quarter over the last four quarters; (ii) the size of the portfolio of financial instruments must exceed €500,000; or (iii) to work or have worked for at least a year in the financial sector carrying out duties which require a knowledge of financial instruments investments.

8.49 Article 2(1) of the Prospectus Directive defines small- and medium-sized enterprises as companies, which on the basis of their most recent annual or consolidated balance sheet satisfy at least two of the three following criteria: (i) an average number of employees over the course of the financial year less than 250; (ii) total balance sheet assets not exceeding €43,000,000; or (iii) net annual revenue not exceeding €50,000. Upon request of such companies, and provided that there is reciprocal recognition between the Member States, small- and medium-sized companies may be considered as qualified investors. The Intermediary Regulation does not contain an analogous provision.

8.50 In granting to Consob the regulatory power to define which subjects should be considered as qualified investors, Article 100 of the TUF expressly provides that such a classification shall be made in observance of EC principles. For the purposes of the new notion of qualified investor, it shall thus be neces-sary to wait till Consob issues the relevant regulation. Pending the issuance of the same, doubts will arise regarding the applicability of the old definition of qualified investor, provided that there is an EC definition which could be considered sufficiently detailed.

8.51 Article 100 of the TUF also grants to Consob the right to issue regulations which identify further types of offerings to the public of financial products exempted from the obligation of publishing a prospectus.13

8.52 Pursuant to Article 100 of the TUF, for the purpose of making use of the EU passport, the issuer or offeror which carries out one of the offerings described in items c), d) and e) above may also decide to draft a prospectus.

VII Approval of the prospectus by the competent authority and the related drafting procedures

1 Prohibition on publishing a prospectus without the prior authorisation of Consob

8.53 The thirty-seventh recital of the Prospectus Directive underlines that the exist-ence of several competent authorities in each Member State may generate

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superfluous costs and lead to an overlap of responsibility without supplemen-tary advantages. To this end, it seems useful for each Member State to desig-nate a single competent authority for the approval of prospectuses, and for the assumption of the responsibilities regarding the supervision on observance of the Prospectus Directive. In compliance with the terms of Article 21 of the Prospectus Directive, Article 1 of the Implementation Decree establishes that Consob is the competent national authority for the purposes of executing the tasks established by the Prospectus Directive.

8.54 Consob is indeed obliged to verify the completeness of the prospectus as well as its consistency, it being understood that the issuer remains responsible for the truthfulness of the information contained in the prospectus.

8.55 Article 13(2) of the Prospectus Directive expressly provides that failure by the competent authority to reply to a demand for authorisation to publish a prospectus shall not constitute an approval of the request. Conversely, prior to the issuance of the Implementation Decree, Article 94 of the TUF estab-lished that in the case of requests regarding listed financial products or finan-cial products circulated among the public in a significant manner, Consob could indicate supplementary information to be inserted in the prospectus and specific publication procedures to the offerors within fifteen days as of the presentation of the request; after this deadline the so-called ‘principle of silent consent’ would apply, and, as a consequence, the prospectus could be published.14 Article 94bis of the TUF now expressly establishes that failure by Consob to issue a decision within the established deadlines shall not con-stitute approval of the prospectus. The above provision thus introduces a pro-cedure in which silence of the Consob is equivalent neither to an approval, nor to a rejection, giving rise to a rather unusual qualification of administrative behaviour.

2 Right of Consob to transfer the approval of the prospectus to another competent authority of an EU state

8.56 Article 94bis also grants to Consob the power to demand, in the case of offers relating to EC financial instruments, the approval of the prospectus by a com-petent authority of another Member State. The issuer and the offeror have only the right to receive, within three business days as of the adoption of the deci-sion, the relevant notice by Consob. The new terms for the approval of the pro-spectus shall start again from that date onwards.

8.57 Article 95 of the TUF provides that Consob shall regulate the provisions for the implementation of the section relating to the public offering of financial products with regard to the characteristics of the financial products, the issuers and the markets. The regulation also establishes in particular the conditions for the transfer of approval of a prospectus to the competent authority of another Member State.

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3 Procedure for the approval of the prospectus

8.58 Article 94bis of the TUF provides that Consob shall approve the prospectus within the terms established by Consob in observance with the terms of the EC provisions. Indeed, the time frame established by Article 13 of the Prospectus Directive has already been formally implemented by Article 7 of the Issuer Regulation, which provides that the authorisation to publish the prospectus shall be issued: (i) within twenty business days as of the date of receipt of a request for an authorisation, in the event that the investment solicitation (i.e., the offering to the public of financial products) relates to financial instruments which are neither listed nor diffused among the public in a significant man-ner; (ii) within ten business days as of the date of receipt of the request for an authorisation, in the event that the investment solicitation (i.e., the offering to the public of financial products) relates to financial instruments which are neither listed nor diffused among the public in a significant manner, issued by an issuer which already has financial instruments admitted to trading on a regulated market, or which has offered such instruments to the public.

8.59 Article 7 of the Issuer Regulation also provides that the request shall take effect from the moment on which the same is received by Consob. However, if the notice is incomplete, Consob shall inform the issuer or the offeror within ten working days, and the request shall take effect from the date on which Consob receives the missing documents or elements.

8.60 According to Article 7 of the Issuer Regulation, in the event that, due to rea-sonable grounds, Consob considers that further information is necessary, it shall inform the issuer or the offeror within twenty business days, in the case described under (i) and within ten business days in relation to the deadline described under (ii). The new deadlines shall run from the moment on which Consob receives such information.

4 Prospectus composed of several documents

8.61 In accordance with Articles 5 and 12 of the Prospectus Directive,15 Article 94 of the TUF allows issuers and offerors to draft the prospectus in unitary form or as distinct documents. In the latter case, the prospectus shall be composed of: (i) a registration document that contains the information about the issuer or the offeror; (ii) an informative note about the financial instruments and prod-ucts offered; and (iii) a summary containing the risks and essential character-istics of the offering. The obligation to edit the summary shall be particularly significant for cross-border offers, in so far as it could be the only document translated into the language of the host Member State in which the transaction is carried out.

8.62 Article 6 of the Issuer Regulation introduces an authorisation procedure relat-ing to the registration document. In fact, the issuer is allowed to request a

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separate authorisation to Consob for the publication of the registration docu-ment. The informative note on the financial instruments, together with the summary, may be subject to authorisation, if the issuer decides to carry out the offering or the admission to trading on a regulated market. In the case of a pro-spectus having a tripartite format, the registration document shall have a valid-ity of twelve months starting from the date of authorisation to its publication.

VIII Contents of the prospectus and language

1 Contents of the prospectus

8.63 Article 94 of the TUF establishes that the prospectus must contain, in an easily analysable and comprehensible form, all the information which, according to the features of the issuer and the financial products offered, are necessary to allow investors to make an informed judgment on the assets, financial situation and financial results and prospects of the issuer and the guarantors, as well as on the financial products and the related rights.

2 Language

8.64 Article 19 of the Prospectus Directive provides that, in the case of an offering to the public of financial products or of listing carried out: (i) only in the home Member State, the prospectus must be drawn up in a language accepted by the competent authority of the home Member State; (ii) in one or more host states, excluding the home Member State, the prospectus must be drafted either in a language accepted by every competent authority of the host states or in a language commonly used in the world of international finance, at the choice of the issuer, the offeror or the person requesting the admission. The compe-tent authorities of each host State shall further only have the right to request the translation of the summary; (iii) in the home Member State and in other Member States, the prospectus must be drawn up in a language accepted by the competent authority of the home Member State and must be made available either in a language accepted by the competent authorities of the host Member State or in a language commonly used in the world of international finance at the choice of the issuer, the offeror or the person requesting the admission. The competent authorities of each host Member State shall furthermore only have the right to request the translation of the summary box.

8.65 Article 95 of the TUF also establishes that Consob shall regulate the imple-mentation provisions for the section relating to the public offering of financial products with regard to the characteristics of the financial products, the issuers and the markets. The regulation shall also, in particular, establish the language to be used in the prospectus.

8.66 Pending the issuance of the above regulations, the current language regime for prospectuses is contained in Articles 10 and 10bis of the Issuer Regulation. In

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the event that an investment solicitation (i.e., the offering to the public of finan-cial products) is carried out outside Italy and the same is the home Member State, the prospectus may be drafted in a language commonly used in the world of international finance. The competent authority of the host Member State may request a translation of the summary box into the official language of that State.

8.67 Conversely, by way of example, in the event that the offering to the public of financial products is intended to be made in Italy as the host Member State, the prospectus approved by the authority of the home Member State may be drafted either in Italian or in a language commonly used in the world of inter-national finance at the choice of the issuer or of the offeror. In this latter case, the summary box shall be translated into Italian.

IX Revocation of subscriptions

8.68 Article 95bis of the TUF, by implementing Article 16 of the Prospectus Directive and Article 8(1) of the Prospectus Directive, introduces two cases of revocability of the subscriptions, in case of: (i) failure to include into the pro-spectus the final offer price and the amount of financial products offered; (ii) publication of a supplement to the prospectus. In the event under point (i) such a right may be exercised within the deadline indicated by the prospectus, and in any case within a deadline of no less than two business days as of when the final offer price and the amount of financial products offered to the public is submitted. In the event of publication of the supplement to the prospectus, the revocation may be exercised within the deadline indicated by the same, which in any case shall not be less than two business days after the date of publication of the supplement.

8.69 Thus, the revocation of subscriptions allows the investor to re-evaluate whether or not to adhere to the public offering of financial products, based on core information which was not available to the investor at the time on which the decision to subscribe for financial products was adopted. The purpose is to ensure that all the investors make investment decisions on an informed basis and based on the most recent information relating to the issuer.

X Advertisements

8.70 Prior to the issuance of the Implementation Decree, the provisions relating to advertisements under Article 101 of the TUF were more stringent than those of the Prospectus Directive. In fact, Article 101 of the TUF, unlike Article 15 of the Prospectus Directive, prohibited any kind of advertising activity preceding the carrying out of a public offering of financial products.

8.71 This prohibition remains in force today with regard to financial products other than EC financial instruments.

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8.72 With regard to the procedures for making announcements, Article 101 of the TUF establishes that they shall be submitted to Consob at the same time, and shall be made according to the criteria established by Consob regulations, in accordance with EC provisions and, in any case, in observance of the accuracy of the information and of its consistency with that contained in the prospectus, if already published, or with the information that shall be included under the prospectus to be published.

8.73 Article 101 of the TUF further provides that Consob may: (i) suspend, for a period not exceeding ten consecutive16 business days, any further circula-tion of the advertisement relating to an offering regarding EC financial instru-ments, in the event of grounded suspicion of infringement of the provisions above or of the related regulatory laws; (ii) precautionary suspend for a period not exceeding ninety days, the further circulation of the advertisement relating to an offering regarding products other than those described under point (i), in the event of grounded suspicion of infringement of the provisions illustrated above, or of the related regulatory laws; (iii) prevent the further circulation of the advertisement, in the event of a confirmed infringement of the legal provisions illustrated above or of the related regulatory laws; (iv) prevent the execution of the offering, in the event of failure to comply with the provisions described under points (i), (ii) and (iii) above.

8.74 Article 101 of the TUF finally establishes that the relevant information pro-vided by the issuer or the offeror to qualified investors or to special categories of investors, including information communicated during meetings relating to offers of financial products, must be disclosed to all qualified investors or to all the categories of investors to which the offering is directed on an exclusive basis. This provision is intended to guarantee that all the above investors have access to the same core of information in order to decide whether or not adhere to the offering.

8.75 Article 101 does not indicate what is a relevant information. Thus, Consob shall have to indicate what type of information may be considered as such.

XI Prospectus liability

8.76 In accordance with Article 6 of the Prospectus Directive, Article 94 of the TUF, as modified by the Implementation Decree, contains provisions on the infringement of the rules relating to the draft and contents of the prospectus (the ‘Prospectus Liability’).

8.77 In particular, Article 94 of the TUF provides that the issuer, the offeror and the possible guarantor, as the case may be, as well as any other person who has subscribed the prospectus, shall be liable, with regard to the parts of its own competence,17 for damages suffered by an investor who had reasonably relied on the truthfulness and completeness of the information contained in

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the prospectus. The regulation further provides for inversion of the burden of proof, in so far as the above subjects, in order to avoid liability, must demon-strate that they adopted every diligent measure for the purpose of ensuring that the information corresponded to the facts and did not contain omissions which could alter their meaning.

8.78 Article 94 of the TUF also extends liability for false information or omissions which are able to influence the decisions of a reasonable investor to the inter-mediary responsible for the placement. Also in this case, there is an inversion of the burden of proof, in so far as for the purpose of avoiding any liability with regard to investors the party responsible for the placement must prove that it has adopted every diligent measure in order to ensure that the information cor-responded to the facts and did not contain omissions which could alter their meaning.

8.79 By imposing a burden of proof on the subjects cited above, the Italian legis-lator extended to the Prospectus Liability the same rules already ratified by Article 23 of the TUF for the case of compensation for losses caused to clients by intermediaries in providing investment services. In this event, intermediar-ies shall prove that they acted with the specific diligence requested.

8.80 Article 94 also provides that no subject may be held liable solely for the infor-mation contained in the summary, unless this latter is misleading, imprecise or inconsistent, if read together with the other parts of the prospectus.

8.81 With regard to the statute of limitations within which any actions for compen-sation may be brought, Article 94 of the TUF provides for a term of five years as of the date of publication of the prospectus, except where the investor proves that the falsity of the information or the omissions was discovered during the two years preceding the initiation of the action.

XII Financial statements of the issuer

8.82 Prior to the issuance of the Implementation Decree, Article 96 of the TUF pro-vided that for the purpose of carrying out an investment solicitation, the most recent annual financial statements and the most recent consolidated financial statements of the issuer had to be certified by an auditor. Furthermore, in the event that following the auditing of such financial statements, the auditor had expressed a negative opinion or had declared itself unable to express an opin-ion on the same, the issuer could not carry out an investment solicitation (i.e., an offering of financial products to the public).

8.83 The provisions illustrated above were not compatible, however, with the provi-sions of the schemes attached to the Prospectus Regulation. The Implementation Decree has provided for the deletion of the mentioned obligations with regard to EC financial instruments. Conversely, however, in the case of issuers of

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financial products different from EC financial instruments, the offering to the public of the same cannot be carried out in the event that the most recent annual financial statements and consolidated financial statements of the issuer have not been audited and the auditor has formulated a negative opinion or has declared itself unable to express an opinion.

1 Offence of falsification of the prospectus

8.84 The administrative pecuniary sanctions for the infringement of regulations on the public offering of financial products are contained in Article 191 of the TUF, as amended by the Implementation Decree.

8.85 In Italy, the falsification of prospectuses is also a criminal offence. Article 173bis of the TUF provides that anyone who presents false information or conceals data in the prospectus requested for an investment solicitation (i.e., for the offering to the public of financial products) or for the admission to listing on regulated mar-kets, or in documents to be published on the occasion of public offers for acquisi-tion or exchange, in such a way as to lead into error the recipients of the prospectus, with the intention of misleading the same recipients and of securing for itself or for others an unfair profit, shall be punished by imprisonment from one to five years.

8.86 In order to commit the offence of falsification of the prospectus, the party must be aware of the falsity, of the intention to deceive and of the purpose of unfair profit.

8.87 Finally, the presentation of false information or concealment of data must be able to mislead. Considering the ratio of the rule, aimed at ensuring the trans-parency and integrity of markets, such a rule does not provide for a quantita-tive threshold.

Notes

1. ‘Italian Official Gazette 28 December 2005, No. 301, Ordinary Supp lement’.2. Constitutional Court, 2 February 1990, No. 64, and Constitutional Court, 18

April 1991, No. 168.3. This decision has been clarified by Consob in the ‘Consob Informa’ newsletter

of 25 July 2005, No. 30.4. The modifications to the Issuer Regulation have been adopted by Consob deci-

sion No. 15232 of 29 November 2005.5. According to the terms of Article 1, paragraph 1, item m) of the TUF, Sicavs

and mutual funds are collective investment bodies for savings (UCITS). 6. This Article provides that ‘the indications relating to the price established for

the offering and the final size of the same, where not included in the prospec-tus, shall be published through the supplementary notice established in Article 5, paragraph 2, as soon as such elements are determined. The supplementary notice shall be published with the same procedures used for the prospectus.

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At the same time as its publication, a copy of the notice, together with a repro-duction of the same in electronic form, shall be sent to Consob.’

7. With regard to the new provisions on responsibility for the prospectus intro-duced by the Implementation Decree, see Chapter XI.

8. This Article provides that the prospectus shall contain the information which, according to the characteristics of the financial products and the issuers, shall be necessary for allowing investors to make an informed judgment on the asset, economic and financial situation and on the evolution of the activities of the issuer, as well as on the financial products and their associated rights.

9. F. Annunziata, La Disciplina del Mercato dei Capitali [The regulation of capital markets], Giappichelli Editore, Torino, 2004, and ‘R. Costi – L. Enriques’ Il Mercato Mobiliare [The Securities Market], in Trattato di Diritto Commerciale [Treatise on Commercial Law], Volume VIII, CEDAM, Padova, 2004.

10. Prior to the issuance of the Implementation Decree, according to the terms of Article 1, paragraph 1, item t) of the TUF, investment solicitation had the following meaning: any offering, invitation to an offering or promotional mes-sage intended for the public in any form, and aiming at the sale or subscription of financial products, including the placement among subjects authorised to provide investment services.

11. This circumstance is confirmed by Consob, which in Notice No. DEM/68995 of 18 September 2000 and No. DIS/43280 of 2 June 2000, observed that: for the purposes of qualification of an offering, invitation to an offering or promo-tional message as a case of an investment offering, the same had to have the objective of sale or subscription of financial products.

12. According to the terms of the cited Article (notwithstanding the fact that the regulation refers to qualified operators, it is considered that the same neverthe-less constitutes the supplementary provision of the cited item a) of the TUF), ‘qualified operators’ means: (i) authorised intermediaries; (ii) asset manage-ment companies; (iii) SICAVs; (iv) pension funds; (v) insurance companies; (vi) foreign subjects carrying out the activities of the above subjects, by virtue of the laws in force in their own origin country; (vii) companies and entities issuing financial instruments traded in regulated markets; (viii) companies registered with the lists described in Articles 106, 107 and 113 of Legislative Decree No. 385 of 1 September 1993; (ix) financial promoters; (x) individ-uals providing evidence of having the professional requirements established by the Consolidated Act for subjects carrying out administrative, management and control functions within securities intermediation companies; (xi) bank-ing foundations; (xii) as well as any company or legal person having specific competence and experience with transactions involving financial instruments, expressly declared in writing by the legal representative of the same.

13. We note that at present, the regulatory discipline for implementation of the aforementioned provisions is contained in Articles 33 and 57 of the Issuer Regulation. Hence, until Consob does not issue the new regulatory provi-sions, we consider that the regulations currently in force should continue to be applied.

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14. As far as we are aware, no issuer/offeror has ever made use of such a regulatory provision.

15. We point out that the cited Articles of the Prospectus Directive had already been implemented by Article 6 of the Issuer Regulation.

16. We indicate that in the old formulation of Article 101, the right of suspension could be exercised for not more than ninety days.

17. The right to limit liability solely to the parts of respective competence is directly provided by the schemes attached to the Regulation of 29 April 2004.

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I A dual approach: the Companies Act and the Listing Rules 134 1 The Companies Act 135 2 The Listing Rules 136 II The central competent administrative authority 136 III Definition of a ‘public offer’ 136 1 Definition 136 2 Exemptions 137 3 Further exemptions 137 4 Collective investment schemes 138 IV Approval of a prospectus 138 1 Principle 138 2 Exception to the ‘home country’ Principle 139 V Single European passport 140 VI The prospectus 141 1 Content 141 2 Format 141 3 Supplements 141 4 Language 141 VII Publication 142 VIII Advertisements 143 1 General 143 2 Investment Services Act 144 IX Appeal 144 X Prospectus liability 144 XI Non-EU and non-EEA issuers and the use of prospectuses

approved in non-EU and non-EEA countries 145 XII Sanctions 145 XIII Conclusion 146

I A dual approach: the Companies Act and the Listing Rules

9.1 The Prospectus Directive was transposed into Maltese law as part of an inten-sive initiative taken by the Maltese authorities on the legislative financial

9MaltaLouis De Gabr iele

Camilleri Preziosi Advocates

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services front following Malta’s accession to the European Union (the ‘EU’) in May 2004.

Since the Prospectus Directive is a maximum harmonisation directive, the Maltese authorities enjoyed limited flexibility in achieving the Prospectus Directive’s objectives. As a result, the Maltese provisions implementing the Prospectus Directive substantially reflect the wording of the Prospectus Directive .

9.2 The Maltese legislative and regulatory framework, prior to the transposition of the Prospectus Directive, distinguished between a prospectus pursuant to which an offer of securities is made to the public and an admission document pursuant to which the securities of an issuer would be admissible to trading on a stock exchange. Whilst the former was regulated by the Companies Act (Cap. 386 of the Laws of Malta) (‘CA’), the latter were regulated by the Listing Rules promulgated by the Listing Authority under the Financial Markets Act (Cap. 345 of the Laws of Malta) (‘FMA’).

Notwithstanding the convergence between the two sets of rules intro-duced by the Prospectus Directive, the implementation of the Prospectus Directive in Maltese law has retained this dichotomy, with the CA as the law regulating a prospectus offering securities to the public where no application is made for the securities so offered or issued to be admitted to a regulated market and the Listing Rules acting as the point of reference in circum-stances where an application is made to the Listing Authority for securities to be admitted to trading on a regulated market. Accordingly, the Prospectus Directive has brought about significant amendments to both the CA and the Listing Rules .

1 The Companies Act

9.3 Pursuant to Legal Notice 391 of 2005, a number of provisions of the CA were amended including, but not limited to, the definition of ‘an offer of securities to the public’ and the relevant exemptions thereunder. The same legal notice also introduced and amended, where applicable, the substantive provisions on the requirement to draw up a prospectus, the penalties for the non-compliance therewith, the civil liability attached to the issuance of a prospectus, the registration requirements and the interpretative provisions.

The Second Schedule of the CA was also amended by virtue of Legal Notice 390 of 2005. Part A of the Schedule prescribes what must be specified in a prospectus which is issued by a company incorporated in a Member State (or EEA State). Part A was used to transpose most parts of the Prospectus Directive and states the requirements for the prospectus’s approval and pub-lication. Part B deals with prospectuses of an overseas company constituted in a jurisdiction other than a Member State (or an EEA State) and which offer securities to the public in Malta. The Schedule also incorporates by reference the Prospectus Regulation .

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2 The Listing Rules

9.4 The Listing Rules regulate issuers whose securities are, or are in the process of being made, admissible to listing on a recognised investment exchange in Malta. The Listing Rules have also been amended to transpose the require-ments of the Prospectus Directive with respect to the contents of a prospec-tuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements .

II The central competent administrative authority

9. 5 The Malta Financial Services Authority (the ‘MFSA’), acting through the Registrar of Companies (the ‘Registrar’) is Malta’s central competent adminis-trative authority responsible for supervising compliance with the provisions of the Prospectus Directive. The Registrar’s powers are listed in the Companies Act (The Prospectus) Regulations.1

In the case of offers to the public where listing or an application for listing is involved, the MFSA acts through the Listing Authority .

III Definition of a ‘public offer’

1 Definition

9.6 Prior to the implementation of the Prospectus Directive, a ‘public offer’ was defined as an offer made to the public generally and then provided for a num-ber of ‘safe harbours’ that exempted an offer from the rigours of a public offer and accordingly from the requirement of a prospectus.

The implementation of the Prospectus Directive required substantial changes to this definition. Article 2(3)(a) of the CA now defines a ‘public offer’ as a communication to persons in any form and by any means, presenting suf-ficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. This definition is also applicable to the placing of securities through financial intermediaries.

This definition replicates the Prospectus Directive’s definition. In sub-stance, the net effect is not quite different from the position obtained prior to the implementation of the Prospectus Directive – but the implementation of the exemptions under the Prospectus Directive have signified a critical change to Malta’s regulatory scheme with regards to what does not constitute a public offering. Indeed, the structure has remained the same where all offers of securities to the public, except for the exemptions discussed in 2 and 3 below, whether made by listed or non-listed companies, require the issuance and publication of a prospectus .

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2 Exemptions

9.7 The CA contains the exemptions found under the Prospectus Directive that exempt an offer of securities from being a public offer with the consequence that no pro-spectus is necessary in those specific instances. Article 2(3) of the CA replicates the exemptions found under Article 3(2) of the Prospectus Directive. The proviso to the exemptions found in the Prospectus Directive can also be found in the CA.

Moreover, the CA also exempts from the obligation to publish a prospectus the exemptions found in Article 1(2)(h) of the Prospectus Directive2 and in Article 1(2)(j) of the Prospectus Directive.3

In these cases, an offeror has the right, but not the obligation, to draw up a prospectus in accordance with the provisions of Part A of the Second Schedule to the CA.

3 Further exemptions

9.8 The CA also exempts a number of transactions and securities from the pro-visions of Chapter III of the CA, which partly implements the Prospectus Directive, including the obligation to draw up a prospectus.

Article 89 of the CA exempts a form of application issued:

(i) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or

(ii) an offer where the shares are offered for no consideration and is made exclusively to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such divi-dends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; or

(iii) an offer where shares are allotted to existing or former directors or employees by their employer which has shares already admitted to trad-ing on a recognised investment exchange or by an affiliated undertaking, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; or

(iv) shares issued on the redemption or reduction of shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital; or

(v) an offer made in connection with a takeover bid, provided that a docu-ment is available containing information which is regarded by the Registrar as being equivalent to that of the prospectus; or

(vi) an offer made in connection with or pursuant to a proposed merger, provided that a document is available containing information which is regarded by the Registrar as being equivalent to that of the prospectus .

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4 Collective investment schemes

9.9 Article 89 of the CA also exempts issues by a holder of a collective investment scheme licence within the meaning of the Investment Services Act (‘ISA’), provided such issue is made in accordance with rules or regulations made under that Act.

The ISA provides that a collective investment scheme, whether licensed or not, is prohibited from issuing or causing to be issued a prospectus in or from Malta unless the prospectus has been approved by the MFSA. Prior to the implementation of the Prospectus Directive, the Investment Services Act (Prospectus of Collective Investment Schemes) Regulations 1996 contained detailed provisions regulating the issuing of prospectuses by such schemes. These regulations were repealed and replaced following the implementation of the Prospectus Directive. The Investment Services Act (Prospectus of Collective Investment Schemes) Regulations4 is divided into three parts deal-ing with Malta-based schemes, European and non-European based schemes and a number of miscellaneous provisions. These Regulations regulate all pro-spectuses of collective investment schemes, including those that fall outside the scope of the Prospectus Directive.

It is important to note that the Investment Services Act (Prospectus of Collective Investment Schemes) Regulations do not transpose all the provi-sions of the Prospectus Directive. Other additional and detailed require-ments of the Prospectus Directive are found in the Investment Services Guidelines

An offer to the public made by a collective investment scheme where list-ing is involved is regulated by the Listing Rules .

IV Approval of a prospectus

1 Principle

9.10 A prospectus for a public offering requires approval from the Registrar. However, where an issuer of securities to the public is listed or is in the proc-ess of listing on a regulated market in Malta, the prospectus must be prepared in accordance with the Listing Rules and must be submitted for approval to the Listing Authority.

In concordance with the ‘home country’ principle embraced by the Prospectus Directive, the Registrar or the Listing Authority will not approve a prospectus unless he is satisfied that Malta is the home Member State in rela-tion to the issuer of the securities to which it relates and the prospectus has been drawn up in accordance with the provisions of the CA and of Part A of the Schedule to the CA or the Listing Rules.

The Registrar or the Listing Authority is then required to notify the issuer or the offeror, as the case may be, of his decision regarding the approval of the prospectus within ten working days of the submission of the draft

nt scheme, whether

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prospectus. This time limit will be extended to twenty working days if the public offer involves securities issued by an issuer who has not previously offered securities to the public or who does not have any securities admitted to trading on a regulated market and who has not previously offered secur i-ties to the public.

If the Registrar or the Listing Authority finds, on reasonable grounds, that the documents submitted are incomplete or that supplementary infor-mation is needed, the time limits will apply only from the date on which such information is provided by the issuer or the offeror. The Registrar or Listing Authority is required, within ten days from the submission of the application, to notify the issuer if the documents are incomplete. Nevertheless, the failure by the Registrar or Listing Authority to give a decision within the appropriate time limit does not constitute an approval of the prospectus .

According to the Second Schedule and the Listing Rules, a prospectus must contain all the information necessary, according to the particular nature of the issuer and of the securities, to enable investors and their investment advisers to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the is suers and of any guarantor, and of the rights attaching to such securities. The information must be presented in an easily analysable and comprehensible form.

Furthermore, the Listing Rules require the prospectus to be signed by every director of the company. This is replicated by similar provisions in the CA; however, the latter contemplates the possibility of an agent authorised in writing to sign on behalf of the said directors .

2 Exception to the ‘home country’ principle

9.11 An exception is, however, made for issues of non-equity securities whose denomination per unit amounts to at least €1,001.635 (or nearly equivalent to this amount in another currency) and for any issues of non-equity secur-ities giving the right to acquire any transferable securities or to receive a cash amount, as a consequence of their being converted or the rights conferred by them being exercised, provided that the issuer of the non-equity securities is not the issuer of the underlying securities or an entity belonging to the group of the latter issuer.

In such a case, the home Member State is the Member State where the issuer has its registered office, or where the securities were offered to the pub-lic. Thus, issuers are entitled to have the prospectus approved by the authority of the country in which the admission to trading or the public offer is to take place. Such issuers are entitled to apply for approval of the prospectus to the authority of the country in which the admission to trading or the public offer is to take place .

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V Single European passport

9.12 The Listing Rules and the CA provide for the exercise of passport rights, introduced by the Prospectus Directive, where a prospectus has already been approved in an EU (or an EEA) Member State and for the validity of a Malta approved prospectus in other EU (or EEA) Member States.

If Malta is the home Member State and the securities are offered in one or more Member States, other than Malta or EEA States, the prospectus approved by the Registrar and any supplements thereto shall be valid for an offer to the public in any number of host Member States or EEA States, provided the regu-latory authority of the host Member State or EEA State (the ‘host regulatory authority’) is notified.

In fact, the Registrar is to provide the host regulatory authority, at the request of the issuer or the person responsible for drawing up the prospec-tus, and within three working days following that request or, if the request is submitted together with the draft prospectus, within one working day after the approval of the prospectus, with a certificate of approval and a copy of the prospectus as approved . If there is the need, this notification shall be accompanied by a translation of the summary of the prospectus produced under the responsibility of the issuer or person responsible for drawing up the prospectus. The same procedure shall be followed for any supplement to the prospectus.

The process of notification is considered to be essential. In fact a pro-spectus which has been approved by the regulatory authority of another Member State (or an EEA State) is not deemed to be an approved prospectus unless that authority has provided the Registrar with a certificate of approval and a copy of the prospectus as approved together with, where requested by the Registrar, a translation into English or Maltese of the summary of the prospectus .

The ‘certificate of approval’ is a statement confirming that the prospec-tus has been drawn up in accordance with the Prospectus Directive, that the prospectus has been approved, in accordance with the Prospectus Directive, by the Registrar or the regulatory authority of the Member State or EEA State, as the case may be, providing the certificate, and, where applicable, of the reasons as to why the Registrar or the regulatory authority providing the certificate authorised the omission, in accordance with the Prospectus Directive, from the prospectus of information which would otherwise have been included.

The procedure set out above should also apply where an issuer of securities to the public is listed or is in the process of listing on a regulated market in a Member State (or EEA State). In such a case, it is the Listing Authority and not the Registrar that carries out the process of notification and issues the ‘certificate of approval’ .

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VI The prospectus

1 Content

9.13 The prospectus must contain all the information necessarily required for an investor to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities.

The required information to be submitted in the prospectus varies accord-ing to the nature and circumstances of the issuer and the type of securities involved. On the basis of the dual approach described in I above, the require-ments are found in Chapter 66 of the Listing Rules and in paragraph 5 of the Second Schedule of the CA.

It is important to note, however, that the Listing Rules provide that the description of the required information made in such a prospectus is indicative and does not seek to replace the Prospectus Regulation. Indeed, it has been the practice in Malta that practitioners actually refer to the building blocks of the Prospectus Regulation in preparing a prospectus rather than the local rules .

2 Format

9.14 Maltese law mirrors the Prospectus Directive in offering issuers a choice as to the format of the prospectus. Accordingly, a prospectus may be drawn up either as a single document (which must include a summary) containing all the requisite information, or as a three-part prospectus composed of sepa-rate documents which will be divided into: (i) a registration document with information on the issue; (ii) a securities note; and (iii) a summary note.

Provision is also made in the CA and the Listing Rules for the less compre-hensive ‘base prospectus’ as defined in the Prospectus Directive .

3 Supplements

9.15 The CA and the Listing Rules provide for the information given in the base prospectus to be supplemented by a supplement to be drawn up and published in the situations and in the manner listed in Article 16(1) of the Prospectus Directive.7

It is important to note that if the final terms of the offer are not included in either the base prospectus or a supplement, the final terms shall be provided to investors and filed with the Registrar in the case of an offer to the public .

4 Language

9.16 Maltese and English are the official languages in Malta and accordingly the Listing Rules8 and the CA9 provide that where the offer is going to be made in more than one Member State (or EEA member), including Malta,

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the prospectus must be made in English or Maltese and must also be made available, either in a language accepted by the regulatory authorities of each host Member State (or EEA State), or in a language customary in the sphere of international finance, at the choice of the issuer or offeror.

On the other hand, when securities are offered to the public in one or more Member States or EEA States excluding Malta, the Listing Rules10 and the CA11 state that the prospectus shall be drawn up either in a language accepted by the regulatory authorities of those Member States or EEA States or in a language customary in the sphere of international finance, at the choice of the issuer or offeror.

However, for the purpose of scrutiny by the Listing Authority, the pro-spectus must, at the choice of the issuer or offeror, be drawn up in English, Maltese or any other language customary in the sphere of international finance .

The Listing Rules12 adds that where admission to trading on a regulated market of non-equity securities whose denomination per unit amounts to at least €50,000 is sought in one or more Member States (or EEA States), the prospectus shall be drawn up, either in a language accepted by the regulatory authorities of the home and host Member States (or EEA States), or in a language customary in the sphere of international finance, at the choice of the issuer or person asking for admission to trading .

VII Publication

9.17 The CA (Art. 99) provides that the allotment or sale of any shares in or debentures of a public company in pursuance of a prospectus, and any pro-ceedings taken on applications made in pursuance of a prospectus, shall only be made until at least the beginning of the sixth working day (or such later time, if any, as may be specified in the prospectus) after the publica-tion in a daily newspaper circulating wholly or mainly in Malta of a notice stating that a prospectus has been issued, indicating therein where the issuer or offeror has made available, free of charge, a paper copy of the full prospectus .

In respect of listed companies, Chapter 7 of the Listing Rules provides that, once approved, the prospectus must be filed with the Listing Authority and must be made available to the public by the applicant no later than six work-ing days before the relevant securities are admitted to trading. Furthermore, a prospectus must be available at least six working days before a primary offer opens. Any prospectus approved by the Listing Authority must be registered with the Registrar .

The Listing Authority shall insert on its website any note stating that the prospectus has been published and is available at the issuer’s registered office. The Listing Authority is also required to publish on its website over a period of twelve months, at its choice, all the approved prospectuses .

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In the case of a prospectus comprising several documents and/or incorp-or ating by reference, the documents and information making up the prospectus may be published and circulated separately provided that the said documents are made available to the public, free of charge . Each document must indicate where the other constituent documents of the full prospectus may be obtained. The text and the format of the prospectus, and/or the supplements to the prospectus, made available to the public, shall at all times be identical to the original version approved by the Listing Authority . Where the prospectus is made available by publication in electronic form, a hard copy must nevertheless be delivered to the investor, upon his request, free of charge, by the issuer, the person asking for admissibility to listing or the financial intermediaries placing or selling the securities .

VIII Advertisements

1 General

9.18 The Companies Act (The Prospectus) Regulations13 and the Listing Rules14 provide the requirements for advertisements relating to offers of securities to the public.

Advertisements must be clearly recognisable as such and the informa-tion contained in the advertisement must not be inaccurate or misleading and must be consistent with the information contained or to be contained in the prospectus. The advertisement must also contain a statement that a prospectus has been or will be published and the addresses and times at which copies of the prospectus are or will be available to the public. It is also important that the information concerning the offer to the public (dis-closed in oral or written form) must be consistent with that contained in the prospectus.

Where Malta is the home Member State and the advertising activity involves an offer of securities to the public, the Companies Act (The Prospectus) Regulations provide that the Registrar has the power to exercise control over the advertisement’s compliance with the law.

The Regulations also impose disclosure of material information provided by an issuer or an offeror, including information disclosed in the context of meetings relating to offers of securities, to all qualified investors or special categories of investors to whom an offer is exclusively addressed, despite the exemption from publication of a prospectus. If, however, a prospectus is required to be published, such information is to be included in the prospectus or in a supplement to the prospectus.

In the case of companies admissible or applying for admissibility to list-ing, an advertisement issued for the purpose of announcing an offer where a prospectus is required by the Listing Rules must seek the Listing Authority’s authorisation prior to its publication.

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2 Investment Services Act

9.19 In terms of the Investment Services Act (Cap. 370 of the Laws of Malta), an ‘investment advertisement’ may not be issued in or from within Malta unless its content has been approved by a holder of an investment services licence.

A problem may arise since the definition of an investment advertisement excludes a prospectus issued by a company in terms of the CA. Under Article 2 of the CA, the term ‘company’ is defined as any company formed and regis-tered in accordance with the CA.

Prima facie, this may create a doubt as to whether a prospectus issued by a company which has not been formed and registered in terms of the CA is exempt from the above-mentioned approval. From informal discussions with the Registrar, it appears, however, that the term ‘prospectus’ in the investment advertisement definition would also include a prospectus issued by a company which, although not incorporated under the CA, has issued its prospectus in terms of the Prospectus Directive . On this basis, it appears that the approval of an investment services licence holder with respect to such a prospectus is not necessary .

IX Appeal

9.20 In line with Article 26 of the Prospectus Directive, decisions taken by the Registrar in respect of any matter concerning the prospectus or an offer to the public are subject to a right to appeal to the Financial Services Tribunal.15

X Prospectus liability

9.21 The CA (Art. 94) reflects Article 6 of the Prospectus Directive when provid-ing that liability for the information in the prospectus attaches to all persons responsible for it. In fact, civil liability for misstatements in the prospectus attaches jointly and severally to the persons who are responsible for or who have authorised the issue of a prospectus in case damage is sustained by a person subscribing for shares or debentures on the faith of that prospectus, by reason of any untrue statement included therein.

The CA, however, excludes an expert being held liable for any such damage, unless the expert has made an untrue statement in the prospectus. Furthermore, a person will not be held liable provided he proves that, up to the time of the allotment of the shares or debentures, either he had reasonable grounds to believe and did believe that the statement was true, or that any untrue statement made by an expert was made by a person competent to make such a statement. The CA further provides that if such a person on becoming aware of the untrue statement before any allotment is made under the prospec-tus gives reasonable public notice of the untruthfulness of the statement, he will not be liable.

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Since the summary is only meant to be read as an introduction, and not in conjunction, to the other parts of the prospectus, the Prospectus Directive obliges Member States to ensure that no civil liability attaches to any person solely on the basis of the summary (including any translation thereof unless it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus. In almost identical wording, a proviso was introduced in the CA providing that no person shall be liable for statements made in the summary (including the translation thereof), except when such statements are untrue when read together with the other parts of the prospectus .

The Second Schedule16 and the Listing Rules17 also contain a provision re-quiring the summary to contain a warning that civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus .

XI Non-EU and non-EEA issuers and the use of prospectuses approved in non-EU and non-EEA countries

9.22 Part B of the Second Schedule deals with prospectuses of an overseas com-pany constituted in a jurisdiction other than a Member State or an EEA State and specifies what a prospectus from a non-EU country should contain in order for it to be approved. Part 1 refers to the matters which must be specified in the prospectus. The requirements are based on those found in the Prospectus Directive and their aim is to bring prospectuses created outside the EU or EEA in line with the European Standards established by the Prospectus Directive .

XII Sanctions

9.23 As required by Article 25 of the Prospectus Directive, the CA ensures that the appropriate measures may be taken or administrative sanctions may be imposed against the persons responsible in case the provisions adopted in the implementation of the Prospectus Directive have not been complied with in Article 91. Every person responsible for issuing, circulating or distributing a prospectus or for the issue of a form of application for shares or debentures in contravention of the provisions of the CA is liable to a penalty. Under the CA, the Registrar has the duty to recover penalties due under such Act.

An exception is granted if the person responsible for the prospectus proves that he was not aware of any undisclosed matter, or that the contravention was a result of an honest mistake of fact on his part, or that the contravention regarded a matter which, in the court’s opinion, were immaterial or should be reasonably excused.

The CA further imposes a penalty on every person who is knowingly a part of the issue, if a statement in a prospectus purporting to be made by an expert

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9.24 Prospectus for the Public Offering of Securities in Europe Prospectus for the Public Offering of Securities in Europe

is not made with the expert’s written consent, such consent being recorded in a statement in the prospectus.

Another penalty is imposed on everyone responsible for the issue, if the registration procedure set out in Article 93(1) of the CA is not followed. The Registrar will register the prospectus upon receipt of a copy, signed by every person named therein as a director of the company or his agent authorised in writing, and once he is satisfied that the requirements under Chapter III of the CA and the Second Schedule to the CA have been complied with. A penalty shall be imposed for every day from the date of issue of the prospectus until a copy is delivered .

XIII Conclusion

9.24 The transposition of the Prospectus Directive into Maltese law has resulted in a number of amendments to the CA and the Listing Rules, and to the publish-ing of legal notices under a number of Acts.

The dual approach taken by the legislator has ensured that issues where list-ing is involved and where listing is not involved are each governed by separate legislative instruments. Nevertheless, some inconsistencies that have arisen, such as the lack of clarity in the definition of ‘investment advertisement’ (dis-cussed in VIII2 above) require the legislator’s intervention, notwithstanding any informal clarifications that may be given to practitioners by the Registrar when faced with such legal ambiguity.

However, the implementation of the Prospectus Directive, in particu-lar the introduction of the passporting regime for prospectuses, continues to strengthen the legal framework in place for Malta to continue to register suc-cesses as a European financial services centre .

Notes

1. Subsidiary Legislation 386.11.2. Offers where the total consideration of the securities offered does not

exceed €2,500,000, which limit shall be calculated over a period of twelve months.

3. Offers in respect of non-equity securities issued in a continuous or repeated manner by credit institutions where the total consideration of the offer over a period of twelve months is less than €50,000,000, provided that these secur-ities are not subordinated, convertible or exchangeable and do not give a right to subscribe to or acquire other types of securities and they are not linked to a derivative instrument.

4. Subsidiary Legislation 370.04.5. The values vary slightly from those found in the Prospectus Directive as a

result of their conversion from Maltese lira to euro following Malta’s adoption of the euro as its currency on 1 January 2008.

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Malta 9.24 Malta

6. Rules regulating prospectuses under the Listing Rules fall under three separ-ate chapters. Chapter 5 deals with the prospectus in general, Chapter 6 deals with the contents of the prospectus, while Chapter 7 deals with the authorisa-tion the admissibility, the application procedures, publication and circulation of the prospectus. A working group is currently studying the possibility of streamlining and simplifying the legal regime governing a prospectus under the Listing Rules .

7. Paragraph 26, Second Schedule, Companies Act; and Listing Rules 5.13–5.16.

8. Listing Rule 6.11. 9. Paragraph 29, Second Schedule, Companies Act.10. Listing Rules 6.10.11. Paragraphs 28, Second Schedule, Companies Act.12. Listing Rules 6.12.13. Prospectus Regulation 5, Subsidiary Legislation 386.11.14. Listing Rule 7.19.15. The Financial Services Tribunal is constituted in terms of Article 21 of the

Malta Financial Services Authority Act (Cap. 330 of the Laws of Malta). The Tribunal and its statutory functions were modelled on a similar tribunal estab-lished by the Financial Services Act 1986 of the United Kingdom .

16. Paragraph 5, Second Schedule, Companies Act.17. Listing Rule 6.2.4.

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I Introduction 148 II Competent authority 149 III Prior approval and appeal procedures 150 1 Offering of securities to the public 150 A Procedure 150 B Exemptions 151 2 Admission to trading on a regulated market 151 A Procedure 151 B Exemptions 151 IV Content and format, language and supplements of the prospectus 152 1 Content 152 2 Format 153 3 Supplements 153 4 Language 153 V Publication and advertisements 154 1 Method of publication 154 2 Advertisements 154 VI Use of a prospectus approved in other (non-EU and non-EEA)

countries 155 VII Measures and sanctions 155 VIII Prospectus liability 157 IX Rules applicable to transactions and securities not subject to the Directive


I Introduction

10.1 In Romania, the Prospectus Directive has been implemented by Capital Markets Law No. 297 of 28 June 2004, as amended to date (the ‘Capital Markets Law’, or ‘Law 297/2004’), at the level of primary legislation, which entered into force and effect on 29 July 2004. The implementation was subsequently com-pleted via two secondary enactments, namely National Securities Commission Regulation No. 1 of 9 March 2006 regarding issuers and securities transactions

10RomaniaIuliana Craic iu

Musat & Asociatii

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Romania 10.6

(‘Regulation 1/2006’) and National Securities Commission Regulation no. 31 of 14 December 2006 for completion of certain regulations issued by the National Securities Commission for implementing certain provisions of the European directives (‘Regulation 31/2006’). Regulation 1/2006 entered into force on 6 April 2006, while Regulation 31/2006 entered into force on 4 January 2007. In addition, the national supervisory authority in capital mar-kets, the National Securities Commission (‘NSC’), issued a short note on the international public offering of securities in accordance with the Prospectus Directive, which stands as a recommendation.

10.2 Prior to the implementation of the Prospectus Directive, the offering of securi-ties was regulated by the Emergency Government Ordinance no. 28/2002 on securities, financial investment services and regulated markets, pursuant to which no passporting was available, since at that time Romania’s prospects of becoming an EU Member State were yet to be defined.

10.3 The rules governing the publication of a prospectus in the event of a public offering of securities or a request for admission to trading on a regulated mar-ket are laid down in the Capital Markets Law and are detailed in Regulation 1/2006 and Regulation 31/2006. These enactments distinguish between two types of public offerings:

(i) the sale offering; (ii) the purchase/takeover offering.

10.4 The current applicable Romanian legal framework solely provides rules con-cerning the public offering of securities. However, public offering of other financial instruments remains a grey area, not clearly regulated.


10.5 The competent authority for the approval of prospectuses in Romania is the NSC.More particularly, with respect to the public offering of securities, NSC is

competent to approve:

(i) the public offering of securities on the Romanian territory; (ii) admissions to trading on Romanian regulated (and unregulated) markets; (iii) the public offering of securities which takes place on the territory of

another Member State of the European Economic Area in the event Romania is the ‘home Member State’;

(iv) admissions to trading on a regulated market of another Member State of the European Economic Area in the event Romania is the ‘host Member State’.

10.6 Where Romania is not the host Member State, the NSC transfers its authority to approve the prospectus to the relevant authority of the host Member State, subject to the latter notifying the NSC with respect to approval of the pro-spectus in line with the Prospectus Directive and provision of a copy of

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the report. In the event the prospectus is amended (e.g., as a result of initial information included in the prospectus being modified), the NSC must be noti-fied accordingly, and in that case the NSC may require the competent authority from the host Member state to include additional information in the offering prospectus.



A Procedure

10.7 In order to offer securities to the public in Romania or to have securities admitted to trading on a regulated market, a prospectus must be approved by the NSC or by the competent authority of another Member State in accord-ance with the Prospectus Directive (Art. 17). The procedure set forth in the Prospectus Directive, as discussed in the general report, has been imple-mented by the Capital Markets Law and the secondary legislation issued by the NSC.

10.8 In brief, the offering of securities to the public where Romania is a host Member State is commenced with the prospectus being filed with the NSC along with additional information and documents depending on the public offering purpose (e.g., draft press release concerning the public offering, in case of takeover public offering – evidence of the public offering bond, i.e., bank deposit of a minimum of thirty per cent of the total offering value or bank letter of guarantee for the full public offering value, price statement, etc.).

10.9 The NSC must approve or reject the prospectus within ten business days after receipt of the prospectus and related approval request. The above deadline is extended to twenty business days if NSC has not reviewed a prospectus for the offeror or issuer relating to a public offering or admission to trading on a regulated market before. Nonetheless, request of the NSC for more informa-tion or documents suspends the deadlines mentioned above. As per the legal provisions in force, the NSC’s approval of the prospectus is solely an acknowl-edgement of the prospectus being in line with the applicable legal require-ments and is not a guarantee or assessment of the public offering’s opportunity, advantages and shortcomings, possible profits and risks.

10.10 If the prospectus is rejected (or not approved within the statutory deadline), the applicant may file a claim with the Administrative Disputes and Litigation Section of the Bucharest Court of Appeal, seeking the Court to compel the NSC to approve the prospectus. In case the Bucharest Court of Appeal dis-misses the motion, the applicant is entitled to file a second appeal with the Administrative Disputes and Litigation Section of the High Court of Cassation and Justice against the Bucharest Court of Appeal’s decision.

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Romania 10.13

B Exemptions

10.11 The Capital Markets Law provides as exceptions from the mandatory char-acter of the publication of a offering prospectus, the exemptions set forth in Articles 3(2) and 4(1) of the Prospectus Directive,1 including, inter alia, the following:

(a) the offering of securities made exclusively to the qualified investors; (b) the offering of securities made to less than 100 investors, individuals or

legal persons which are not qualified investors; (c) the offering of securities in relation to a merger; (d) the offering of securities to existing or former directors or employees by

an undertaking affiliated with the employer, provided these securities are of the same class as the securities already admitted to trading on a regulated market, subject to a simplified prospectus being made avail-able; and

(e) the offering of securities in exchange for other securities being the object of another public offering of purchase/takeover/exchange, subject to a simplified prospectus being made available for each issuer and securities categories.

All exemptions are admissible, subject to a simplified prospectus being made available to the relevant investors.2

Romanian law also provides for a new exemption from publication, in addi-tion to the ones set forth in Article 4(1) of the Prospectus Directive, namely the offering of shares in relation to change of the share capital, other than the increase of share capital by contribution in cash, by gratuitous allotment of shares to existing shareholders or by dividends paid by issuance of new shares of the same type as the shares for which dividends are being paid, subject to a simplified prospectus being made available.


A Procedure

10.12 Securities may be admitted to trading on a regulated market provided that a prospectus has been approved by the NSC or the competent regulator of another Member State. The procedure to request, obtain approval of and chal-lenge NSC decisions concerning the prospectus is the same as the procedure applicable to a public offering (see nos. 7 through 10 of this chapter).

B Exemptions

10.13 Regulation 1/2006 provides for exemptions to the obligation to publish a pro-spectus for the admission to trading on a regulated market of certain categor-ies of securities, which mirror those set forth in Article 4(2) of the Prospectus Directive.3 However, Romanian law also provides for an additional exemp-tion from publication, namely the admission to trading of shares in relation to

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change of the share capital, other than the increase of share capital by contri-bution in cash, by gratuitous allotment of shares to existing shareholders or by dividends paid by issuance of new shares of the same type as the shares for which dividends are being paid, subject to a simplified prospectus being made available.


1 Content

10.14 Under Romanian law, it is a general requirement that prospectuses contain information sufficient and necessary, taking into account the nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, to enable the investors to make an informed assessment of: (i) the assets and liabilities; (ii) financial position; (iii) financial results (profit and loss); and (iv) prospects of the offeror, issuer and any guarantor and of the rights attached to such securities. As provided for in the Capital Markets Law and Article 11 of the Prospectus Directive, the NSC can also permit the incorporation of information by reference in the prospectus.

10.15 Prospectuses of public offerings where Romania is a host Member State must be drawn up in compliance with the Regulation, as well as applicable Romanian law provisions, while prospectuses of public offerings passported in Romania must be made in compliance with the Prospectus Directive. However, a pro-spectus can be drawn up in accordance with the national law of an issuer not having its registered office in the European Union Area if: (i) the information incorporated in the prospectus is equivalent to the requirements of the national and international standards; and (ii) the prospectus is drawn up in accord-ance with international standards set by international securities commission organisations.

10.16 The Romanian Capital Markets Law also provides that any amendment to the offer shall be prior approved by the NSC and any amendment made with the observance of such provisions shall be deemed null and void.

10.17 The prospectus validity shall be of twelve months further to the publication and it may be used for subsequent issuance of securities, provided that any amendment to the initial offer is prior approved by the NSC.

10.18 As a rule, the price and number of securities object of the public offering must be provided for in the prospectus. If such information is not mentioned, the prospectus must provide at least the conditions and criteria for price establishment.

10.19 As a rule, subscriptions within public offerings are irrevocable. However, sub-scribers are allowed to withdraw their acceptance of the offer or subscription within a period of three business days from either: (i) the date of establishment

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of the price and number of securities subject to the public offering, if these were not available in the prospectus; or (ii) the date of publication of a pro-spectus amendment. Withdrawal is to be notified to the leading public offering intermediary.

2 Format

10.20 The prospectus can, at the offeror’s or issuer’s discretion, be drawn up as a sin-gle document or as three separate documents. A prospectus consisting of three separate documents includes: (i) an offer or presentation document (with infor-mation relating to the issuer); (ii) a securities presentation note (with informa-tion relating to features of the securities to be offered or admitted to trading); and (iii) a summary of the prospectus.

10.21 Listed companies which intend to make multiple offerings within a single year may request NSC to approve a public offering schedule. In this case, when a public offering is envisaged, only the securities note and summary need be prepared, and only if changes or recent developments have occurred the issuer presentation note needs to be updated.

10.22 As per NSC Regulation 1/2006, for the public offering or admission to trad-ing of certain types of securities (such as non-equity securities, including warrants in any form issued under an offering programme, or non-equity securities issued in a continuous or repeated manner by credit institutions), the prospectus can, at the choosing of the issuer, offeror or person request-ing admission to trading on a regulated market, consist of a base prospectus containing all relevant information about the issuer and the securities offered or to be admitted.

3 Supplements

10.23 In the event that a significant factor occurs in the period between approval of the prospectus and the close of the offer or the admission to trading, the issuer (or offeror) must prepare a supplement to the prospectus. This supplement must be prior approved by the NSC and where a publication exemption is not appli-cable, made public in a manner similar to the initial prospectus. Supplements must not create for investors a less favourable position.

4 Language

10.24 As a rule, the prospectus should be prepared in Romanian and, in the case of a cross-border public offering, another widely used language. The summary must be also prepared in Romanian, unless the press releases and/or prospectus were drafted and approved under a different EU Member State jurisdiction and using a widely used language of that jurisdiction, in which case the summary need only be prepared in that language.

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10.25 The prospectus must be made available to the public any time further to NSC approval. Publication shall be accomplished in accordance with Article 14(2) of the Prospectus Directive and Article 175 of the Romanian Capital Markets Law. A prospectus shall be considered to have been made public when it is made available in any of the following ways:

(i) publication in at least two daily newspapers with nationwide or extensive circulation;

(ii) in a printed document made available free of charge to the public at the offices of the market on which the securities are being admitted to trading, the issuer’s registered office and the offices of the financial intermedi aries placing or selling the securities;

(iii) on the website of: (a) the offeror or issuer and, if any, the financial inter-mediary; (b) the market operation where admission to trading is to be completed; or (c) the NSC (www.cnvm.ro).

10.26 Any press releases concerning the public offering must mention that a pro-spectus has been or will be published and the place where it is or will be pos-sible to obtain a copy thereof. When the prospectus is made public, it becomes mandatory.

2 Advertisements

10.27 Any type of advertisement relating to an offering of securities to the public or to an admission to trading is subject to specific provisions of the Romanian securities legislation, in the event that:

(i) securities are offered on the Romanian territory or securities are admit-ted to trading on a Romanian regulated market;

(ii) securities are offered or admitted to trading outside Romania by Romanian investors, and the prospectus has been drawn up and approved by the NSC in accordance with the applicable law.

10.28 Any advertisement made public by the issuer (or offeror) should comply with the following conditions: (i) the document should state that a prospectus has been or will be published and where it can be obtained; (ii) the information contained in the advertisement should be accurate and not misleading; (iii) the information should be consistent with that contained in the prospectus; and (iv) the advertisement must be clearly recognisable as such.

10.29 All advertisements should be approved by the NSC before being circulated. The NSC will inform the issuer (or offeror) of its decision within a period of five days following receipt of the draft document.

www.cnvm.ro

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Romania 10.34

10.30 Advertisements must contain no reference to their approval by the NSC, only references to the NSC approval of the prospectus being admissible. Moreover, any information provided in the advertisement materials must correspond to the information included in the prospectus. Publishing advertisements present-ing advantages or benefits is under Romanian law a fraud or deceptive adver-tisement (Art. 178(3), (4) Law 297/2004).


10.31 If a prospectus is drawn up and approved by the competent authority in accordance with the national law of an issuer whose home state is not a Member State of the European Economic Area, the NSC will approve the prospectus if the following cumulative conditions are complied with: (i) the information incorporated in the prospectus (including financial information) is equivalent to the requirements of the Regulation 1/2006; and (ii) the pro-spectus is drawn up in accordance with the international standards set by international securities commission organisations (Art. 50 Regulation 1/2006 and Art. 20(1) Dir.).

10.32 The possibility to use a prospectus approved by the regulator of another Member State of the European Economic Area, as mirrored in the Prospectus Directive (Art. 49 Regulation 1/2006), is also implemented in Romania. Accordingly, no approval by the NSC of a prospectus is required if:

(i) the prospectus was approved by the competent authority of another Member State of the European Economic Area in accordance with the Directive’s implementing legislation;

(ii) the prospectus is still valid; (iii) the prospectus is drawn up in Romanian or a widely used language; (iv) the NSC is notified that the prospectus has been approved by the com-

petent authority of the home Member State and a copy of the prospectus and a Romanian translation of the summary are provided.

10.33 With a view to carry out a public offer in Romania grounded on a base pro-spectus approved by the regulator of another Member State of the European Economic Area, the NSC issued a recommendation that the final terms of the public offering be notified to NSC, in case such final terms are not included in the base prospectus/amendments to the base prospectus notified to NSC.

VII Measures and sanctions

10.34 Law 297/2004 contains a list of measures and sanctions that can be imposed by the NSC under specific circumstances (Art. 180-181 Law 297/2004 and Title X). This list of measures goes beyond those set forth in Article 21(3) and (4) of the Prospectus Directive, as, for example, the NSC has the right to

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repeal the decision approving the prospectus in case: (i) it acknowledges that the public offering infringes the applicable laws and NSC regulations in force; (ii) it assesses that circumstances subsequent to the decision of approval deter-mine material changes of the elements which grounded such decision; (iii) the issuer/offeror/person requesting admission to trading notifies NSC that it withdraws the public offering, prior to launching the offering announcement.

10.35 As per Law 297/2004, any of the following facts represents a contravention: (i) infringement of any provision of Law 297/2004 and NSC regulations for implementation of Law 297/2004; (ii) carrying out operations requiring NSC’s authorisation without such authorisation or by breaching the conditions/restric-tion set forth in the authorisation; (iii) infringement of the conduct of business rules; (iv) infringement of measures set forth following audits; and (v) infringe-ment of the obligations set forth for listed companies to have the financial statements audited by licensed persons (Art. 272 Law 297/2004).

10.36 Any of the above contraventions may be sanctioned by NSC with: (i) warning; (ii) fine; (iii) complementary administrative penalties ranging from: (a) suspen-sion of authorisation; (b) withdrawal of authorisation; to (c) temporary denial of carrying out activities/services regulated by Law 297/2004 (Art. 273).

10.37 The administrative fines may range between: (i) 0.5 per cent to 5 per cent of the paid share capital for legal entities; (ii) RON 500 to 50,000 for individuals; (iii) fifty per cent to one hundred per cent of the value of transactions performed by persons breaching insider trading and market abuse rules (Art. 245–248 Law 297/2004).

10.38 In addition to administrative fines, persons found to have breached the secur-ities laws may also be subject to criminal liability (i.e., prison ranging from six months to five years, criminal fine of fifty per cent to one hundred per cent of the value of transactions performed and/or a temporary denial of carry-ing out activities/services regulated by Law 297/2004). The following acts, for example, are subject to criminal sanctions:

(i) the intentional presentation by the director, manager and/or executive leader of inaccurate and/or misleading information regarding the eco-nomical status of the company;

(ii) the intentional use of confidential/privileged information, by any person being aware of such information, with a view to acquire or transfer or having the intention to acquire/transfer, to its own benefit or for other, directly or indirectly, financial instruments such information refers to;

(iii) the intentional disclosure of confidential/privileged information to other persons, by persons being aware of such information or the counsel given to a person to acquire/transfer financial instruments subject to such con-fidential/privileged information;

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Romania 10.42

(iv) the intentional performance of activities of market manipulation; (v) the intentional access by unauthorised persons of the electronic trading/

depository/settlement systems (Art. 237(3), Art. 245-248, Art. 279(2) Law 297/2004).


10.39 The prospectus must clearly identify (with name and position for individuals and name and registered office for legal entities) the persons who are responsible for the authenticity, accuracy and completeness of the information included in the prospectus (Art. 10(1), (2) Regulation 1/2006). Those persons include the issuer or the offeror (as the case may be), the intermediary, the financial auditor or any other person having contributed to set up the prospectus (including the person guaranteeing the fulfilment of obligations undertaken by the issuer). These persons must warrant in the prospectus that, to the best of their knowledge, the information contained therein is true and accurate and that no information had been omitted that could materially alter the meaning of the prospectus.

10.40 Additionally, the following persons may also be held liable for any infringe-ment of the legal provisions related to the authenticity, accuracy or correct-ness of information in the prospectus: (i) the offeror; (ii) the members of the Board of Directors (or the sole director) of the offeror; (iii) the issuer; (iv) the members of the Board of Directors of the issuer; (v) the founders, in case of public subscription; (vi) the financial auditor which ascertained the financial results mentioned in the prospectus; (vii) the offer intermediary; (viii) and/or any other entity which undertook liability in the prospectus for any informa-tion, study or assessment included therein.

10.41 In these cases, the right to damages must be exercised by a harmed investor within six months from acknowledgement of the prospectus’s default, but not later than one year from the closing date of the public offer (Art. 182(1) Law 297/2004). On what concerns admissible evidence, it should be noted that liability cannot be incurred solely on the basis of a summary of the prospectus or a translation thereof, unless the summary contains misleading, inaccurate, inconsistent or contradictory information in relation to the prospectus (Art. 10(3) Regulation 1/2006).

10.42 The liability for the prospectus applies to the following entities/persons jointly, irrespective of their default, in connection with any damage caused by any misleading, inaccurate or incorrect information in the prospectus:

(i) the offeror, if any of the following is liable: the members of the Board of Directors (or the sole director); the offer intermediary; and/or any other entity which undertook liability in the prospectus for any information, study or assessment included therein;

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(ii) the issuer, if any of the following is liable: the members of the Board of Directors; the founders in case of public subscription; the finan-cial auditor which ascertained the financial results mentioned in the prospectus;

(iii) the manager of the intermediation syndicate, if any of the syndicate members is liable (Art. 182(2) Law 297/2004).


10.43 Romanian legislation implementing the Prospectus Directive chose to apply the rules set forth in the Prospectus Directive to public offerings of securities with a total consideration of less than €2,500,000 partly or entirely carried out on the Romanian territory (Art. 12, Regulation 1/2006).

10.44 Save when other specific legislation applies, other public offerings do not require the publication of a prospectus.

X Conclusion

10.45 The Romanian legislation has generally transposed in full the provisions of the Prospectus Directive.

However, some provisions of the Romanian law go beyond the scope of the Prospectus Directive. More particularly, unlike the Prospectus Directive, which provides a total exemption from publishing a prospectus for: (i) cer-tain categories of offers; (ii) admission of certain categories of securities to trading on a Romanian regulated market; or (iii) shares issued in substitution of shares of the same class already issued, if the issuing of such new shares does not involve any increase in the share capita, the Romanian law requires the publication of a simplified prospectus even in such cases. Additionally, as regards shares offered, allotted or to be allotted in relation to change of the share capital, other than the increase of share capital by contribution in cash, by gratuitous allotment of shares to existing shareholders or by dividends paid by issuance of new shares of the same type as the shares for which dividends are being paid, for which the Prospectus Directive requires issuance of a pro-spectus, the Romanian law provides exemption from publication, subject to a simplified prospectus being made available.

Notes

1. See nos. 13 and 15 of Chapter 1, vol. I, of this book.2. This is an extension of exemption (e), defined in no. 13 of Chapter 1, vol. I, of

this book.3. See no. 15 of Chapter 1, vol. I, of this book.

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I Introduction 159 1 The legal framework 159 2 Some general features 161 II Competent authority 162 III Procedure of prior approval and appeal 163 1 Procedure of prior approval 163 2 Right of appeal 165 IV Content, language and supplements of the prospectus 166 1 Content 166 2 Format 168 3 Supplements of the prospectus 169 4 Language 169 V Publication and advertisements 170 1 Method of publication 170 2 Advertisements 171 VI Use of prospectus approved in other (non-EU and non-EEA)

countries 172 VII Sanctions 173 VIII Prospectus liability 175 IX Rules applicable to transactions and securities not subject to the

Prospectus Directive and Prospectus Regulation 175 1 Securities not subject to the Prospectus Directive and ZTFI 175 2 Exempted transactions 177 3 Exempted securities 177 4 Exempted admissions to trading 178 X Conclusion 180

I Introduction

1 The legal framework

11.1 The Republic of Slovenia, following dissolution of the former Socialist Federal Republic of Yugoslavia (‘SFRY’) in 1991, continued to apply the majority of

11Republic of SloveniaEva Pergar ec, Jur i j Dolžan and M ITJA V IDMAR

Odvetniki Jurij Dolžan, Mitja Vidmar & Igor Zemljaric

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the former federal legislation to the extent that such legislation was not con-trary to the constitutional order of the independent Republic of Slovenia. In its effort to establish its own legislative framework as soon as reasonably prac-ticable, Slovenia revised important former federal laws and regulations in an expedient manner.

The first law of the Republic of Slovenia relating to issuing, offering and trading of securities was passed in 1994; the legislative framework relat-ing to securities was thereafter substantially revised in 1999 with the new Securities Market Act (the ‘ZTVP’, Zakon o trgu vrednostnih papirjev), which also replaced some securities-related provisions previously included in other regu lations such as the Law on Takeover of 1997 (‘ZPre’, Zakon o prevzemih) and the Law on Investment Funds and Management Companies of 1994 (the ‘ZISDU’, Zakon o investicijskih skladih in družbah za upravljanje).

11.2 Slovenia implemented the Prospectus Directive with some delay through the substantial revision of the 1999 Securities Market Act in 2006 (the ‘ZTVP-1’, Zakon o trgu vrednostnih papirjev), which was published in the Official Journal of the Republic of Slovenia on 17 March 2006.

The provisions of ZTVP-1 complied in most respects with the provisions of the Prospectus Directive; however, there were some differences in defining its field of application. In accordance with Article 1 of the Prospectus Directive, the Prospectus Directive shall, inter alia, not apply to non-equity securities issued in a continuous or repeated manner by credit institutions where the total consideration for the offer is less than €50,000,000, which limit shall be calculated over a period of twelve months (see also Chapter I, no. 9). The cor-responding minimum amount in ZTVP-1 was set in Slovenian domestic cur-rency at SIT 12,000,000,000 which, according to the official exchange rate,1 amounted to €50,075,112.67. Similarly, Article 3 of the Prospectus Directive provides that there is no obligation to publish a prospectus in relation to an offer for securities addressed to investors who acquire securities for a total consider-ation of at least €50,000 per investor, for each separate offer and when an offer of securities whose denomination per unit amounts to at least €50,000. Again, the threshold included in ZTVP-1 slightly differs from the amount under the Prospectus Directive since it was set at SIT 12,000,000, which amounted to €50,075.11.

It should be noted that during the validity of ZTVP-1, Slovenia did not adopt the Euro as its currency; the national currency unit was Slovenian Tolar (‘SIT’). Slovenia adopted the Euro as its currency on 1 January 2007, when the Euro Adoption Act (‘ZUE’, Zakon o uvedbi evra) entered into force. The differences resulting from the use of different currencies under the ZTVP-1 and the Prospectus Directive were finally remedied through the adoption of the new law in 2007.

11.3 ZTVP-1 was replaced in 2007 by a wholly new Market in Financial Instruments Act (the ‘ZTFI’) published in the Official Journal of the Republic of Slovenia

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Republic of Slovenia 11.7

on 27 July 2007. The new ZTFI entered into force on 11 August 2007 and pur-ports to have fully implemented various EU directives dealing with the subject matter of the prospectus and securities, including the Prospectus Directive and Directive 2004/109 of 15 December 2004.

11.4 The provisions relating to the content of the prospectus contained in the Prospectus Regulation were applicable in Slovenia from its accession to the European Union in 2004 onwards as in any other Member State.

2 Some general features

11.5 The provisions of ZTFI reflect the basic principle under the Prospectus Directive that securities may only be offered publicly in Slovenia if a pro-spectus in relation to such securities has been published in Slovenia during the period of the last twelve months and such prospectus has previously been approved by either: (i) the Slovenian Securities Market Agency (Agencija za trg vrednostnih papirjev) (the ‘ATVP’) or (ii) by the competent authority of another Member State of the European Union (each a ‘Member State’) and notified to the ATVP in accordance with the Prospectus Directive.

11.6 For the purposes of ZTFI, the term ‘offer of securities to the public’ means any communication, in any form and with application of any means, which contains sufficient information on the terms of the offer and the securities to be offered that on the basis of such information the investor decides to purchase or subscribe for such securities (Art. 30 ZTFI ). This definition shall also be applicable to selling the securities through financial intermediaries. It should be noted that: (i) there seems to be no special regulation defining ‘sufficient information’ under the laws of Slovenia (see Chapter 1, vol. I, of this book, footnote no. 48); and (ii) such def-inition slightly, in its grammatical interpretation, differs from the definition of the ‘offer to the public’ as contained in Article 2 of the Prospectus Directive but which difference should be remedied by proper interpretation in practice.

According to the ZTFI, the ‘offering programme’ is a plan, which enables issuance of debt securities (non-equity securities), including warrants in any form, which are a similar type or category, permanently or repeatedly during the period defined in the programme.

In Article 31 of ZTFI the term ‘first and further sale of securities’ defines: (i) the first sale of securities as a sale of securities based upon the issuer’s offer upon their issuance; and (ii) the further sale of securities as any sale of securities, except the first sale, including a sale performed by a financial inter-mediary that buys the securities from the issuer upon the first sale.

11.7 According to the ZTFI, the term qualified investor (‘dobro pouceni vlagatelj’) includes:

(i) legal entities having received the approval or are subject to supervision in relation to their activities on the financial markets, including credit

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institutions (kreditne institucije), investment companies (investicjska pod-jetja), other surveyed financial companies (druge nadzorovane financne družbe), insurance companies (zavarovalnice), reinsurance companies (pozavarovalnice), pension companies (pokojninske družbe), collective investments undertaking (kolektivni naložbeni podjemi) in management companies of such undertakings, pension funds (pokojninski skladi) and the managers thereof and persons trading with goods and derivatives thereof;

(ii) legal entities without the approval and not subject to supervision in relation to their activities on the financial markets provided that their corporate purpose is solely to invest in securities;

(iii) the Republic of Slovenia and other states or bodies of national or regional governments, Bank of Slovenia (Banka Slovenije) and other central banks, international and supranational institutions (such as World Bank, International Monetary Fund, European Central Bank, European Investment Bank and similar);

(iv) small- and medium-sized enterprises as defined in Article 2(1)(e) of the Prospectus Directive;

(v) small- and medium-sized companies that have been registered as quali-fied investors on their request in the Member State of their registered seat (Art. 2(a)(e)(v) Dir.); and

(vi) natural persons who were, on their request, registered in the register of the qualified investors held by the Member State of their residence.

In accordance with Article 47 of the ZTFI, the register of the qualified investors in Slovenia is held by the ATVP and is available to the issuers.

According to the ZTFI, the term ‘debt securities’ shall generally mean the bonds and other securities, other than equity securities.


11.8 The competent authority for the approval of a prospectus in Slovenia is ATVP (‘Agencija za trg vrednostnih papirjev’). ATVP has the sole competence to review and approve a prospectus in accordance with the ZTFI. ATVP is also a contact point of the Republic of Slovenia as defined in Article 56, first para-graph, of the Directive 2004/39 EC for the purposes of exchanging notices, information and cooperation with the competent authorities of the other Member States.

The ATVP has its registered seat in Ljubljana, Poljanski nasip 6, 1000 Ljubljana (Phone: + 386 (0)1 2800400, Email: [email protected], www.atvp.si).

11.9 As explained further below (see no. 13 of this chapter), ATVP may transfer the competence to approve a prospectus to the competent authority of another Member State if such authority consents to such transfer.

www.atvp.si

www.atvp.si

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1 Procedure of prior approval

11.10 Subject to certain exemptions (see nos. 40 to 46 of this chapter), any pub-lic offering of securities in Slovenia (whether through an initial sale or a subsequent resale) is only permitted in Slovenia if the issuer or the offeror publishes a prospectus in relation to the securities so offered. A prospectus must also be published by the person seeking the admission of the securities to trading on a regulated market (except in case of certain exceptions as pro-vided under the ZTFI).

11.11 Pursuant to Article 37 of ZTFI, a prospectus must be approved by the com-petent authority of the home Member State of the issuer before being made available to the public.

Article 69 of ZTFI provides that the application for approval of the pro-spectus may be filed by the issuer, the offeror (if different from the issuer) or (in the case of a prospectus for admission to trading) the person asking for admission of the securities to trading on a regulated market. Such application must be accompanied by a copy of the prospectus prepared in accordance with the provisions of the Prospectus Regulation (Art. 70 ZTFI). If the application is filed by an issuer which is a local authority within the Republic of Slovenia (e.g., a municipality), the consent of the Ministry of Finance for such issue of the relevant securities is also required (Art. 70/3 ZTFI).

11.12 If the ATVP determines that the application is incomplete or that the pro-spectus has not been prepared in accordance with the ZTFI, it must notify the issuer within ten working days from the day of receipt of the application.

The ATVP must notify the applicant of its decision on an application to approve a prospectus within ten working days from the receipt of the com-plete application. This period is extended to twenty working days in case of a public offering for securities by an issuer whose securities have previously not been offered to the public and admitted to trading on a regulated market (Art. 71/1,2 ZTFI).

11.13 ATVP may: (i) transfer its competence and responsibility to approve a pro-spectus to the competent authority of another Member State if such authority consents to such transfer; or (ii) assume the competence to approve a prospec-tus from the competent authority of another Member State (Art. 68 ZTFI). Such transfer shall be notified to the applicant within three working days from the date of the ATVP’s agreement with the other competent authority, but no later than on the date on which it would otherwise have to notify its decision on an application to approve a prospectus. If the approval of the prospectus is so transferred, the time period for the notification of the decision on the prospec-tus shall run from the date of the notification of the transfer to the applicant (Art. 68 ZTFI).

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11.14 The ATVP shall approve the prospectus if the application is filed by the rel-evant applicant and if such prospectus complies with the provisions set out in Chapter 2 of the ZTFI (Offer of securities to the public) (Art. 72/1 of ZTFI) (see also Chapter 1, no. 28). If this is not the case, the approval shall be denied unless the prospectus has been amended or supplemented to comply with the above-mentioned provisions within the time period set by the ATVP. Pursuant to Article 72 of ZTFI, the approval shall also be denied if:

(a) the application refers to a prospectus for securities for which the decision on their issuance is void or has been annulled; or

(b) the applicant is an issuer that has been sanctioned by the ATVP for breach of its obligations to comply with its reporting requirement2 and such breach has not yet been remedied.

The application to approve a prospectus shall be rejected if:

(a) the application has been filed by a non-eligible applicant; (b) the application is incomplete due to reasons other than irregularities

or incompleteness of the prospectus and such application has not been amended or supplemented within the available time period; or

(c) other procedural requirements for the assessment of the application have not been met.

11.15 After the prospectus is approved, the issuer, the offeror or the applicant for admission to trading of the securities shall file the final version thereof (which shall not differ from the approved version) with the ATVP in electronic form, publish it and inform the ATVP about the way of publishing (see also no. 29 of this chapter). If the prospectus relates to an initial public offer of a class of shares not already admitted to trading on a regulated market, the requirement relating to the publication and notification of a prospectus shall be fulfilled as soon as possible but no later than six working days before the expiry of the offer (or sooner if the acceptance period is less than six working days). In other cases the requirement relating to the publication and notification of a prospec-tus shall be fulfilled by the day on which the securities are offered to the public or admitted to trading on a regulated market (Art. 73(2) ZTFI).

11.16 The prospectus approved is generally valid for a period of twelve months after its publication provided that it is supplemented if and as required by ZTFI (Art. 62 ZTFI) (see no. 27 of this chapter). In the case of a prospectus relating to an offer-ing programme, the base prospectus shall be valid for a period of up to twelve months. In the case of non-equity securities issued in a continuous or repeated manner by credit institutions and complying with the other criteria referred to in Article 56/2 of the ZTFI (see also no. 26 of this chapter), the prospectus shall be valid until no more of the securities concerned are issued in a continuous or repeated manner. In case of a divided prospectus (i.e., a prospectus divided into three separate documents), its registration document shall be valid for a period

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of twelve months after its submission to the ATVP provided it has been updated with the ‘annual document stating all published or publicly available information of the issuer’ (Art. 62 (4) ZTFI) and shall, when accompanied by the securities note and updated (if applicable) with the required supplements, together with the summary note constitute a valid prospectus (Art. 62(5) ZTFI).

After the expiry of the validity period, the prospectus may no longer be used for public offering or the admission to trading (listing) on the regulated market.

As to the further sale of the securities, the prospectus has to be published before every further sale of securities when such are offered to the public. Before any public offer, the ATVP shall issue a decision on approval of the prospectus.

2 Right of appeal

11.17 The decisions taken by ATVP in the process of approval of the prospectus may be challenged in court proceedings initiated against ATVP in the Supreme Court of the Republic of Slovenia3 in accordance with the provisions of the Administrative Disputes Act (‘ZUS’, Zakon o upravnem sporu, Official Journal of the Republic of Slovenia, No.105/2006), as supplemented by certain special procedural provisions contained in ZTFI. The main features of these provisions are briefly outlined below.

11.18 The person challenging a decision taken by ATVP in the procedure of prior approval of a prospectus may be: (i) any person that participated in the pro-cedure conducted by ATVP prior to such decision (i.e., the applicant and any other person who was given the possibility to participate in the procedure in order to protect its lawful interest); or (ii) a representative of the public interest. According to the provisions of the ZUS currently in force, the role of such a representative can, as a general rule, be taken by the public attorney (‘Državni pravobranilec’) who requires the government’s authorisation for filing com-plaints seeking to protect the public interest.

11.19 The rules of procedure applicable to the relevant proceedings differ signifi-cantly depending on whether the ATVP by the decision so challenged approved the prospectus or not.

If the approval of prospectus was denied by ATVP, then the general rules for challenging administrative decisions apply. This basically means that the court will, in the event of the plaintiff’s success, declare the ATVP’s decision invalid, and either:

(a) direct that ATVP shall repeat the procedure of approval (taking into account the court’s guidelines as to legal and procedural matters); or

(b) take a final decision on the approval of the prospectus.

The court decision in such cases is final and is not subject to further appeal.

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If, however, the plaintiff challenges the decision by which ATVP approved a prospectus, the court may neither declare the ATVP’s decision invalid nor modify the ATVP’s decision. Instead, the court can only declare that the decision was unlawful, which declaration has no effect on the validity of the transactions effected in reliance on the relevant prospectus. The parties can appeal against the decisions taken by the court in these cases, in which case the final decision is taken by a panel of seven judges of the Supreme Court.

IV Content, language and supplements of the prospectus

1 Content

11.20 A base prospectus is a prospectus containing: (i) all the information required under the Prospectus Regulation and Article 53 of ZTFI (which shall include all information necessary to enable investors to make an informed assessment about the investment in the securities, including information on the legal and financial situation and prospects of the issuer, any guarantor and of the rights attaching to such securities); (ii) a supplement to the prospectus if and when necessary; and (iii) the final terms of the offer if so elected by the issuer (Art. 40 ZTFI).

If the final offer price and number of the securities which will be offered to the public cannot be included in the prospectus, then the prospectus should disclose the criteria and conditions according to which such elements will be determined; in case of price, the maximum final price should alternatively be disclosed. If the prospectus does not include the above information, the issuer or the offeror should enable the investors to withdraw from the acceptance of the purchase or subscription of securities within a period not shorter than two working days after the final offer price and number of the securities has been published (Art. 59(1) and (2) ZTFI). In each case, the issuer or the offeror must notify the final offer price and amount of securities to the ATVP or the competent authority of a home Member State of the issuer and publish this information in accordance with the provisions of Article 74(1) of ZTFI (see no. 29 of this chapter).

11.21 In exceptional cases, where information required by the Prospectus Regulation to be included in a prospectus is inappropriate to the issuer’s sphere of activity or to the legal form of the issuer or to the securities to which the prospectus relates, the prospectus shall contain information equivalent (if it exists) to the required information, taking into account the general requirement that the pro-spectus must contain the information necessary to enable investors to make an informed assessment about the investment in the securities.

In addition, the ATVP may authorise the omission from the prospectus of certain other information required by the provisions of the ZTVP or the Prospectus Regulation if:

a) the disclosure of such information would be contrary to the public interest;

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b) the disclosure of such information would be seriously detrimental to the issuer, provided that such omission would not be likely to mislead the public considering the facts and circumstances essential for the informed assessment of the issuer, offeror or the guarantor or the rights attached to the securities to which the prospectus relates;

c) such information is of minor importance only for such specific offer or admission to trading and does not have characteristics that would influ-ence the assessment of the financial position and future prospectus of the issuer, offeror or guarantor.

According to the provisions of ZTFI, the ATVP may prescribe more detailed criteria for the omission of the information, provided that in defining such detailed criteria it takes into account the regulation or other implementing act of the European Commission issued on the basis of Article 8(4) of the Prospectus Directive (Art. 60 ZTFI).

11.22 Information may also be incorporated in the prospectus indirectly, by refer-ence to one or more previously or simultaneously published documents that have been approved by, or filed with, the ATVP or the competent authority of another Member State, which is a Member State of the issuer in accordance with the provisions of ZTFI. The information contained in such documents shall be the latest information available to the issuer and the type of infor-mation permitted to be included in the prospectus and the manner of such incorporation by reference shall comply with the provisions of the Prospectus Regulation (see also Chapter 1, vol. I, of this book, no. 40). When information is incorporated by reference, a cross-reference list must be provided in order to enable investors to easily identify and access specific items of information so incorporated. The summary note (see no. 23 of this chapter) may not incorpo-rate information by reference (Art. 64 ZTFI).

11.23 In addition to all relevant information relating to the issuer and the securities which are to be offered to the public or admitted to trading on a regu lated market, the prospectus must also contain a summary note except where the denomination per unit of securities amounts to at least €50,000. In accord-ance with Article 54 of the ZTFI, the summary shall, in a brief manner and in a non-technical language, convey the essential characteristics and risks associated with the issuer, any guarantor and the securities, in the lan-guage in which the prospectus was originally drawn up (see also no. 28 of this chapter). The summary shall also contain a warning (Art. 54(2) ZTFI) that:

(a) the summary should be read as an introduction to the prospectus; (b) any decision to invest in the securities should be based on consideration

by the investor of the prospectus as a whole; (c) where a claim relating to the information contained in a prospectus is

brought before a court, the plaintiff investor might have to bear the costs

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of translating the prospectus into the official language of the court before the legal proceedings are initiated; and

(d) the persons who have prepared the summary, including any translation thereof, and applied for its notification, shall only be liable if the sum-mary is misleading, inaccurate or inconsistent when considered together with the other parts of the prospectus.

2 Format

11.24 The prospectus may be drawn up as a single document (enotni prospekt) or in a form of separate documents (deljeni prospekt). If the prospectus com-prises several documents, the information required for the prospectus should be divided among the documents as follows: (i) the registration document shall contain the information relating the issuer; (ii) the securities note shall contain the description of securities and information relating to them; and (iii) a docu-ment with a summary note shall be added (Art. 55 ZTFI).

A summary note is not required for prospectuses prepared in relation to admission to trading on a regulated market of debt (non-equity) securities with the nominal amount of at least €50,000 (Art. 53/5 ZTFI).

11.25 A prospectus may also be drawn up as a ‘simplified prospectus’, which con-tains only the basic information as to the issuer and securities offered to the public or to be admitted to trading on the regulated market (see also no. 43 of this chapter). The simplified prospectus may be drawn up for the securities for which the total purchase price during the twelve-month period is less than €2,500,000 (Art. 42 ZTFI).

11.26 For certain securities, a base prospectus approach shall be applicable. In accordance with Article 56 of ZTFI, special rules for the base prospectus apply in relation to the following securities:

(a) debt (non-equity) securities, including warrants, issued under an offer-ing programme; and

(b) debt (non-equity) securities issued by banks in a continuous or repeated manner provided that: (i) the proceeds from the issue of such securities are, according to the applicable law, invested into assets that provide sufficient coverage for all liabilities under such securities until their ma-turity; and (ii) in the event of insolvency of the bank issuer, such assets shall be intended for priority repayment of the capital and interest pay-able in respect of such securities, without prejudice to the application of the Prospectus Directive 2001/24/EC (see also no. 20 of this chapter).

In case of a base prospectus, the information contained in the base prospectus shall be supplemented, if and when necessary, by updated information on the issuer and the relevant securities (see also nos. 20 and 26 of this chapter).

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3 Supplements of the prospectus

11.27 The issuer, the offeror or the applicant for the admission to trading shall prepare a supplement to a prospectus which already has been approved if, between the approval of the prospectus and the close of offer of securities or start of trading on the organised market: (i) any new material fact or circumstance has occurred; or (ii) a material error or inaccuracy in relation to the information included in the prospectus is discovered, provided that such fact, circumstance, error or inaccuracy could affect the assessment of the securities (Art. 80 ZTFI).

Any supplement to the prospectus shall be approved by the ATVP or the competent authority of the issuer’s home Member State within seven working days of the application, mutatis mutandis, of the rules applicable to the pro-spectus approval generally.

Such supplement should be published in the same manner as applicable to the publication of the original prospectus. If necessary, considering the new information included in the supplement, the issuer, the offeror or the applicant for the admission to trading shall also publish a corresponding supplement to the summary and its translation.

Investors that purchased or subscribed for the securities pursuant to the offer based on the original prospectus shall have the right to withdraw from the acceptance of the offer. Such right to withdraw shall be enforced within two working days after the supplement has been published.

4 Language

11.28 According to the rules contained in Article 85 of ZTFI and as contemplated by the Prospectus Directive, the determination as to which language shall be applicable for the prospectus depends on the residency of the issuer and the state where the offer to the public or application for admission to trading on a regulated market is made.

The prospectus shall be prepared in the Slovenian language:

(a) in cases where Slovenia is the home country for the issuer and the offer to the public is to be made in Slovenia only, or admission to trading on a regulated market in Slovenia only is sought; and

(b) if Slovenia is the issuer’s home Member State and a public offering is made or admission to trading on a regulated market sought in Slovenia and in other Member State(s), provided that such prospectus shall be made available to the public also in a language accepted by the compe-tent authority of the host Member State or in the language customarily used in the international financial circles.

If Slovenia is the host Member State and the prospectus is not prepared in the Slovenian language, ATVP may require that the summary be translated into the Slovenian language.

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In a case of an offer to the public or an application for admission to trading on a regulated market in a Member State other than Slovenia, the prospectus shall be drawn up, at the choice of the issuer, offeror or person applying for admission to trading, in a language accepted by the competent authority of the host Member State or in a language customarily used in international financial circles. Notwithstanding the aforementioned, for the purposes of the prospectus approval procedure by the ATVP, such prospec-tus shall in addition also be drawn up, at the discretion of the applicant, in the Slovenian language or in a language customarily used in international financial circles.

Where admission to trading is sought in one or more Member States for debt securities each with nominal value of at least €50,000, the prospectus shall be drawn up (at the choice of the issuer or person applying for admis-sion to trading) either in the languages accepted by the competent authorities of the issuer’s home Member State and of each such host Member State or in the language customarily used in international financial circles (Art. 85/6 ZTFI).



11.29 According to Article 74 of ZTFI, a duty to make the approved prospectus available to the public shall be considered complied with if the prospectus has been made available to the public through one of the following means:

(a) by publication in a newspaper sold on the whole or prevailing part of Slovenia or the Member State in which securities are offered to the pub-lic or admitted to trading;

(b) if its printed version is made available to the public free of charge (i) at the offices of the administrator of the organised market where the secu-rities are to be admitted to trading, or (ii) at the registered office of the issuer and all of the offices of the intermediaries performing the ser-vices in relation to the sale and purchase of subscription of the relevant securities;

(c) in electronic form on the websites of the issuer and of the financial inter-mediaries selling the securities;

(d) in electronic form on the website of the regulated market where the admission to trading is sought;

(e) in electronic form on the ATVP website (such service, if provided by ATVP, is chargeable) (Art. 74 ZTFI).

The ATVP is obliged to publish on its website a list of all the prospectuses approved during the preceding twelve months. Such list shall also provide the hyperlinks to the prospectuses published on the websites of the issuer,

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intermediaries or regulated market (see no. 29 of this chapter) unless a prospectus is also published on the ATVP website (Art. 74/2 ZTFI).

Although where the prospectus is made available by publication in elec-tronic form the Prospectus Directive only requires that a paper copy of the prospectus be delivered free of charge to the investor at his request, the ZTFI requires that in case of publication in electronic form the issuer, the offeror, the person asking for admission to trading or the financial intermedi aries placing or selling the securities shall, upon the request of an investor and free of charge, deliver the prospectus to such person in paper form (Art. 77 ZTFI).

11.30 A prospectus comprising several documents and/or incorporating information by reference, the documents and information making up the prospectus may according to Article 76 of ZTFI be published separately provided that such documents are made available, free of charge, to the public in accordance with one of the methods of appropriate prospectus publication (see no. 29 of this chapter). Each of such documents shall indicate where the other docu-ments, which together constitute the prospectus, may be obtained (Art. 76(2) ZTFI).

In pursuance of its right under Article 14(3) of the Prospectus Directive, Slovenia has included into ZTFI a provision that any advertisement in relation to the relevant securities (see no. 32 of this chapter) shall include a statement that a prospectus has been or will be published and where such prospectus can be obtained by the investors.

2 Advertisements

11.31 The provisions contained in Article 78 of ZTFI and covering the advertisement in relation to securities may be split between:

(a) rules generally applicable to the offering of securities to the public or admission of securities to trading on an organised market; and

(b) rules applicable to the securities in relation to which the issuer, the offer or or the person applying for admission to trading of such securities is required to prepare a prospectus.

Advertisement shall be considered as any form of advertisement or marketing in relation to the offering of securities to the public or admission of securities to trading on an organised market.

11.32 Any public offering of securities or admission of securities to trading shall be subject to the following general rules:

(a) the advertisement shall comply with the provisions of the Prospectus Regulation; and

(b) an issuer or an offeror shall ensure that all information in relation to the offer, including those disclosed during the roadshows or disclosed

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to some investors only, is made available to all the qualified investors or special categories of investors to whom the offer is addressed;

11.33 If an obligation to prepare a prospectus is attached to the relevant public offer-ing or admission to trading, the following rules shall apply in addition to the general rules:

(a) each advertisement shall include an information as to the publication of the prospectus and where it shall be available to the investors (see no. 30 of this chapter);

(b) each advertisement shall be clearly recognisable as such; (c) the information included in the advertisement shall not be inaccurate

or misleading and must comply with the information contained in the prospectus (if already published) or required to be included in the pro-spectus (if the prospectus has not yet been published); and

(d) any information relating to the public offer of securities or admission to trading shall be consistent with that contained in the prospectus, not-withstanding if it has been disclosed orally or in writing and regardless of whether it has been made for advertising or marketing purposes.


11.34 Generally, all of the provisions of ZTFI regulating offers of securities or appli-cations for admission to trading on an organised market in Slovenia shall apply in relation to any such offer made or admission sought in relation to securities issued by the issuer with its registered office in a third country outside the European Union.

11.35 In addition to the generally applicable rules, the issuer of securities with a regis-tered office outside the European Union, the offeror of securities issued by such issuer or the applicant for the admission of such securities to trading in Slovenia shall authorise a person authorised to provide investment services in Slovenia pursuant to the ZTFI for all actions in relation to the public offer or admission to trading, including for the preparation and publication of the prospectus (Art. 87/1 ZTFI). Such authorised investment company shall be jointly and severally liable with the issuer, offeror or such applicant for their respective obligations set by the ZTFI in relation to the offering or admission to trading.

1136 Notwithstanding the general rules applicable to prospectuses, ATVP may also approve a prospectus related to the securities of a third-country issuer and prepared under the laws of such third country provided that the following con-ditions are met:

(a) the prospectus has been drawn up in accordance with international stand-ards set by the international organisation of authorities responsible for the supervision in relation to the securities, including the International

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Organisation of Securities Commissions (IOSCO) information publica-tions standards; and

(b) the prospectus meets, in relation to the information included in the pro-spectus (including information of financial nature), the requirements that are equivalent to the requirements under the ZTFI.

In considering the approval of a prospectus related to the securities of a third-country issuer, ATVP is bound to comply with the implementing regulation issued by the Commission pursuant to Article 20/3 of the Prospectus Directive.

VII Sanctions

11.37 As provided in Article 89 of ZTFI, ATVP shall have the competency and obli-gation for the supervision of compliance with the ZTFI provisions relating to public offers and applications for admission to trading on a regulated market for which Slovenia is the home Member State.

ATVP shall also have powers in relation to public offers and admissions to trading sought where Slovenia is considered the host Member State for the issuer, provided that according to Article 96 of ZTFI in such case its powers are limited to:

(a) notification to the home Member State of the irregularities or breaches of the issuer’s or the intermediarie’s obligations discovered in relation to the public offer or admission to trading in Slovenia;

(b) taking appropriate measures necessary for the protection of investors if the breaches notified before have not been remedied (despite measures taken by the issuer’s home Member State or as a result of such home Member State’s measures being inadequate), provided that the measures are: (i) notified in advance to the competent authority of the home Member State, and (ii) immediately notified to the European Commission.

ATVP shall have no authority if securities of the issuer with a registered office in Slovenia are to be offered publicly or admitted to trading on the regulated mar-ket in a Member State other than Slovenia, provided that the issuer, the offer or or the person asking for admission have elected that the competent authority of the Member State in which the securities are to be offered or admitted to trad-ing shall perform this task (Art. 67 and 38 ZTFI). Such election of the issuer, the offeror or the person asking for admission shall be notified to the ATVP and to the competent authority of the other Member State in advance.

The supervision shall be aimed at ensuring that the issuer, the offeror, the applicant for admission to trading and other relevant persons comply with the provisions related to the offering of the securities to the public. Supervision shall include its powers to intervene as discussed below (see no. 38 of this chapter).

ATVP may request information and documentation in relation to its super-vision of compliance with the ZTFI provisions from the issuer, the offeror or

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the applicant for the admission to trading of securities, including their holding and subordinated companies. Such information and documentation may also be required from their respective auditors and directors.

11.38 ATVP shall be authorised by the issuer, the offeror or the applicant for the admission to trading that additional information is included in the prospectus if such is required for the protection of the investors.

Should ATVP have a founded suspicion that the provisions of the ZTFI related to the offering of securities to the public have been breached, ATVP may: (i) temporarily suspend the public offering or admission to trading for a period of up to ten working days; (ii) prohibit advertising or temporarily suspend it for a period of up to ten working days; and (iii) request the regulated market regulator to suspend trading with securities for a period of up to ten working days. The ATVP may also: (i) prohibit the offering of securities to the public or admission to trading; (ii) prohibit trading with such securities; and (iii) publish that the issuer does not comply with its obligations related to the offering of securities to public.

In case the ATVP has temporarily suspended or prohibited the offering to public or admission to trading of the relevant securities, each investor that pre-viously purchased or subscribed for the relevant securities shall have the right to withdraw from its acceptance of the underlying offer within five working days from the publication of the relevant ATVP’s measure.

11.39 ATVP also has the power to impose administrative penalties on the issuers and other persons who violated the relevant ZTFI provisions, including the individuals responsible.

For grave breaches (such as failure to publish a prospectus or a supplement thereto when required, publication of prospectus or a supplement thereto without a prior approval, inclusion of inaccurate or incomplete information in a prospectus, publication of invalid prospectus and failure to duly publish a pro-spectus or supplement thereto or failure to prepare a prospectus in the relevant language) penalties range from €25,000 to €125,000 for legal persons and from €130 to €4,100 for the responsible individual. In the event of an especially severe offence due to high damage caused or benefit received or wilful conduct or intent of the offender, penalties may be increased up to €370,000,00 for legal persons and up to €12,000 for the responsible individual (Art. 556 ZTFI).

For minor breaches (such as failure to publish the final offer price and number of securities or failure to comply with obligations related to the noti-fication of such price, number and methods, failure to timely submit the final prospectus to ATVP, failure to timely publish the outcome of the offer, failure to make the prospectus available to the public or failure to provide information to ATVP) the penalties range from €12,000 to €125,000 for legal persons and from €200 to €4,100 for the responsible individual (Art. 557 ZTFI).

Slovenian law does not provide for a specific prospectus, public offering of securities or admission to trading criminal sanctions.

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11.40 According to Article 58 of ZTFI, the prospectus shall contain information on the persons responsible for the accuracy and completeness of the information contained in the prospectus. Information regarding at least the following per-sons shall be included, considering the intended use of the prospectus:

(a) the issuer and members of its management and supervisory board; (b) the offeror or applicant for admission to trading; and (c) any guarantor for the obligations under the securities.

The prospectus should contain a statement of the responsible persons that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that there are no omissions likely to affect the import of the prospectus.

11.41 All such persons shall be jointly and severally liable for any damages caused to the investor due to inaccurate and incomplete information contained in the prospectus, unless they can prove one of the following (Art. 58 ZTFI):

(a) they have acted with due professional care in preparing the prospectus and verifying the information included;

(b) at the moment of the purchase of securities the investor knew that the information contained in the prospectus was inaccurate and incomplete;

(c) the investor had the right to withdraw from its acceptance of the offer accord-ing to the ZTFI and has failed to enforce such right (Art. 80/5 ZTFI);

(d) information has not been included in the prospectus as permitted under the ZTFI (Arts. 60 and 61 ZTFI); or

(e) such information is unlikely to be considered material by a reasonable investor in deciding whether or not to purchase securities.

No liability shall attach to any person solely on the basis of the preparation of the summary, including its translation, unless such summary contains inaccurate or misleading information when read together with the other parts of the prospectus.

ATVP shall have no responsibility for the accuracy and completeness of the information included in prospectuses approved by it (Art. 67/2 ZTFI).

IX Rules applicable to transactions and securities not subject to the Prospectus Directive and Prospectus Regulation

1 Securities not subject to the Prospectus Directive and ZTFI

11.42 In accordance with Article 41(1) of the ZTFI, the provisions regulating the offer of securities to the public shall not apply to the following securities:

(a) units issued by collective investment undertakings other than the closed-end type;

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(b) non-equity securities issued by the Member State, regional or local authority of a Member State, public international bodies of which one or more Member States are members, European Central Bank or central bank of a Member State;

(c) shares or other securities representing a portion in the capital of the cen-tral bank of a Member State;

(d) securities unconditionally and irrevocably guaranteed by a Member State or by a regional or local authority of a Member State;4

(e) non-equity securities issued in a continuous or repeated manner by a bank provided that these securities:

(i) are not subordinated, convertible or exchangeable; (ii) do not give a right to subscribe to or acquire other types of securities

and are not linked to a derivative instrument; (iii) materialise reception of repayable deposits as defined in the Banking

Act (‘ZBan’, Zakon o bancništvu);5 (iv) are covered by a deposit guarantee scheme under the Directive

94/19/EU; (f) debt (non-equity) securities issued in a continuous or repeated manner by

banks where the total consideration of such offer is less than €50,000,000 which limit shall be calculated over a period of twelve months, provided that these securities:

(i) are not subordinated, convertible or exchangeable; (ii) do not give a right to subscribe to or acquire other types of securities

and that they are not linked to a derivative instrument.

Nevertheless, according to Article 41(2) of the ZTFI, the issuer, offeror or a person asking for admission to trading on a regulated market of securities referred to in (b), (d) and (f) above may prepare a prospectus in accordance with the provisions of the ZTFI when securities are offered to the public or the request for admission to trading on the regulated market has been filed.

11.43 In addition, public offerings of securities where total consideration of the offer is less than €2,500,000, which limit shall be calculated over a period of twelve months, are subject to the requirements set out in Article 42 of ZTFI (see also no. 25 of this chapter). Article 42 provides that a simplified prospectus can be published for every public offer of these securities. Such simplified prospectuses must contain the basic details of the issuer (name and unique ID number), the value of the issue, the denomination of the securities and the rights of their holders, financial and other information enabling the investors to make a proper assessment of the issuer and the securities and such other information evidencing that the simplified prospectus is eligible for approval. Before publication, the simplified prospectus must be approved by the ATVP, for which purpose the same procedure applies as for the approval of a prospectus.

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2 Exempted transactions

11.44 According to Article 49 of the ZTFI, the publication of a prospectus is not required in connection with a public offering of securities:

(a) if the offer is addressed solely to qualified investors (‘dobro pouceni vla-gatelji’), as defined in the ZTFI; and/or

(b) if the offer is addressed to fewer than 100 natural or legal persons in a Member State, not being qualified investors; and/or

(c) if the offer is addressed to investors who acquire the securities for a total consideration of at least €50,000 per investor, for each separate offer; and/or

(d) if the securities offered have denomination per unit of at least €50,000; and/or

(e) if the total consideration for the securities offered is less than €100,000, which limit shall be calculated over a period of twelve months.

The exemptions referred to above can only be relied upon if each single transaction fulfils the required criteria and the prospectus must be pub-lished in respect of any transaction that falls outside the scope of the above exemptions.

In addition, the intention to rely on the above exemption must be notified to the ATVP not later than three working days before the commencement of the offer (which notification must, in the case of the initial sale of the securities, be accompanied with a copy of the decision on the issuance of the securities) (Art. 52 ZTFI).

3 Exempted securities

11.45 According to Article 50 of the ZTFI, publication of a prospectus is also not required in connection with the offerings to the public of the following types of securities:

(a) shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital;

(b) securities offered in connection with a takeover by means of an exchange offer, provided that:

(i) where the takeover offer is subject to provisions of the Takeover Act (‘ZPre’, Zakon o prevzemih),6 the issuer has obtained approval for the takeover and has published a prospectus in accordance with the provisions of Takeover Act; or

(ii) in all other cases of takeover offers, a document is available contain-ing information which is regarded by the ATVP as being equivalent to that required for the prospectus under the ZTFI;

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(c) securities offered, allotted or to be allotted in connection with a merger or demerger, provided that:

(i) where such merger or demerger is subject to the provisions of the Companies Act (‘ZGD’, Zakon gospodarskih družbah),7 the required information has been made available in accordance with the provisions of ZGD;

(ii) in all other cases of mergers or demergers, that a document is avail-able containing information which is regarded by ATVP as being equivalent to that of the prospectus;

(d) shares offered, allotted or to be allotted free of charge to existing share-holders based on a capital increase from the company’s assets, and divi-dends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;

(e) securities offered, allotted or to be allotted to existing or former directors or employees by their employer which or its affiliated undertaking has securities already admitted to trading on a regulated market, provided that a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer.

The intention to rely on the above exemption must be notified to the ATVP not later than three working days before the commencement of the offer of securities to the public or to admission to trading on a regulated market (Art. 52 ZTFI).

4 Exempted admissions to trading

11.46 According to the Article 51 of the ZTFI, the obligation to publish a prospectus shall not apply to the admission to trading on a regulated market of the follow-ing types of securities:

(a) shares representing, over a period of twelve months, less than ten per cent of the number of shares of the same class already admitted to trad-ing on the same regulated market;

(b) shares issued in substitution for shares of the same class already admit-ted to trading on the same regulated market, if the issuing of such shares does not involve any increase in the issued capital;

(c) securities offered in connection with a takeover by means of an exchange offer, provided that:

(i) where the takeover offer is subject to provisions of the Takeover Act, the issuer has obtained approval for the takeover and has published a prospectus in accordance with the provisions of the Takeover Act; or

(ii) in all other cases of takeover offers, a document is available contain-ing information which is regarded by the ATVP as being equivalent to that of the prospectus;

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(d) securities offered, allotted or to be allotted in connection with a merger or demerger, provided that:

(i) where such merger or demerger is subject to the provisions of the Companies Act, the required information has been made available in accordance with the provisions of ZGD;

(ii) in all other cases of mergers or demergers, that a document is avail-able containing information which is regarded by ATVP as being equivalent to that of the prospectus;

(e) shares offered, allotted or to be allotted free of charge to existing share-holders based on a capital increase from the company’s assets, and divi-dends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;

(f) securities offered, allotted or to be allotted to existing or former direct-ors or employees by their employer or its affiliated undertaking which has securities already admitted to trading on a regulated market, pro-vided that a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer;

(g) shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market.

In addition, the obligation to publish a prospectus shall also not apply to secu-rities already admitted to trading on another regulated market, if the following conditions are met:

(i) that these securities, or securities of the same class, have been admit-ted to trading on that other regulated market for more than eighteen months;

(ii) that, depending on the moment of the admission to trading on that other regulated market:

(a) if these securities were admitted to trading on that other regulated market after 31 December 2003, such admission to trading was asso-ciated with an approved prospectus made available to the public in conformity with Article 14 of the Prospectus Directive;

(b) if these securities were admitted to trading on that other regulated market after 30 June 1983 and before 31 December 2003, listing particulars were approved in accordance with the requirements of Directive 80/390/EEC (as subsequently amended) or Directive 2001/34/EC;

(iii) that the ongoing obligations for trading on that other regulated market have been fulfilled;

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(iv) that the person seeking the admission of a security to trading on a regu-lated market under this exemption makes a summary document avail-able to the public in the Slovenian language accepted by ATVP;

(v) that the summary document referred to in the previous sub-paragraph is made available to the public in Slovenia in the same manner as required for a prospectus (as set out in the Article 74 of the ZTFI); and

(vi) that the contents of the summary document shall comply with Articles 53 and 54 of the ZTFI8 and shall state where the most recent prospectus can be obtained and where the financial information published by the issuer pursuant to his ongoing disclosure obligations is available.

The intention to rely on the above exemption must be notified to the ATVP not later than three working days before the admission to the trading on the regulated market.

X Conclusion

11.47 The Slovenian legislation reflects the principles contained in the Prospectus Directive and is a result of various changes over the years, including those related to the adoption of the Euro as the Slovenian currency unit as of 1 January 2007. Although the majority of the Prospectus Directive was implemented earlier, it was fully implemented by the new ZTFI from July 2007. The aim of such legislation is no different than the aim of the relevant European Union directives, including the Prospectus Directive and the Prospectus Regulation and will definitely help expand the capital and financial market in Slovenia. It has to be noted, though, that the ZTFI is a fairly complex law with nearly 600 articles and numerous cross references, which complexity may cause, despite fair intentions of the legislator, some problems in practice. On the other hand, after one year of the application of the new ZTFI it may be said that no material problems have been reported and ATVP is continuing to further improve its practice and expertise as regulator in relation to the securities’ public offering and admission to trading and many other issues dealt with by the new ZTFI, including various ZTFI implementing regulations.

Notes

1. 1 euro = 239,640 SIT.2. Chapter III of ZTFI, Duty to disclose controlled information.3. Vrhovno sodišce Republike Slovenije.4. Securities issued by associations with legal status or non-profit-making bodies,

recognised by a Member State, with a view to their obtaining the means neces-sary to achieve their non-profit-making objectives.

5. Banking Act, published in the Official Journal of the Republic of Slovenia, No. 131/2006, as amended.

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6. Zakon o prevzemih, Official Journal of the Republic of Slovenia, No. 79/06, as amended.

7. Zakon o gospodarskih družbah/ZGD-1, Official Journal of the Republic of Slovenia, No. 42/06 as amended.

8. Unofficial translation: ‘The summary shall, in a brief manner and in non- technical language, convey the essential characteristics and risks associated with the issuer, any guarantor and the securities, in the language in which the prospectus was originally drawn up.’

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I Introduction 182 II Competent authority 185 III Prior approval procedure and appeal 185 1 Prior administrative authorisation 185 2 Public offer and admission to trading 185 3 Exemptions 186 IV Content and format, language and supplements of the prospectus 187 1 Content requirements 187 2 Format 188 3 Supplements 189 4 Language 189 V Publication and advertisements 190 1 Method of publication 190 2 Advertisements 190 VI Use of prospectus approved in other (non-EU and non-EEA) countries 190 VII Sanctions 191 VIII Prospectus liability 192 IX Rules applicable to transactions and securities not subject to the Directive

and Regulations 193 X Conclusion 194

I Introduction

12.1 The law 24/1988, of 28 July, on the Securities Markets (the ‘SML’) sets out the basic legal framework governing capital markets in Spain. The SML has been the subject of several substantial reforms over the years, but still represents the main body where the legal foundations are laid on key matters such as the definition of securities, the role of the agents involved in capital markets, the principles governing the issuance and offering of securities, etc.

Under the Spanish legal regime, laws approved by the Spanish Parliament set out basic legal principles, whilst the rules, policies, codes and the specific

12SpainRamiro R ivera and Augusto Piñel

Uría Menéndez

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Spain 12.3

guidance are left for the regulations to be produced by the Spanish Government (normally enacted under the form of Royal Decrees, Ministerial Orders or Circulares, depending on the degree of detail required and the need to adjust from time to time to the changing conditions in the market).

12.2 Until the implementation of the Prospectus Directive, the offering of securi-ties was regulated under Royal Decree 291/1992 and the Ministerial Order dated 12 July 1993, which among other things spelled out the rules governing the content of the prospectus to be published in Spain in the event of a public offer or a request for admission to trading, the exemptions of the obligation to publish a prospectus and other related issues. These rules have been repealed following the implementation of the Prospectus Directive as discussed below .

12.3 The Prospectus Directive implementation process was completed in two stages:

(1) On 11 March 2005, the Spanish Government enacted Royal Decree Law 5/2005 (the ‘RDL 5/2005’) on urgent reforms to encourage productivity and improve public procurement. This law was intended to implement the core principles of the Prospectus Directive by restating Title III of the SML. However, RDL 5/2005 only incorporated a limited number of the main provisions of the Prospectus Directive, including: (i) the obli-gation to publish a prospectus (Art. 3 Dir.); (ii) prospectus summaries (Art. 5(2) Dir.); (iii) mutual recognition of prospectuses (Art. 17 Dir.); (iv) precautionary measures (Art. 23 Dir.); and (v) prospectus liability (Art. 6 Dir.).

(2) RDL 5/2005 did implement a number of principles included from the Prospectus Directive, but lacked the required level of detail. Accordingly, full implementation in Spain required the enactment of additional regulations.

Though the deadline for the implementation of the Prospectus Directive into local law was missed, full implementation was achieved following the enact-ment of: (a) Royal Decree 1310/2005 of 4 November 2005, partially develop-ing the SML on the admission to trading of securities in official secondary markets, public offerings of securities and the prospectus required for such purposes (the ‘RD 1310/2005’), and (b) Ministerial Order EHA/3537/2005, of 10 November 2005 (the ‘EHA Order 3537/2005’, together with RD 1310/2005, RDL 5/2005 and the SML, the ‘Spanish Securities Market Regulations’ or ‘Regulations’).

Adjusting the pre-Prospectus Directive regulations to the new principles contained in RDL 5/2005 caused a significant number of legal uncertainties and practical difficulties during the interim period running from the enact-ment of RDL 5/2005 (March 2005) until the enactment of RD 1310/2005 (November 2005). In order to help cover this gap, the Spanish capital market regulator (the Comisión Nacional del Mercado de Valores, or ‘CNMV’)

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published in July 2005 a helpful notice intended to provide interim solutions in a number of areas of concern. This notice also anticipated the way in which the CNMV would presumably interpret the new legal framework in a number of relevant areas where the law and regulations lacked the appropriate level of detail. The CNMV’s notice also stated that certain provisions in the Prospectus Directive, though not yet implemented by local laws, were drafted in such sufficiently precise terms that allowed it to reach ‘direct effect’, so that issuers and offerors, as well as anybody asking for the admission of securities for trading, could benefit from them even before the implementation process had been completed .1

12.4 The most relevant amendments introduced by the new legislative developments can be summarised as follows:

Former requirements to file with the CNMV a prior notification (●● comu-nicación previa) regarding listing and public offerings of securities are now removed, thus reducing the bureaucratic burdens and facilitating the process.The approval process is now subject to a strict timeline, where the ●●

CNMV has shortened the terms formerly allowed to produce its rulings.The number and scope of the exemptions to the duty to produce and register ●●

a prospectus in relation to certain public offerings or sale of securities are increased and widened.Listing and offering requirements are regulated in a single set of rules on ●●

the basis of a common set of principles.The ‘EU passport’ ensures the ability to use the locally approved prospectus ●●

in a variety of EU jurisdictions without going through the approval process again.The terms under which the issuer (and other parties involved in the offering ●●

process) assume liability for the contents of the prospectus, is regulated in depth.Printing of a prospectus is no longer the only available means to ensure that ●●

the prospectus is distributed.Certain formalities normally associated with the issuance of debt securities ●●

(such as the need for a notarial deed, official publications and/or registration of the issuances with the Commercial Registry) have now been removed and/or simplified to a large extent .

12.5 The Regulations include amongst the securities subject to the principles in the Prospectus Directive, certain types of money market instruments with maturity less than twelve months (pagarés). By way of exception, these issuers are not required to remit annual information, need not produce a summary of the prospectus, but cannot have access to the ‘EU passport’ regime .

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Spain 12.12


12.6 In Spain, the CNMV acts as a public agency with independent legal status. The CNMV operates as the competent authority for the purposes of the Prospectus Directive.

The CNMV is entrusted with the surveillance and supervision of the secur-ities markets, and it also participates in producing market regulation.

12.7 The CNMV shall be deemed the competent authority with respect to all trans-actions submitted to the Regulations. These include: (i) listing of securities in Spanish secondary markets; and (ii) public offerings and issuances, as well as prospectuses, if and to the extent Spain is the home Member State. Spain shall be regarded as the home Member State in accordance with the rules set out under Article 2(1)(m) of the Prospectus Directive .

III Prior approval procedure and appeal

12.8 The Regulations implementing the Prospectus Directive provide for terms and conditions that are generally equivalent to those of the Prospectus Directive. Accordingly, the following sections will outline the major differences between the relevant provisions in RDL 5/2005 and RD 1310/2005, and the correspond-ing rules under the Prospectus Directive.2

1 Prior administrative authorisation

12.9 As a general principle, the Regulations provide that the issuance and offering of securities in Spain shall not be subject to prior administrative authorisation. Any pre-existing limitation has now been removed. Likewise, no prior admin-istrative authorisation is required for the admission to trading of securities (listing) in a Spanish secondary market.

12.10 The above notwithstanding, unless covered by an exemption, listings and offer-ings in Spain shall be subject to the filing, registration and, where necessary, approval by the CNMV of: (a) certain information regarding the issuer and the securities; (b) audited financial statements of the issuer; and (c) a prospectus, which will be subject to certain publicity requirements.

2 Public offer and admission to trading

12.11 Under RDL 5/2005, a ‘public offering’ of securities in Spain is any form of communication with third parties in any manner and under any form that pro-vides sufficient information on the terms of the offer and the securities, thus allowing the investor to decide upon the acquisition or subscription of any such security.

12.12 An offer shall not be deemed a ‘public offering’ where: (a) it is exclusively addressed to qualified investors; (b) it is addressed to fewer than 100 individuals

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or entities per Member State, excluding qualified investors; (c) it is addressed to investors that acquire no less than €50,000 each, for each separate offer; (d) the securities have an individual nominal value of no less than €50,000; and (e) the securities represent an aggregate total value of less than €2,500,000 during a twelve months period .

Where an offer does not qualify as a ‘public offering’, there is no need to file for approval of a prospectus. However, any subsequent sale of any security that may have gained access to any of the above exemptions shall nonetheless be treated as a separate offer and, thus, will be assessed on its own merits so as to confirm if it does qualify as a ‘public offering’ or not .

The Regulations have effectively widened the scope of the so-called ‘private placement’ exemptions, which used to safe harbour certain offerings addressed to institutional investors as well as to the general public to the extent that the large nominal value of the securities, or the reduced size of the offer-ing, suggested the existence of a very limited distribution or a sophisticated targeted investor.

12.13 ‘Qualified investors’ include those formerly regarded as institutional invest-ors (such as banks, investment firms, insurance companies, pension funds, collective investment schemes, public institutions, etc.) , as well as: (a) indi-viduals that expressly request to be treated as such and comply with certain criteria associated with a certain command and expertise of the capital mar-kets; and (b) small- and medium-sized entities (SMEs under the Regulations) that voluntarily adhere to the ‘qualified investors’ regime . It is worth noting that the relevant registers of qualified investors will not be maintained by the CNMV, but by investment services companies and credit institutions provid-ing investment services, which registers shall be made available to all issuers upon request (Art. 30 RD 1310/2005) . The concept of ‘qualified investor’ is thus broader than the ‘institutional investor’ exemption available under the old regime .

3 Exemptions

12.14 There are a number of exemptions from the prospectus requirement for ‘public offerings’, which can be divided into the following categories:

(i) shares issued in substitution for outstanding shares of the same class, to the extent that the share capital is not increased;

(ii) securities offered in connection with certain transactions, such as take-overs or mergers, provided a document is made available containing information the CNMV regards as ‘equivalent’ to that contained in a prospectus, in light of EU regulations;

(iii) shares offered free of charge to existing shareholders and dividends paid in the form of shares of the same class as those for which the divi-dends are paid, to the extent a document is made available containing

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Spain 12.16

information on the number and nature of the shares, and the reasons and details of the offering;

(iv) securities offered to directors and/or employees or former employees by their employer or a company of the same group, to the extent the secur-ities offered are already admitted to trading on an EU or an EEA regu-lated market, and a document is made available containing information on the number and nature of the securities, and the reasons and details of the offering;

(v) non-equity securities issued by certain public authorities and bodies, as well as securities guaranteed by the Spanish State; and

(vi) certain non-equity securities issued by credit institutions under the form of programmes on a continuous or regular basis. This rule is expressly intended to allow for the issuance and offerings of commercial paper by Spanish credit institutions in an agile way, thus doing away with the need to file prospectuses for each programme .

12.15 Exemptions that apply only to the admission of transferable securities to trad-ing on a regulated market include, in addition to those that mirror the securities which are exempt in a public offering (see no. 13 of this report), the following:

(i) shares representing, over a twelve-month period, less than 10 per cent of shares of the same class already admitted to trading on the same regu-lated market;

(ii) shares resulting from the conversion of other securities or the exercise of rights (i.e., warrants, options or convertibles), to the extent those shares belong to the same class already admitted to trading on the same regu-lated market; and

(iii) securities where there is no prospectus to ‘passport’ into Spain but the company nevertheless meets certain conditions (e.g., the securities have been traded on another regulated market for at least eighteen months) .


1 Content requirements

12.16 As per the Prospectus Directive, the Regulations set out that the prospectus shall contain all information which, according to the nature of the issuer and the securities, is necessary to enable investors to make an informed assess-ment of, broadly speaking, the financial position (assets and liabilities, finan-cial situation, profits and losses) and prospects of the issuer, the guarantor, if any, and the rights attached to the securities.

The information in the prospectus must be produced in a clear and easily understandable manner.

Under EHA Order 3537/2005, the CNMV has referred to the templates for each type of prospectus as contained in the Prospectus Regulation. As a side

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issue, the CNMV has led a number of reviews from various market authorities with a view to produce more detailed templates of certain information, includ-ing the one produced by the CNMV and AIAF Mercado de Renta Fija on May 2005 and which refers to the offering and listing of fixed income securities. These templates are voluntary (offerors and issuers need not follow them), but certainly involve a reduction in terms of timing requirements and costs .

12.17 The obligation to include a summary in the prospectus (which, according to the former rules, was only required in Spain in certain specific cases under the form of the so-called ‘tríptico’ or three-page summary) has been imple-mented by RDL 5/2005. The summary (which shall not be necessary for issu-ances and offerings involving non-equity securities with a nominal value in excess of €50,000) will include brief, non-technical wording setting out the key characteristics of the securities and the risk factors associated with the issuer, the guarantor, if any, and the securities. Likewise, the summary will include warnings as per the terms of Art. 5(2) Dir., though RDL 5/2005 omits the Prospectus Directive requirement that such summary contains a warning that, where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legis-lation of the relevant Member State, have to bear the costs of translating the prospectus before legal proceedings can be initiated.

Unlike other jurisdictions, the Regulations have not set out a maximum number of words for the summary, though the CNMV recommends that it does not exceed 2,500 words . Moreover, RD 1310/2005 requires that the pro-spectus summary must always be translated into Spanish unless the relevant prospectus relates to non-equity securities having a nominal value of at least €50,000 or the CNMV waives such translation requirement in light of the spe-cific circumstances of the offer or listing request .

12.18 The CNMV may allow the omission of certain information in the prospectus as per the terms of Article 8 of the Prospectus Directive .

2 Format

12.19 Under the Regulations, a prospectus can be drawn up, at the discretion of the issuer, as a single document (which will remain valid for transactions within the twelve months following the date the prospectus is first published) or as three separate documents (which will remain valid for transactions within the twelve months following the date the registration document is first published, provided the securities note is updated with any such relevant information as is material to the securities and the offeror or issuer) .

12.20 A prospectus consisting of three separate documents should include: (a) a reg-istration document with information relating to the issuer (issuers may request the CNMV to accept their audited annual financial statements as a registra-tion document, if they contain the information required to be included in such

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document. The CNMV would, in such circumstances, be entitled to require issuers to provide a correspondence table indicating where the sections of the relevant Annex of the Prospectus Regulation have been addressed in the finan-cial statements); (b) a securities note with information relating to the securities to be offered or admitted to trading; and (c) the summary (as described above) . The registration document is valid for twelve months and is thus available for use in the context of other offerings or listings within that period of time, sub-ject to the inclusion of a separate securities note for each specific transaction .

12.21 The Regulations contemplate the use of a base prospectus, that is, a prospec-tus setting out all relevant information to be included in a prospectus, except for the final terms and conditions of the relevant offer or issuance. These are unknown at the time the base prospectus is approved, and can only be deter-mined at the time of issuance. The final terms and conditions can only relate to information to be included in the securities and need not be approved by the CNMV, though will be subject to stringent publicity requirements.

12.22 The base prospectus is only available for the issuance or offering of non-equity securities and warrants issued under programmes or on a continuous or regular basis .

3 Supplements

12.23 According to the Regulations, if any significant new fact arises or material mistake or inaccuracy in the prospectus comes to light from the time of approval of the prospectus to either the close of the offering or the commencement of trading, as the case may be, a supplement to the original prospectus must be filed for approval by the CNMV. The approval process should be completed within five business days (thus shortening the seven business day maximum allowed under the Prospectus Directive) and the supplement must be publi-cised in the same terms as the prospectus was. If necessary, the summary shall be duly adjusted to reflect the contents of the supplement .

12.24 In addition, the Regulations provide that the withdrawal right granted to invest ors by Article 16(2) of the Prospectus Directive shall be exercised within a period of no less than two business days after the publication of the supple-ment. Surprisingly enough, the rules do not ask for a maximum time limit to this effect. Therefore, the maximum time limit for the exercise of withdrawal rights may be unclear in those (unlikely) situations where issuers and offerors have failed to specify it in the relevant supplement .

4 Language

12.25 Prospectuses relating to trading requests in an Spanish secondary market or to offerings in Spain may be drafted, at the discretion of the offeror, in the Spanish language, in a language that is customary in the sphere of international finance

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(which is widely understood as referring to the English language; the CNMV has confirmed this view) or in another language authorised by the CNMV .

12.26 If the approval is sought for a listing prospectus relating to admission to trad-ing in EU and EEA markets other than Spain, then the prospectus language will be, at the discretion of the offeror, a language commonly accepted by the concerned EU Listing Authorities or in a language that is customary in the sphere of international finance (i.e., the English language), with the summary being translated into the local languages if so requested by the concerned EU Listing Authorities .

12.27 The CNMV will require a Spanish translation of the summary of a non-CNMV approved prospectus if the issuer is seeking the listing in a Spanish secondary market. The Regulations allow the CNMV to do away with such requirements in light of special circumstances (a vague and undefined term), and further provide for an exemption in case of the offering of non-equity securities with a nominal value in excess of €50,000 .



12.28 Article 14 of the Prospectus Directive grants two rights to home Member States, which Spain has chosen not to exercise. The first of these is the right of a home Member State to require an issuer that chooses to publicise a prospec-tus by insertion in a newspaper or by making it available in printed form, to complement these means by publishing it in electronic form on the web page of the issuer/offeror and those of the underwriters and placement agents . The second of these is the right of a home Member State to require publication of a notice stating how the prospectus has been made available, and where it can be obtained by the public . As a result, neither of these features of Article 14 of the Prospectus Directive is a requirement of Spanish law .

2 Advertisements

12.29 The Regulations have fully implemented Article 15 of the Prospectus Directive. Unlike the prior regime, the new regulations allow for advertisements to be released before the prospectus has been approved. As a matter of practice, and though advertisements need not be subject to approval by the CNMV, offerors and issuers commonly submit draft advertisements to the CNMV in advance and listen to its views and comments.


12.30 As stated in Article 20(1) of the Prospectus Directive, RD 1310/2005 provides that the CNMV, to the extent that Spain is the home Member State for the

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relevant purposes, may approve a prospectus drawn up by a non-EU issuer or offeror, if such prospectus: (a) has been drawn up in accordance with interna-tional standards set by an international securities organisation, including the IOSCO disclosure standards; and (b) the information requirements, including information of a financial nature, are equivalent to the requirements under the RD 1310/2005 or developing legislation.

In this regard, the following documents are deemed to meet the informa-tion requirements referred to in (b) above:

(i) the annual accounts drawn up in accordance with, among others, inter-national accounting standards or with generally accepted accounting principles; and

(ii) the annual accounts audited in accordance with, among others, inter-national audit standards or with generally accepted international audit principles .

VII Sanctions

12.31 Article 30 of the SML states that when Spain is a host Member State, the CNMV must inform the competent authorities of the home Member State if it notices that the issuer or the financial institutions in charge of the public offer have committed irregularities or if it observes breaches of the issuer’s obliga-tions deriving from the admission to trading in a regulated market. In the event that the issuer or the financial institution in charge of the public offer con-tinues to breach the relevant legal or regulatory provisions, despite the meas-ures taken by the competent authority of the home Member State or because such measures prove inadequate, the CNMV, after informing the competent authority of the home Member State, will take all the appropriate measures in order to protect investors, immediately informing the European Commission of these measures.

12.32 In addition to the general right of the CNMV to request additional information from the offerors and issuers (as well as from their controlling shareholders, directors, top executives, etc.), and from certain relevant parties involved in the offering or listing processes (such as any financial intermediary and audi-tors), Article 44 of RD 1310/2005 sets forth the authority of the CNMV in respect of sanctions which may be imposed for breach of the provisions of the Regulations. These include, among others, the right of the CNMV to adopt the following precautionary measures:

(i) to suspend a public offer or an admission to trading, for a maximum term of ten consecutive business days in each case;

(ii) to prohibit or suspend public advertisements, for a maximum term of ten consecutive business days in each case;

(iii) to prohibit a public offer.

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If the relevant securities have already been admitted to trading, the CNMV may:

(i) suspend trading on a Spanish official secondary market or other reg-ulated market for a maximum term of ten consecutive business days in each case, or request the relevant governing body of the market to order such suspension, if the CNMV has evidence that the provisions of RD 1310/2005 have been breached or if the CNMV believes that said measure is advisable for the purposes of protecting the investors;

(ii) exclude from trading on a Spanish official secondary market or a regu-lated market if the CNMV deems that the provisions of RD 1310/2005 have been breached. Such resolutions shall be adopted, in any event, after first hearing the interested party, without prejudice to any preventive measures that may be adopted .


12.33 According to the Regulations, liability for the information contained in the prospectus lies with: (a) the issuer; (b) the offeror; (c) the person requesting admission to trading in an official secondary market; (d) the directors of all the aforementioned parties; and (e) the guarantor, with respect to the information that this person is required to prepare.

12.34 In addition, the lead manager in a transaction involving the first admission to trading of the shares of a company in a Spanish secondary market, which had been preceded by a public offering of the shares, shall be held responsible with respect to the information contained in the securities note of the prospectus. To this effect, the lead manager shall be required to carry out any such veri-fications as are reasonably necessary, in light of commonly accepted market standards, to confirm that the information in the securities note with respect to the transaction or the securities is not false, nor that there is any omission of relevant information.

12.35 For these purposes, a lead manager is any such financial intermediary man-dated in order to assist in setting the financial, timing or commercial conditions of the offer, as well as to coordinate the relations with the regulatory author-ities, market parties, potential investors and other underwriters and placement agents.

12.36 Finally, parties potentially liable for the contents of a prospectus include: (a) any other persons who explicitly assume liability for the content of the pro-spectus, as long as this acceptance is contained in the prospectus; as well as (b) those persons who have authorised all or part only of the content of the pro-spectus (to the extent the relevant section has been reflected in the same terms as authorised) .

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12.37 As regards the summary, no civil liability can be attributed to any person solely on the basis of the summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus .

12.38 The prospectus must identify the persons who are liable for the information contained therein, with their name and post, or, in the case of legal persons, their corporate names and registered offices. These persons must declare that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission which could affect its contents .

The statute of limitations for this type of liability shall expire in three years from the time the claimant could have been aware of the false information or omission in the prospectus.

Finally, the Regulations provide that where the offeror is a person different than the issuer, the offeror may be exempted from prospectus liability if the issuer has drafted the relevant prospectus and agrees to take responsibility for its contents.

12.39 The prospectus liability shall be avoided to the extent the relevant party can provide evidence that, at the time the prospectus was published, it acted in a diligent manner to ensure that the information in the prospectus was true or that the omissions that led to the damage had been properly left out of the prospectus. This rule shall not apply inasmuch as any such person, following publication of the prospectus, gained knowledge of the falsehood or omission but failed to take the relevant steps to inform diligently those persons affected during the period when the prospectus remained in force .

IX Rules applicable to transactions and securities not subject to the Directive and Regulations

12.40 The Regulations apply to the offering of any kind of negotiable securities as per the definition contained in RD 1310/2005. The definition explicitly excludes: (a) contracts for future and options (though Art. 1.3 of RD 1310/2005 has expli-citly admitted within its scope certain financial contracts); and (b) shares or units in open-ended funds. Both types of contracts and securities are the sub-ject of specific offering and listing regulations.

12.41 The offering of shares or units in open-ended funds is contained in Law 35/2003 on Collective Investment Institutions and Royal Decree 1309/2005, of 4 November 2005, approving the Regulations of Law 35/2003 on Undertakings for Collective Investment and adapting the tax regime of Undertakings for Collective Investment.

For open-ended collective investment institutions, institutions compliant with the investment policies laid down by the UCITS EU Directive 85/611/EC

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(commonly referred to UCITS funds) must be registered with the CNMV through a standard and simple procedure. Other non-UCITS funds are subject to a different authorisation procedure by the CNMV .

X Conclusion

12.42 In making use of the opt-out rules and alternatives set out under the Prospectus Directive, RD 1310/2005 implemented standard EU requirements for the approval of the prospectus and established a system for listing and approv-ing the public offering of securities that is comparable to those of the most advanced jurisdictions, enabling Spain’s securities markets to improve their competitiveness.

The Spanish legislator has gone beyond a mechanical implementation of EU laws, and has set out to provide a modern, effective and efficient listing and offering regulatory framework, which enables the Spanish securities markets to remain competitive and avoids the risk of local issuers setting out to take advantage of the Prospectus Directive and Prospectus Regulation under other more potentially beneficial jurisdictions.

Notes

1. According to the CNMV notice, those Prospectus Directive provisions were: paragraphs (m) and (n) of Article 2 (which deal with the definition of ‘home Member State’ and ‘host Member State’); Article 4 (regarding the types of secur ities in relation to which the obligation to publish a prospectus is exempted); last paragraph of Article 5(4) (relating to the final terms of the base prospectuses); Arts. 9(1), 9(2) and 9(4) (dealing with the twelve-month valid-ity of prospectuses, base prospectuses and registration documents); Article 11 (incorporation by reference); Arts. 13(2)–13(5), on the time limits for approval of the prospectus and the possibility of transferring prospectuses between competent authorities; Arts. 14(1), 14(2) and 14(4)–14(7), on publication of the prospectus; Article 15(2), on advertisements; Article 18, regarding notification of the passport for the prospectuses; and Article 19, regarding the languages of the prospectuses.

2. Annexe 1 includes a chart that intends to facilitate the identification of the spe-cific sections in RD 1310/2005 which implement each of the rules set out under the Prospectus Directive .

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I Introduction 195 II Competent authority 196 III Procedure of prior approval and appeal 196 1 Obligation to publish a prospectus 196 2 Exemptions 196 A General 196 B Offers to the public 197 C Trading on a capital market 198 IV Content and format, language and supplements of the prospectus 199 1 Content 199 2 Format 199 3 Supplements 199 4 Language 200 V Publication and advertisements 200 1 Methods of publication 200 2 Advertisements 201 VI Prospectus approved in other (non-EU and non-EEA) countries 201 VII Sanctions 201 VIII Prospectus liability 201 IX Rules applicable to transactions and securities not subject to the Directive or

Regulation 202

I Introduction

13.1 The previous Swedish legislation concerning the prospectus for the public offer-ing of securities was regulated in several different laws. With the Prospectus Directive the Swedish legislator substantially revised the legislation and from 1 January 2006 all rules concerning prospectuses are to be found in the Swedish Securities Trading Act (lag om handel med finansiella instrument [nr 1991:980 as amended]).1

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Jönköping International Business School, Linköping University

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13.2 With the changes in the Swedish Securities Trading Act only one competent authority supervises the public offering of securities, i.e., the Swedish FSA (Finansinspektionen), while in the past the approval was shared between the different stock exchanges in Sweden and the Swedish FSA. Although the Prospectus Directive contains a right for the competent authority to delegate some powers to other organs, this power was not used by the Swedish legislator to delegate powers from the Swedish FSA .


1 Obligation to publish a prospectus

13.3 The Swedish Securities Trading Act (the ‘SSTA’) requires a prospectus to be published whenever a negotiable instrument is to be offered to the public or is to be traded on a capital market unless particular exemptions apply (ch. 2 §1; hereafter 2:1 and so forth). In accordance with the preliminary workings which preceded the legislation, a prospectus has to be published whenever a negotiable instrument is intended for public circulation. A negotiable instrument should be considered to be intended for public cir-culation if it is constructed in such a way that it easily and simply can be negotiated on a regulated market. This also means that other negotiable instruments, for instance shares in private companies and such financial instruments which cannot be transferred, are not covered by the Prospectus Regulation.

Besides the obvious situations where there is an offer to the public, a less obvious example is when people are invited to join a formation of a company on a homepage. Another example is when an invitation by mail or email is sent to a number of people, for instance shareholders, members of an association or the inhabitants of a town. However, the legislator has not tried to define the term offered to the public .

2 Exemptions

A General

13.4 In general, exemptions from the obligation to publish a prospectus under the Swedish Securities Trading Act are based foremost on Article 1 of the Prospectus Directive and the different exemptions contained therein, in particular Articles 1(2)(a), 1(2)(b), 1(2)(d) and 1(2)(i) (which originated from Sweden). The optional exemption in Article 1(2)(h) of the Prospectus Directive (no prospectus has to be published if the consideration for the offer is less then €2.5 million), but above the absolute minimum of €100,000 in Article 3 (according to which no prospectus can ever be required by the Member States), has been implemented

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as €1 million in Sweden (see below). See Article 2:2–3 of the Swedish Securities Trading Act .

B Offers to the public

13.5 Under the Swedish Securities Trading Act (Art. 2:4) no prospectus needs to be published when a negotiable instrument is offered to the public, in the following situations:

(i) the offer is directed to qualified investors; (ii) the offer is directed to less than 100 natural or legal persons, who are

not qualified investors, in a Member State of the European Economic Area (EEA);

(iii) the offer concerns the purchase of negotiable instruments for an amount equal to at least €50,000 for each investor;

(iv) each of the negotiable instruments has a nominal value which equals at least €50,000; or

(v) the amount which in total shall be paid by the investors for a period of twelve months equals no more than €1 million.

Furthermore, when negotiable instruments are offered to the public no pro-spectus need be published (Art. 2:5 SSTA) if the offer concerns:

(i) shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase of the issued capital;

(ii) securities offered in connection with a public takeover bid, if the FSA has approved a document equal to that of a prospectus;

(iii) securities offered, allotted or to be allotted in connection with a merger, provided that a document is available containing informa-tion which is regarded as being equivalent to that of the prospectus and the FSA has not made a decision requiring a prospectus to be published;

(iv) shares offered, allotted or to be allotted free of charge to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, pro-vided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; or

(v) securities offered, allotted or to be allotted to existing or former dir-ectors or employees by their employer or an affiliated undertaking, provided that the said securities are of the same class as the securities already admitted to trading on the same regulated market and that a document is made available containing information on the number and nature of the securities and the reasons for and detail of the offer .

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C Trading on a capital market

13.6 In addition, the Swedish Securities Trading Act (Art. 2:6) does not require a prospectus to be published when a negotiable instrument is intended for trading on a capital market if:

(i) the shares represent, over a period of twelve months, less than ten per cent of the number of shares of the same class already admitted to trading on the same capital market;

(ii) the shares are issued in substitution for shares of the same class already admitted to trading on the same capital market, if the issuing of such shares does not involve any increase of the issued share capital;

(iii) the securities are offered in conjunction with a public takeover bid, provided that a document is available containing information which is regarded as being equivalent to that of a prospectus and the FSA has approved the document;

(iv) the securities are offered, allotted or to be allotted in connection with a merger, provided that a document is available containing information which is regarded as being equivalent to that of the prospectus and the FSA has not made a decision requiring a prospectus to be published;

(v) the shares are offered, allotted or to be allotted free of charge to existing shareholders, and dividends which are paid out in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market and that a document is made available containing information on the number and nature of the shares and the reasons for and detail of the offer;

(vi) the securities are offered, allotted or to be allotted to existing or former directors or employees by their employer or an affiliated undertak-ing, provided that the said securities are of the same class as the securities already admitted to trading on the same regulated market and that a document is made available containing information on the number and nature of the securities and the reasons for and detail of the offer; or

(vii) the shares result from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, provided that the said shares are of the same class as the shares already admitted to trading on the same regulated market.

As regards securities which are offered but which are of the same class of securities which for eighteen months have been admitted to trading on another regulated market within the EEA, the Swedish Securities Trading Act (Art. 2:7) does not require a prospectus to be published. However, further conditions have to be met. This rule corresponds to and is an implementation of Article 4(2)(h) of the Prospectus Directive.

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If a prospectus is intended to be published despite the fact that the exemp-tions apply, the requirements regarding prospectuses in the Swedish Securities Trading Act as well as the requirements of the Prospectus Regulation have to be met (Art. 2:8 SSTA) .


1 Content

13.7 The minimum requirements as to the contents of the prospectus are laid down in the Swedish Securities Trading Act with further reference to the Prospect Regulation.

The Swedish Securities Trading Act requires the prospectus to contain all information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of rights attached to the securities attached (Art. 5(1) Dir.; Art. 2:11 et seq. SSTA and applicable rules from the Swedish FSA).

2 Format

13.8 The prospectus may in accordance with the Prospectus Directive be prepared as either one document or three separate documents. In the latter case the prospectus is divided into: (i) a registration document; (ii) a securities note; and (iii) a sum-mary. The registration document must contain information about the issuer .

However, a prospectus can be prepared in a simple version. This is in accordance with Article 5.4 of the Prospectus Directive, but only applies to a limited number of securities such as non-share related negotiable instruments which are issued within an offering programme.

In the simpler version of the prospectus, the offer price and number of securities do not have to be disclosed (Art. 2:13 SSTA) .

3 Supplements

13.9 The Swedish Securities Trading Act requires any significant new fact, material error or inaccuracy relating to the information in the prospectus which occurs until the closing of the offering or the start of the trading on a capital market, and which may effect an investor’s assessment of the securities, to be published in a supplement to the prospectus.

The summary of the prospectus must be updated in accordance with the new information in the supplement if it is necessary to reflect the information in the supplement. Any investor who prior to the publication of the supplement has already agreed or subscribed to the securities is entitled to withdraw their acceptance within five working days following the publication of the supple-ment . The supplement must be approved by the FSA (Art. 2:34 SSTA) .

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4 Language

13.10 The language of the prospectus must be in Swedish unless the FSA in an indi-vidual case decides that another language may be used.

If the prospectus concerns non-share related negotiable securities which each has a nominal value of at least €50,000 and which are to be traded on a capital market in Sweden, the prospectus may be published in another lan-guage which is common on the international financial markets .

Other languages may be used if there is a cross-border element in the offer, i.e., when the offer is outside Sweden but Sweden is the home State or another State within the EEA is the home State but the public offer is in Sweden (Art. 2:21 et seq. SSTA) .


1 Methods of Publication

13.11 A prospectus can only be published when it has been approved and registered by the FSA. This must be done by the issuer, the person who is responsible for the offer or the person who applies for the negotiable instruments to be traded on a capital market.

The publication must be as soon as possible and no later than the day before the time starts for the offer or the securities in question is traded.

13.12 The following methods of publication are possible:

(i) in one or more nationwide newspapers or newspapers with extensive coverage within the EEA provided the public offer is made via an offer to the public or the capital market where the securities are to be traded;

(ii) in a written form, placed free of charge at the disposal of the public at the place of the business of the market where the securities are admitted to trading, as well as the place of business of the issuer and the financial companies placing or transacting the sale of securities;

(iii) in electronic form on the website of the issuer and, where applicable, on the website of the financial companies placing or transacting the sale of securities; or

(iv) in electronic form, via the information system of the capital market where the application for listing or admission for trading is made.

In case of electronic publication, the prospectus must be made available upon the investor’s request in physical form free of charge by the issuer, the person who is responsible for the offer, the person who applies for the negoti-able instruments to be traded on a capital market or the financial companies placing or transacting the sale of securities (Art. 2:28 et seq. SSTA).

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2 Advertisements

13.13 The advertisement of a negotiable instrument to be offered to the public or to be traded on a capital market must contain information that a prospectus has been or will be published and indicate where investors are or will be able to obtain it.

In addition, the advertisement must clearly show it is an advertisement and the information contained in an advertisement must not be inaccurate or misleading. The information in the advertisement must be consistent with the information contained in the prospectus or, if no prospectus has been pub-lished, the information required in the prospectus which is to be published (Art. 2:32 SSTA).

Any other information concerning the offer, which is not an advertisement, must be consistent with that in the prospectus (Art. 2:33 SSTA).

VI Prospectus approved in other (non-EU and non-EEA) countries

13.14 Article 2:25 of the SSTA provides that if Sweden is the home Member State in cases were the issuer has its registered office in a country outside the EU or the EEA, the Swedish FSA will be competent to approve the prospectus if: (i) the prospectus has been drawn up in accordance with the rules in the country which is the issuer’s home state; and (ii) the information requirements under the law of the relevant country are equivalent to the requirements set forth in the SSTA and the Prospectus Regulation.

VII Sanctions

13.15 The Swedish Securities Trading Act and rules therein are enforced by the FSA.

The FSA has several different sanctions at its disposal such as administrative fines and may also forbid further trading (Art. 6:2–3e SSTA).

The Swedish Penal Code may also apply in serious cases.


13.16 When an offer is made to the public which concerns the issue of negotiable instruments, the prospectus must be prepared by the issuer. If the offer to the public concerns the purchase of shares, convertible bonds, share subscription rights or options from someone who is in the possession of such negotiable instruments, the prospectus must be drawn up by the issuing company. Other prospectuses concerning offers to the public must be drawn up by the person who is responsible for the offer (Art. 2:9 SSTA).

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13.17 The rules on civil liability for an incomplete prospectus or errors in prospectus are laid down in the Companies Act 2005 (Chapter 29, Art. 1) and were intro-duced when the Prospectus Directive was implemented.

In general, prospectus liability lies with the members – although indi-vidually – of the board of directors of the company. Liability can be invoked by the company, the shareholders or other third parties, such as investors. Liability requires at least negligence. Even if the legislative change was one step forward in legal development in Sweden, it is still not clear to what extent and under which circumstances financial companies placing or transacting the sale of securities have a civil liability in tort nor if and to what extent such companies can and should be able to redirect the liability towards the issuing company.

IX Rules applicable to transactions and securities not subject to the Directive or Regulation

13.18. As mentioned in the introduction, all rules concerning prospectuses are to be found in the SSTA. In cases were the Prospectus Directive does not apply, the SSTA remains applicable.

Notes

1. See in detail the preliminary workings to the legislation, especially proposition 2004/05:158 ‘Prospekt’.

PART I I I

Application in the EEA Member States

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I Introduction 205 II Competent authority 206 III Prior approval and appeal procedures 207 1 Offering of securities to the public 207 A Procedure 207 B Exemptions 208 2 Admission to trading on a regulated market 208 A Procedure 208 B Exemptions 208 IV Content and format, language and supplements of the prospectus 209 1 Content 209 2 Format 210 3 Supplements 210 4 Language 210 V Publication and advertisements 211 1 Method of publication 211 2 Advertisements 212 VI Use of a prospectus approved in other (non-EU and non-EEA) countries 212 VII Sanctions 213 VIII Prospectus liability 214 IX Conclusion 214

I Introduction

14.1 Iceland implemented the Prospectus Directive by Act No. 31/2005, which amended the Act on Securities Transactions No. 33/2003. On 1 November 2007, Act No.33/2003 on Securities Transactions was replaced by a new Act on Securities Transactions No. 108/2007 (the ‘Securities Act’). The rules govern-ing the publication of a prospectus in the event of a public offering of securities or a request for admission to trading on a regulated market were laid down in Chapter VI of the Securities Act. The aforesaid rules governing the publication

14IcelandÓlafur Ar inbjörn Sigurðsson hdl.

Logos Legal Services

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of a prospectus were taken up practically unchanged in the Securities Act from the previous Act.

14.2 Following the implementation of the Prospectus Directive into Icelandic law, four new regulations on public offering of securities and request for admission to trading on a regulated market were adopted. The purpose of these regula-tions is to implement further the requirements set by the Prospectus Directive. The aforesaid regulations are, first, Regulation No. 242/2006 on public offer-ings of securities with a total value of ISK210 million or more and the admis-sion of securities to trading on a regulated market; second, Regulation No. 243/2006 on the adoption of Commission Regulation No. 809/2004 imple-menting Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemin-ation of advertisements; third, Regulation No. 244/2006 on public offerings of securities with a total value of ISK8.4 million to ISK210 million; and fourth, Regulation No. 245/2006 on official admission to trading on a regulated market.

Concurrent with the adoption of the four new Regulations, two Regulations were abolished, i.e., Regulation No. 434/1999 on official admission to trading on a regulated market and No. 630/2003 on trading in securities.

No other legislation or circulars have been issued by the Icelandic Financial Supervisory Authority, the Fjármálaeftirlitið (Financial Supervisory Authority) (‘FME’), except a fee schedule for review of prospectuses No. 1075/2005 .

14.3 Prior to the implementation of the Prospectus Directive, the competent author-ity for the approval of prospectuses in Iceland was the Iceland Stock Exchange, known today as the OMX Nordic Exchange Iceland hf., which is the only regulated market in Iceland. However, following the implementation of the Prospectus Directive the FME took over as the competent authority.


14.4 The competent authority for the approval of prospectuses in Iceland is the FME.

With respect to the public offering of securities and admission of securities to trading in Iceland, the FME shall oversee and is competent for the approval of prospectuses.

14.5 The FME may, under the Securities Act, by agreement appoint a regulated market to handle prospectus approval. Such an agreement shall state what tasks are entrusted to the regulated market and the conditions for their per-formance. Compensation for prospectus approval shall be decided by the FME or the regulated market in question. With reference to the aforesaid, FME and OMX Nordic Exchange Iceland hf. concluded an agreement on the scrutiny

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and endorsement of prospectuses. The agreement was entered into force on 1 January 2006 and shall expire no later than 31 December 2011. The agree-ment shall be reviewed following the review of the Prospectus Directive, which is to be completed by 31 December 2008. If, at that point in time, the FME is no longer authorised to entrust a regulated securities market with the endorse-ment of prospectuses, the Agreement shall become invalid without any notice of termination and the FME will take over prospectus approval.

14.6 The FME is authorised to transfer prospectus approval to the competent authority of another Member State of the European Economic Area. The FME shall notify the issuer, the offeror or the person requesting admission on to trading on a regulated market about such transfer within three working days from the time of its decision. The time limit is ten days from that notifi-cation day .



A Procedure

14.7 It is prohibited to offer securities to the public in Iceland, or to have securi-ties admitted to trading on a regulated market, unless a prospectus has been approved by the FME, or OMX Nordic Exchange Iceland hf. in accordance with the agreement with the FME, or the competent regulatory authority of another Member State, in accordance with the Prospectus Directive. The pro-cedure set forth in the Prospectus Directive has been implemented by the Securities Act. Moreover the applicant should file the following documents along with the draft prospectus: completed list of cross-references; the audited accounts of the company for the last three years, unless an exemption has been granted, signed by a certified public accountant, as well as the interim financial statements for the current year, if applicable; official confirmation of the company’s registered share capital; a list of the shareholdings of the twenty largest shareholders and parties financially connected with them such as spouses, cohabiting partners, children who are not financially competent, and legal entities which they control; the current articles of association for the company; a list of insiders in accordance with the provisions of the Act on Securities Transactions; rules on treatment of insider information and insider trading if an issuer has adopted such rules; and a time plan for admission of shares to trading which has been prepared in consultation with the OMX Nordic Exchange Iceland hf .

The FME will announce within ten working days of receipt of a request for approval of a prospectus whether it needs more information or if the prospec-tus is approved. This period is extended to twenty working days if the public offer involves securities issued by an issuer which does not have any securities

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admitted to trading on a regulated market and who has not previously offered securities to the public.

If the applicant does not receive a reply from the FME within the afore-mentioned ten-working-day period after having submitted a completed file, it shall not be deemed to constitute approval of the application.

If the prospectus is rejected (or not approved within the statutory time limit), the applicant can take the FME rejection to the courts within three months from the date the applicant received the rejection, cf. Article 18 of the Act on official supervision of financial operations No. 87/1998, as amended .

B Exemptions

14.8 Article 50 of the Securities Act provides exemptions from the obligation to publish a prospectus for certain categories of securities. It fully corresponds to the exemptions set forth in Articles 3(2), 4(1) and (2) of the Prospectus Directive.

The main private placement exemptions are that the following types of offers are exempted from publication of prospectuses:

(i) an offer of securities addressed solely to qualified investors; and/or (ii) an offer of securities addressed to fewer than 100 natural or legal per-

sons per Member State, other than qualified investors; and/or (iii) an offer of securities addressed to investors who acquire securities for

a total consideration of at least ISK4,200,000 per investor, for each sep-arate offer; and/or

(iv) an offer of securities whose denomination per unit amounts to at least ISK4,200,000; and/or

(v) an offer of securities with a total consideration of less than ISK84,000,000, which limit shall be calculated over a period of twelve months .


A Procedure

14.9 It has been mentioned that securities may not be admitted to trading on a regulated market unless a prospectus has been approved by the FME, or OMX Nordic Exchange Iceland hf. in accordance with the agreement with the FME, or the competent regulator of another Member State.

In this case, the procedure to request approval of the prospectus is the same as the procedure applicable to a public offering (see no. 7 of this chapter).

B Exemptions

14.10 Article 50(3) of the Securities Act sets forth exemptions to the obligation to publish a prospectus for the admission to trading on a regulated market of cer-tain categories of securities: see 8 above. The exemptions fully mirror those set forth in Article 4(2) of the Prospectus Directive .

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1 Content

14.11 In general, a prospectus should contain all information necessary, taking into account the nature of the issuer and of the securities offered to the pub-lic or admitted to trading on a regulated market, to enable investors to make an informed assessment of the assets and liabilities, financial position, finan-cial results and prospects of the offeror, issuer and any guarantor and of the rights attached to such securities. The content of the prospectus should be in accordance with the Prospectus Regulation, implemented by Regulation No. 243/2006.

The FME may (but is not obliged to) authorise the omission of certain information required by the Securities Act in the event that: (i) disclosure of such information would be contrary to the public interest; (ii) disclosure of such information would be seriously detrimental to the issuer, provided the omission is not likely to mislead the public with regard to facts and circum-stances essential to an informed assessment of the issuer, the offeror or the guarantor, if any, and of the rights attached to the securities to which the pro-spectus relates; or (iii) such information is of minor importance and relates to a specific offer or admission to trading on a regulated market and is not such as to influence the assessment of the financial position and prospects of the issuer, the offeror or the guarantor, if any .

Furthermore, the FME can permit that certain information is replaced with equivalent adequate information when the requirements of the Prospectus Regulation are inappropriate to the offeror’s or issuer’s scope of activity or corporate form or to the securities to which the prospectus relates. If there is no such equivalent information, this requirement shall not apply.

14.12 Exceptionally, a prospectus can be drawn up in accordance with the national law of an issuer not having its registered office in the European Economic Area if: (i) the information incorporated in the prospectus is equivalent to the requirements of the Securities Act and Regulation No. 242/2006; and (ii) the prospectus is drawn up in accordance with international standards set by inter-national securities commission organisations, including the IOSCO disclosure standards.

14.13 Due to the uncertainty in relation to the demand in offering of securities, the offer price and number of securities to be offered are often not known when the prospectus is finalised. To the extent the final offer price and number of securities to be offered cannot be mentioned in the prospectus, mention should be made of the maximum offer price and the criteria and/or conditions in accordance with which the offer price and number of offered securities will be determined. Investors can withdraw their acceptance of the offer or subscrip-tion within a period of two working days following the announcement of the

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final offer price. This announcement shall be made public in the same way as the prospectus .

As provided for in Article 11 of the Prospectus Directive, the FME can also permit the incorporation of information by reference in the prospectus .

2 Format

14.14 The prospectus can, at the offeror’s or issuer’s discretion, be drawn up as a single document or as three separate documents. A prospectus consisting of three separate documents should include a registration document (with information relating to the offeror or the issuer), a securities note (with information relating to the securities to be offered or admitted to trading) and a summary note .

For the public offering or admission to trading of certain types of securities (such as non-equity securities, including warrants in any form issued under an offering programme, or non-equity securities issued in a continuous or repeated manner by credit institutions), the prospectus can, at the choosing of the issuer, offeror or person requesting admission to trading on a regulated market, consist of a base prospectus containing all relevant information about the issuer and the securities offered or to be admitted .

3 Supplements

14.15 In the event a significant factor arises or a material mistake or inaccuracy occurs in the period between approval of the prospectus and the close of the offer or the admission to trading, the issuer (or offeror) should prepare a sup-plement to the prospectus. The supplement must be approved by the FME (or the competent regulator of another Member State, if the prospectus was approved in that State) within a maximum period of seven working days. The summary and any translations should also be amended to take into account the new information included in the supplement.

Investors who have already agreed to purchase or subscribe to the secur-ities have a right to withdraw their acceptance within a period of two working days following publication of the supplement .

4 Language

14.16 Article 12 of Regulation No. 242/2006 stipulates which language shall be used when the prospectus is prepared. The rules fully correspond with those set forth in Article 19 of the Prospectus Directive, implemented by Regulation No. 243/2006. Notwithstanding the aforesaid, the practice in Iceland is that prospectuses are generally prepared in English.

Where an offer to the public is made or admission to trading on a regulated market is sought only in Iceland, the home Member State, the prospectus shall be drawn up in Icelandic or in a language accepted by the FME.

Where an offer to the public is made or admission to trading on a regu-lated market is sought in one or more Member States, excluding Iceland as

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the home Member State, the prospectus shall be drawn up either in a language accepted by the competent authorities of those Member States or in English, at the choice of the issuer, offeror or person asking for admission as the case may be.

Where an offer to the public is made or admission to trading on a regulated market is sought in more than one Member State, including Iceland as the home Member State, the prospectus shall be drawn up in a language accepted by the FME and shall also be made available either in a language accepted by the competent authorities of each host Member State or in English, at the choice of the issuer, offeror, or person asking for admission to trading, as the case may be.

Where an offer to the public is made or admission to trading on a regulated market is sought in Iceland and Iceland is the host Member State, the prospec-tus shall be made available in a language accepted by the FME or in English, at the choice of the issuer, offeror or person asking for admission to trading, as the case may be.

Where admission to trading on a regulated market of non-equity securities whose denomination per unit amounts to at least ISK4.2 million is sought in one or more Member States, the prospectus shall be drawn up either in a language accepted by the competent authorities of the home and host Member States or in English, at the choice of the issuer, offeror or person asking for admission to trading, as the case may be .



14.17 The prospectus should be made available to the public as soon as is possible, at least with good notice before the public offering and no later than the opening of the offering or the date of admission to trading. If it is the first admission to trading for the securities, the prospectus should be made available at least six working days before the end of the offering.

Publication shall be accomplished in accordance with Article 14(2) of the Prospectus Directive. A prospectus shall be considered to have been made public when it is made available in any of the following ways:

(i) publication in one or more daily newspapers with nationwide or exten-sive circulation;

(ii) in a printed form to be made available, free of charge, to the public at the offices of the market on which the securities are being admitted to trading, or at the registered office of the issuer and at the offices of the financial intermediaries placing or selling the securities;

(iii) on the website of the offeror or issuer and, if applicable, on the website of the financial intermediaries placing or selling the securities;

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(iv) on the website of the regulated market where the admission to trading is sought;

(v) on the website of the FME (www.fme.is) .

No later than the next working day after the prospectus has been made avail-able, a notice has to be published in one or more newspapers, stating how the prospectus has been made generally available.

The (base) prospectus and registration document are valid for a period of twelve months following their publication, provided they are updated when required. The registration document can, of course, only be distributed if it is accompanied by a securities note and summary .

2 Advertisements

14.18 Any type of advertisement relating to an offering of securities to the public or to an admission to trading is subject to specific provisions of Article 9 of Regulation No. 242/2006. However, the provisions only apply in case the issuer, offeror or person requesting admission to trading on a regulated market is obligated to prepare a prospectus.

Any advertisement made public by the issuer (or offeror) should comply with the following conditions: (i) the document should state that a prospectus has been or will be published and where it can be obtained; (ii) the information contained in the advertisement should be accurate and not misleading; (iii) the information should be consistent with that contained in the prospectus; and (iv) the advertisement must be clearly recognisable as such.

14.19 Advertisements can be circulated in any of the ways set forth in the Prospectus Regulation, implemented by Regulation No. 243/2006.

If advertisements with material information are made available to quali-fied investors or special categories of investors, such information must (i) be incorporated in the prospectus or a supplement thereto, if there is an obligation to publish a prospectus; and (ii) be disclosed to all qualified investors or spe-cial categories of investors, if the offer is exclusively addressed to this type of investor. Material information is often given to certain investors during road shows .


14.20 Article 10 of Regulation No. 242/2006 stipulates that the FME is obligated, with advance to Article 14, to acknowledge prospectuses and supplements to prospectuses which have been approved by a competent authority in the European Economic Area (EEA), provided that the notification requirement according to Article 11 is met. Such prospectuses are excluded from any kind of approval process or administration by the FME.

www.fme.is

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In the event a significant factor arises or a material mistake or inaccuracy occurs concerning the information in a prospectus after it has been approved, the FME is authorised to notify the competent authority of the relevant home state that new information is necessary.

14.21. Article 13 of Regulation No. 242/2006 stipulates that if Iceland is the home State of an issuer having its registered office in a country outside the EEA, the FME can approve the prospectus for a public offering or admission to trading of securities, which is drawn up in accordance with the legislation of the rele-vant State, if the following conditions are met:

(i) the prospectus is drawn up in accordance with international standards set by international securities commission organisations, including the IOSCO disclosure standards on publication of information;

(ii) the information incorporated in the prospectus, including financial infor-mation, is equivalent to the requirements of Chapter VI of the Securities Act and Regulation No. 242/2006.

If Iceland is not a home State in a public offering or admission to trading of securities on a regulated market in Iceland and the issuer has a registered office in a country outside the EEA, Articles 10, 11 and 12 of Regulation No. 242/2006 apply .

VII Sanctions

14.22 The Securities Act contains a list of sanctions that can be imposed by the FME under specific circumstances. This list does fully correspond to that set forth in Article 21(3) and (4) of the Prospectus Directive.

14.23 In the event of a violation of any provisions of the Securities Act, the FME can impose an administrative fine ranging from ISK10,000 to 20 million for individuals and ISK50,000 to 50 million for legal persons .

In addition to administrative fines, violators can also be punished by a prison term of up to six years, if there are no more severe sanctions under other legislation, and/or a criminal fine in specific circumstances enumerated in the Securities Act. The following acts, for example, are subject to criminal sanctions:

(i) a public offering of securities is made without a prior publication of a prospectus as required in Article 44(1) of the Securities Act;

(ii) the prospectus does not contain all the information stipulated in Article 45 of the Securities Act;

(iii) a supplement to the prospectus is not prepared in accordance with Article 46 of the Securities Act .

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14.24 The prospectus should clearly indicate and identify the persons responsible for it and any supplements, namely the issuer or its corporate bodies, whether they be administrative, managerial or supervisory, the offeror and the person requesting admission on to trading on a regulated market or the guarantor. These persons must be clearly identified in the prospectus. To this end, their name and function or, in the case of legal entities, their name and the address of their registered office must be mentioned. Furthermore, the prospectus must contain a statement by such persons that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus contains no omissions likely to affect its import .

The issuer or its corporate bodies, the offeror, the person requesting ad-mission or the guarantor, named as responsible parties in the prospectus, are, notwithstanding any provisions to the contrary, jointly liable for any damage caused by any misleading or incorrect information in the prospectus and its supplements, or the omission of information required by the Securities Act, the Prospectus Directive or the implementing legislation. Even though it can be proved that information in the prospectus was misleading or incorrect and there is a connection between that and changes in the purchase price of the securities, it is not certain that the investor will get compensation. The investor first has to prove his loss.

Liability shall be divided internally in accordance with the common rules of tort law . In Iceland the board of directors, including board members, are considered to be mainly liable for the prospectus to be correct. They will, therefore, likely bear the ultimate liability alone or with others. It can be assumed that the company itself would be judged to pay the claims and it would than have a recovery claim towards the board members for at least a part of the compensation on the ground that they have not fulfilled their duties. It would be considered normal that they would bear the liability rather than the shareholders. If the reason for the incorrect information can be traced to a certain party, e.g., the accountant or the manager, the main liability would fall on that party. However if the board members should have been able to see the error they would also be liable .

Liability cannot be incurred solely on the basis of a summary of the pro-spectus or a translation thereof, unless the summary contains misleading, inaccurate or inconsistent information in relation to the prospectus .

IX Conclusion

14.25 The Icelandic legislature has fully implemented the provisions of the Prospectus Directive and the Prospectus Regulation into national law.

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I Introduction 215 1 Identification of the implementing laws and legal framework 215 2 Brief legislative history 216 II Competent authority 216 III Procedure of prior approval and appeal 217 1 Public offer 217 2 Admission to trading 218 3 Exemptions 219 4 Appeal 220 IV Content and format, language and supplements of the prospectus 220 1 Content 220 2 Format 221 3 Supplement 222 4 Language 222 V Publication and advertisements 224 1 Method of publication 224 2 Advertisements 225 VI Use of prospectus approved in other countries 225 1 Use of a prospectus approved in other EEA-contracting parties 225 2 Use of a prospectus approved in non-EEA countries 225 VII Sanctions 226 1 Judicial offences 226 2 Administrative offences 227 VIII Prospectus liability 227 IX Rules applicable to transactions and securities not subject to the Securities

Prospectus Act and the Prospectus Regulation 228 X Conclusion 228

I Introduction

1 Identification of the implementing laws and legal framework

15.1 The Principality of Liechtenstein is not a member of the European Union (EU). However, being a party to the Treaty relating to the European Economic Area (EEA), Liechtenstein is obliged to implement the Prospectus Directive.

15LiechtensteinAndr eas Schurti and Alexander Appel1

Walch & Schurti

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Like the other parties of the EEA, the Principality of Liechtenstein is not only obliged to implement the Prospectus Directive; it is also bound to the Prospectus Regulation which is directly applicable in the Principality of Liechtenstein.

15.2 In Liechtenstein, the implementation of the Prospectus Directive took place by way of a complete revision of the former Liechtenstein Prospektgesetz (Prospectus Act). The Prospectus Act was not only comprehensively revised with regard to its format but also with regard to its content. Moreover, due to its reinforced function to regulate the domestic securities market its name was changed to Wertpapierprospektgesetz (Securities Prospectus Act, ‘SPA’). In order to remind those applying the Securities Prospectus Act of the imme-diate applicability of the Prospectus Regulation, Article 9 of the Securities Prospectus Act mentions that, with regard to the minimum requirements for the content of a prospectus, the Prospectus Regulation has to be applied.

Liechtenstein availed itself of the German corresponding legislation as a model for the implementation of the Prospectus Directive.2

Besides the complete revision of the former Prospectus Act, the implemen-tation of the Prospectus Directive was achieved by amending the Liechtenstein Investmentunternehmengesetz (Act on Mutual Funds).3

2 Brief legislative history

15.3 The Government of the Principality of Liechtenstein approved the internal report as well as the draft version of the new implementing legislative by decision of 11 July 2006. Subsequently, the draft was forwarded to different departments, author-ities, as well as associations in order to offer them the opportunity to comment on the report and the draft version. Comments were submitted by a great number of bodies such as the Federation of the Liechtenstein Banks, the Federation of the Liechtenstein Insurance Companies, the EEA-Unit, the Financial Intelligence Unit, the Department for National Economy, the Department for Foreign Affairs, the Liechtenstein Chamber of Industry and Commerce and others. Some of these contributors also proposed amendments for the draft version of the Securities Prospectus Act. However, all of them agreed to the necessity of a harmonisation of the European laws with regard to the publication of prospectuses.4

The draft version for the Securities Prospectus Act as well as the underlying report and the different statements and amendment proposals were discussed in the Liechtenstein Parliament in two separate readings. Finally, the amended Securities Prospectus Act was approved by the Liechtenstein Parliament in the second reading on 23 May 2007. The Liechtenstein Securities Prospectus Act5 then entered into force on 1 September 2007.


15.4 In the Principality of Liechtenstein the ‘Finanzmarktaufsicht’ (Financial Market Surveillance Authority, ‘FMA’) has to supervise the application

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Liechtenstein 15.7

of the Securities Prospectus Act (Arts. 15 and 29 et seq. SPA). This is an independent, but nevertheless integrated, authority for the surveillance of the Liechtenstein financial market. Its main tasks are to ensure the stability of the financial market of the Principality of Liechtenstein, the protection of clients in the financial sector, the avoidance of abuse of the financial market and the implementation of and compliance with international standards to be applied on the financial market.6 The FMA is independent from the Government, but obliged to render an account to the Liechtenstein Parliament.7

15.5 The FMA has special powers (Art. 29 SPA). However, although it shall collab-orate with other authorities, the FMA is not allowed to delegate these powers to other authorities or to governmental departments of the Principality of Liechtenstein.8

Special powers are, for example, the right to receive information from issuers, offerors or other persons applying for the admission to trade securities, the right to request further information to be included in the prospectus and, if the suspicion of an offence against the Securities Prospectus Act arises, the right to order the temporary suspension of a public offer, the temporary sus-pension of its advertising or even the temporary suspension of trade with the offered securities. Furthermore, the FMA may inform the public in the official gazettes that an issuer does not comply with the regulations of the Securities Prospectus Act and therefore is not allowed to offer securities. Finally, the FMA is allowed to take every measure that is appropriate to achieve compli-ance with the Securities Prospectus Act. In case such measures have to be taken outside the territory of the Principality of Liechtenstein, the FMA, in order to achieve them, has to coordinate with the respective party to the EEA.9

15.6 The FMA is also the competent authority in case of administrative offences (e.g., if in violation of the Securities Act no prospectus is published) (Art. 43 et seq. SPA). It is allowed to impose administrative fines in the amount of up to CHF100,000. Besides the FMA, the Princely District Court is the competent authority for violations of the criminal provisions of the Securities Prospectus Act.10


1 Public offer

15.7 The Liechtenstein Securities Prospectus Act has to be applied on all public offers for securities as well as the admittance for trade of such securities on a regulated market in one of the states of the EEA. The term ‘public offer’ is defined in the Securities Prospectus Act as information of the public irrespec-tive of the format or means of such information, however offering sufficient information with regard to the conditions of an offer and the offered securi-ties in order to provide an investor with the necessary information to decide

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whether or not to subscribe to or buy the offered securities (Art. 3, al. 1(d) SPA). For such a public offer a prospectus has to be published and approved beforehand (Art. 4 SPA).

Different from the previous Prospectus Act all (not only the first) offers have to follow a published prospectus. If the same securities are offered for sale again after some time, such later offer again qualifies as a separate offer and requires the publication of a prospectus.11 However, one must distinguish between such subsequent offers and the offering on different markets of the EEA. It is the achievement of the implementation of the Prospectus Directive that only for the offering on the first market in the EEA a prospectus has to be released (Art. 6 litt. 2(g) SPA). With the approval of the prospectus and the admittance for trade of the offered securities in one regulated EEA-market, no further prospectus has to be published for the trading of these securities on other markets in the EEA (‘European passport’). Therefore, subject to special conditions of the Securities Prospectus Act, for securities already having been admitted to another regulated EEA-market no further prospectus has to be published if a public offer shall subsequently be made in Liechtenstein.

2 Admission to trading

15.8 If an offer is subject to the Securities Prospectus Act, each prospectus has to be approved by the FMA prior to its publication (Art. 15 al. 1 SPA). Pursuant to the previous Prospectus Act, such an approval for a prospectus was only given if the prospectus contained all legally required information and, moreover, if such information given was correct. Pursuant to the Securities Prospectus Act, the FMA is obliged to examine the completeness of the information con-tained in the prospectus. However, no guarantee has to be given with regard to the correctness of the information in the prospectus.12 Therefore, the FMA’s approval of a prospectus is no guarantee for the issuer that he will not be made liable by investors for false information contained in the prospectus at a later stage.

The decision with regard to approval or disapproval by the FMA is subject to a term of ten working days starting with the date on which the FMA receives the prospectus (Art. 15 al. 2 SPA). The term is prolonged to twenty working days if this offer is the first public offer of the respective issuer and if the secu-rities of this offer have not already been admitted for trading on another regu-lated EEA-market (Art. 15 al. 3 SPA). However, if the FMA does not decide within these time periods, this may not be interpreted as an approval of the prospectus. In such a case the FMA has the obligation to immediately inform the issuer of the delay (Art. 15 al. 4 SPA).

Should the information contained in the prospectus or the application for approval be incomplete, the FMA is also obliged to inform the issuer within ten working days. The term for approval then starts with the date on which the FMA receives the lacking information (Art. 15 al. 5 SPA).

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The FMA is entitled to request the issuer to send all documents relating to the approval of a prospectus in electronic format (Art. 15 al. 6 SPA). This should help not only to accelerate the processing at the FMA but also to enhance the collaboration with other authorities in the EEA.

15.9 The FMA may delegate the decision of approval or disapproval to the com-petent authority of another EEA-contracting state if the respective authority agrees to such delegation. The issuer, offeror or person applying for approval of the prospectus has to be informed of such delegation within three working days starting with the FMA’s decision to delegate the approval (Art. 16 al. 1 SPA). Such delegation will be practical if securities shall only be traded on the regulated market of another EEA-contracting state.13

Further, the FMA can agree to take over the decision for approval or dis-approval from the competent authority of another EEA-contracting state if requested to do so by such other authority. The time frame for the FMA’s approval or disapproval then starts with the foreign authority’s decision to del-egate the approval to the FMA (Art. 16 al. SPA).

15.10 After approval, the prospectus has to be deposited with the FMA (Art. 17 al. 1 SPA). Moreover, the complete prospectus has to be published without delay. Such publication must normally be accomplished at the latest one working day prior to the commencing of the public offer (Art. 17, al. 1 SPA).

3 Exemptions

15.11 With regard to the exemptions from the statutory obligation to publish a prospectus, the Securities Prospectus Act provides for more exceptions of its applicability than its predecessor, the Prospectus Act (Arts. 5 and 6 SPA). However, subject to certain conditions for issuers of exempt secur-ities, it is possible to opt in for the applicability of the Securities Prospectus Act in order to benefit from the advantages with regard to the ‘European passport’.14

Amongst the statutory exceptions, offers addressed exclusively to qualified investors (as defined in Art. 3 al.1 lit.g of the Securities Prospectus Act), as well as addressed to less than 100 non-qualified investors in each contracting State, are exempt from the statutory obligation to draft and submit a prospec-tus (Art. 5 al. 1(a) and (b) SPA). This can also be understood as an exemption for offers which are addressed to less than 100 non-qualified investors in each contracting State and to some qualified investors.

Offers in connection with special situations (e.g., the merger of two com-panies or the offer of shares of a company solely to its employees) are exempt from the obligation to publish a prospectus. This exemption is based on the fact that these investors have no need for a prospectus as they have or have had other opportunities to gather detailed information with regard to the securities.15

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Other exemptions include, inter alia, offers in which the total value of the issuance does not exceed €100,000, as well as various exemptions by virtue of the type of the respective securities.

4 Appeal

15.12 Decisions of the FMA may be challenged by way of appeal to the FMA-Beschwerdekommission (FMA Appeal Commission). Decisions of the FMA Appeal Commission may be challenged by way of appeal to the Liechtenstein Administrative Court (Verwaltungsgerichtshof). All appeals to the FMA Appeal Commission or to the Liechtenstein Administrative Court have to be filed within fourteen days from the date of service of the respective decision (Art. 45 SPA).


1 Content

15.13 Pursuant to the Securities Prospectus Act the prospectus has to contain all information necessary for an investor to profoundly assess the assets, the finan-cial situation, the operating results and the future development of the issuer as well as of every guarantor involved. The prospectus further has to provide the investor with sufficient information with regard to the rights related to the possession of the securities offered (Art. 8, al. 1 SPA). Therefore, the pro-spectus must contain all necessary information with regard to the issuer and the offered securities. However, no further specifications with regard to the content of a prospectus are provided in the Securities Prospectus Act. This is due to the fact that the Prospectus Regulation, which provides for the detailed minimum requirements for the content of a prospectus, is directly applicable in Liechtenstein. Therefore, with regard to the mandatory content of a prospec-tus the Securities Prospectus Act expressly refers to the Prospectus Regulation (Art. 9 SPA).

Irrespective of the direct applicability of the Prospectus Regulation and the requirements for its content, the FMA has the power to release the offeror from publishing certain pieces of information if the FMA considers them not to be important or necessary. The publication of information may be seen as unnecessary or not important if, e.g., on the one hand these pieces of informa-tion are not required for the investor to assess the securities offered but on the other hand the publication of this information contravenes the public interest or causes severe damage to the issuer (Art. 14 al. 3 SPA).

If the issuing price and the total amount of securities issued cannot be indicated in the prospectus, either the main criteria or conditions for the cal-culation of the values have to be stated (Art. 14, al. 2 and Art. 17 al. 3(a) SPA). By way of deviation the maximum rate can be indicated in relation to

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the issuance price. The maximum issuing price should always be indicated as it gives the investors comfort that the price will not be higher than a certain amount.16 Alternatively, one must inform the investor in the prospectus that he is entitled to rescind his order or commitment to acquire securities within two working days upon the day when the final price of issuance (as well as the total number of securities issued) is lodged with the FMA (Art. 14 al. 1(b) SPA). The final price of issuance as well as the total number of securities issued must be lodged with the FMA and published like a prospectus (Art. 14, al. 2 and Art. 17 al. 3 SPA).

15.14 The Prospectus has to include a summary that summarises the most important facts and risks with regard to the issuer, the guarantors and the securities in a comprehensible manner (Art. 8, al. 2 SPA). No such summary has to be made if the securities offered are not ‘dividend bearing securities’ or the like with a nominal value of at least €50,000 (or an equivalent value) (Art. 8, al. 3 SPA).

The summary has to contain specific warnings: first of all, the warning that the summary is only a résumé and, as such, does not contain all relevant infor-mation and that the investor, therefore, shall read the entire prospectus before taking his investment decision (Art. 8 al. 2(a) and (b) SPA). A further warn-ing shall be given with regard to the costs of the translation of the prospectus in the sense that, depending on the applicable regulations of the respective EEA-contracting State, an investor filing a claim against the offeror based on misinformation in a prospectus might be bound to bear the costs for the trans-lation of the prospectus prior to the court proceeding (Art. 8 al. 2(c) SPA). Furthermore, the investor has to be made aware of the fact that the persons in charge of the prospectus’s summary and its translation may only be made responsible for misinformation if the information contained in the summary is misleading, wrong or contradictory when read jointly with the information in the entire prospectus (Art. 8 al. 2(d) SPA).

15.15 In the prospectus the name and function of the person(s) who is/are responsible for the content of the prospectus have to be indicated. In case the responsible person is a legal entity its firm name and its registered office have to be stated. Besides these indications a declaration of the respective responsible person(s) has (have) to be included in the prospectus in which they confirm that the information stated in the prospectus is correct and complete and that no mate-rial information is missing (Art. 8 al. 4 SPA). Finally, the prospectus has to be signed by the offeror and the date of issuance has to be indicated (Art. 8 al. 5 SPA).

2 Format

15.16 The format of the prospectus shall be comprehensible and shall make the pro-spectus easy to be analysed (Art. 7 al. 1 SPA). The prospectus may be writ-ten in one or several documents: if written in only one document, this single

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document must contain a summary as well as information with regard to the issuer and the securities offered (Art. 7 al. 3 SPA). If the prospectus consists of several documents, one of these documents has to contain the summary, one the information with regard to the issuer and one the description of the securi-ties offered (Art. 7 al. 4 SPA). The choice whether a prospectus is structured in one or several documents has no impact on the scope of content of the pro-spectus. In any event, the content must be the one required by statutory law. The possibility to have the prospectus made up of several documents shall only accelerate and facilitate the offering in particular for issuers who are admitted to a market and who frequently raise capital on this market.17 However, the possibility to structure a prospectus in different documents does not exist for a basic prospectus which, as such, always has to consist of one single document (Art. 7 al. 5 SPA).

In accordance with Article 13 of the Securities Prospectus Act, the pro-spectus can refer to previously and simultaneously published documents which have been approved by or deposited with the FMA or any competent regulator in another EEA Member State.

3 Supplement

15.17 Each important new circumstance or each material incorrectness or impre-ciseness in relation to the information contained in the prospectus which could influence the assessment of the securities and which occur or are ascertained between the approval of the prospectus and the definite close of the public offer or the entry into trading have to be set out in a supplement to the pro-spectus. This supplement has to be approved by the FMA (Art. 19 al. 1 SPA). The approval has to be given within seven working days (Art. 19 al. 2 SPA). However, if the FMA takes the view that the information contained in the supplement is incomplete, the statutory seven-day term does not commence before the FMA has received all the requested information.18 After approval the supplement has to be published in the same way as the initial prospectus. As a consequence, the potential investors also have to be informed via official gazettes about the publication of the supplement (Art. 17 al. 4 SPA).

Furthermore, the summary of the prospectus and its translations have to be corrected accordingly (Art. 19 al. 3 SPA). This shall enable the investor to get to know the amendments of the prospectus.19 However, there is even more protection for the investors: investors who ordered securities before the publi-cation of the supplement are entitled to cancel their order within two working days if this order was not fulfilled before. This special right of withdrawal has to be emphasised in the supplement (Art. 19 al. 4 SPA).

4 Language

15.18 Article 10 of the Securities Prospectus Act contains the rules with regard to the language of the prospectus. In a nutshell, pursuant to these regulations

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the prospectus may either be drafted in German or in a language ‘customary in the field of international finance’. However, a summary in the German lan-guage always has to be included (Art. 10 SPA). In contrast to neighbouring Switzerland, German is the (only) official language in Liechtenstein.

15.19 To explain the Regulations in more detail, Article 10 of the Securities Prospectus Act provides for the use of different languages depending on the respective EEA Member State in which the securities described in the pro-spectus shall be offered and depending on the so called ‘home-contracting party’. The term ‘home-contracting party’ is defined in Article 3 al. 1(a) of the Securities Prospectus Act and basically is the State in which the issuer has its registered office. However, with regard to special types of non-dividend bear-ing securities the home-Member State is, subject to the choice of the issuer, the offeror or the person requesting the admittance to the market: they may choose as home-contracting party the EEA Member State where the issuer has its registered office, the EEA Member State market to which the securities shall be admitted or the EEA Member State where the securities shall be publicly offered (Art. 3 al 1(n) SPA).

If Liechtenstein is the home Member State and, moreover, the public offer for the securities is only be made in Liechtenstein, the prospectus has to be prepared in German. The FMA may allow another language as long as there is a summary in German and the FMA is of the opinion that the investors are guaranteed to receive sufficient information with regard to the securities (Art. 10 al. SPA).

If Liechtenstein is the home Member State but if the securities are be offered in other EEA-contracting parties only, the prospectus has to be made in a language accepted by the host Member State (i.e., the EEA-contracting party in which an offer to the public is made or admission to trading is sought, if dif-ferent from the home contracting party (Art. 3, al. 1(o) SPA) or a language cus-tomary in the field of international finance. Moreover, if the language accepted by the host contracting party is not German, there has to be a German version of the prospectus or a version in a language accepted by the Liechtenstein FMA together with a summary in German (Art. 10 al. SPA).

If Liechtenstein is the home contracting party and the securities are to be offered in Liechtenstein as well as at least in one other EEA-contracting party, the prospectus has to be in German or in another language accepted by the FMA with a summary in German or the prospectus has to be in a language customary in the field of international finance with a summary in German (Art. 10 al. 3 SPA).

In case Liechtenstein is the home contracting party and the prospectus is not in German, the prospectus must contain a summary in German (Art. 10 al. 4 SPA).

15.20 Article 10 of the Securities Prospectus Act contains a separate regulation for a prospectus with regard to special non-equity securities: if Liechtenstein is

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the home-contracting party and the non-equity securities shall be admitted on the regulated markets of one or several other EEA-contracting parties, the prospectus may be in German or another language accepted by the FMA with a summary in German or in a language customary in the field of international finance (with a summary in German) (Art. 10 al. 5 SPA).



15.21 The complete prospectus has to be published without delay in one of the fol-lowing forms (Art. 17, al. 3 SPA):

(i) it may be published in one or several economic magazines or news-papers which are broadly available or admitted as an official public gazette in the EEA-contracting party in which the public offer shall be submitted;

(ii) furthermore, the publication may be carried out by and having the pro-spectus printed and distributed for free by the issuer, by the financial intermediaries that are placing or selling the securities or by the compe-tent authorities of the regulated market for which the securities shall be admitted;

(iii) the publication condition may also be fulfilled by publishing the pro-spectus on the internet site of the issuer, the internet site of the financial intermediaries that are selling the securities or the internet site of the regulated market for which the securities shall be admitted.

The possible investors have to be informed via the official gazettes where they can locate the published prospectus (Art. 17 al. 4 SPA). If the prospectus is published in electronic format only, the offeror, the issuer, the person applying for the admittance for trade or the financial intermediary placing the securities has to provide the investor with a hard copy version of the prospectus if the investor so requests (Art. 17, al. 6 SPA).

The prospectus has to be published at the latest one working day before the advertised offer commences (Art. 17 al. 1 SPA). The FMA must be informed about the exact date and the way of publication at the latest on the day on which the prospectus is published (Art. 17 al. 4 SPA). Furthermore, if this type of security has not previously been admitted for trade either on the national market or on another regulated market, the offer has to stay valid for a period of at least six working days starting with the day that follows the publication of the prospectus.20

15.22 The FMA itself publishes a list of all prospectuses approved in the previ-ous year on its website with free access for all interested persons (Art. 17 al. 7 SPA).

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2 Advertisements

15.23 Pursuant to Article 21 of the Securities Prospectus Act it has to be differen-tiated whether or not the publishing of a prospectus is mandatory pursuant to the law. In case there is a statutory obligation to publish a prospectus pursuant to the Securities Prospectus Act, any kind of advertising with regard to a public offer or the admittance to trade on a regulated market has to emphasise that a prospectus has been or will be published and where this prospectus is available (Art. 21 al. 1(a1) SPA). Moreover, the adver-tisement must clearly be recognisable as such. It must not contain infor-mation which is incorrect, misleading or contradictory to the information contained in the prospectus (Art. 21 al. 1(a) SPA). All other information that is not intended to be used as advertising and is spread in written or oral form must correspond to the information of the prospectus (Art. 21 al. 1(b) SPA).

If the publishing of a prospectus is not mandatory pursuant to the Securities Prospectus Act, all relevant information with regard to the issuer or the offe-ror that was given to special groups of investors or qualified investors must also be given to all other qualified investors or special groups of investors to whom the offer is addressed. This obligation also refers to information given at special events (Art. 21 al. 2 SPA). However, it goes without saying that the Liechtenstein authorities are entitled to control the advertising on Liechtenstein territory only.21

With regard to advertisements not only the provisions of the Securities Prospectus Act but also to the Prospectus Regulation have to be borne in mind.

VI Use of prospectus approved in other countries

1 Use of a prospectus approved in other EEA-contracting parties

15.24 A prospectus approved by the competent authority of another EEA-contracting party may also be used for a public offer in Liechtenstein subject to the follow-ing conditions.22

The competent authority must notify the Liechtenstein FMA of the approved prospectus by transmitting a confirmation of the approval of the respective prospectus as well as a copy of the prospectus itself.23

Furthermore, if the prospectus is not written in German it must contain a summary in German.24

2 Use of a prospectus approved in non-EEA countries

15.25 A prospectus issued by an issuer having its registered seat in a non-EEA- contracting party may be approved by the Liechtenstein FMA for a public offer

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in an EEA-contracting party or the admittance to the regulated market in an EEA-contracting party if the following conditions are complied with:

(i) the prospectus must have been drafted in accordance with the interna-tional standards of the international organisations of the respective super-vising authorities including the disclosure standards of the International Organisation of Securities Commissions (IOSCO); and

(ii) moreover, the prospectus may only be approved if the information requirements (also with regard to financial information) for the informa-tion contained in the foreign prospectus are equal to those provided for in the Liechtenstein Securities Prospectus Act (Art. 25 al. 1 SPA).

Furthermore, the Regulations of the Securities Prospectus Act with regard to notification requirements (Art. 23 SPA), the passporting system (Art. 22 SPA) as well as language requirements (Art. 10 SPA) have to be complied with (Art. 25 al. 2 SPA).

If these conditions are met and the Liechtenstein FMA approves the pro-spectus the Liechtenstein FMA will be seen as competent authority of the home contracting party (Art. 25 al. 1 SPA).

VII Sanctions

15.26 The Securities Prospectus Act provides for two categories of sanctions: admin-istrative offences and judicial offences. Sanctions for judicial offences have to be imposed by the Princely District Court (Fürstliches Landgericht), whereas the sanctions for administrative offences will be imposed by the FMA as com-petent authority (Art. 42 et seq. SPA).

1 Judicial offences

15.27 It is regarded as a judicial offence if, with regard to a public offer, the publica-tion of a prospectus is mandatory and the pieces of information contained in the prospectus being relevant for the decision to acquire the offered securities are false. It is also seen as a judicial offence if disadvantageous information is not published in the prospectus but withheld from the possible buyers. Such forms of deliberate misinformation may be punished not only with a fine in the amount of a certain percentage of up to one year’s salary of the offender but also with custodial sentences of up to one year’s imprisonment (Art. 42 al. 1 SPA).

Moreover, the deliberate unauthorised use or revelation of personal data or facts and of most business secrets will qualify as a judicial offence. For such an offence, fines in the amount of a certain percentage of up to one year’s sal-ary or custodial sentences of up to half a year’s imprisonment may be levied (Art. 42 al. 2 SPA).

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In case these offences are committed negligently half of the fines or custo-dial sentences may be imposed (Art. 42 al. 3 SPA).

2 Administrative offences

15.28 The FMA is entitled to impose fines of up to Swiss Francs 100,000 if pursuant to the Securities Prospectus Act a prospectus approved by the FMA has to be published and this prospectus was deliberately published prior to the FMA’s approval (Art. 43 al. SPA). Furthermore, such fine may be imposed if the FMA was deliberately not informed, if the FMA was not informed on time or if the FMA was informed incorrectly about the price of the issue or the volume of the issue. The same will be applied if the price of the issue, the volume of the issue or the prospectus itself, the notification in the gazettes or the supplement to the prospectus have deliberately not been timely published, have not been timely published at all or have been published incorrectly (Art. 43 al. 1 SPA).

Furthermore, a fine of up to Swiss Francs 100,000 may be levied if an issuer does not comply with the obligation of Article 20 of the Securities Prospectus Act. This provision obliges all issuers to inform their investors annually of all the information published with regard to the offered securities due to the surveillance regulations of one of their markets (Art. 20 SPA). A fine of the same amount may be imposed if in violation of Article 17 al. 6 of the Securities Prospectus Act no hard copy version of the prospectus is made available to the investors. Finally, such fine may be imposed if the summons of the FMA to comply with the regulations of the Securities Prospectus Act is not obeyed (Art. 43 al. 1(e) SPA).

If these administrative offences have not been committed deliberately but only negligently only half of the amount as stated above may be levied as fine (Art. 43 al. 2 SPA).


15.29 On the one hand the Securities Prospectus Act contains regulations with regard to the fines as described above. These fines may be imposed on the respective offenders in case of the described judicial or administrative offences.

On the other hand, pursuant to the Securities Prospectus Act in each pro-spectus the name and function of the person(s) responsible for the content of the prospectus have to be mentioned. If the responsible person is a legal entity, its firm name and its registered office have to be stated (Art. 8 al. 4 SPA).

These persons can be made liable for all damages incurred by the investors if in contradiction to the provisions of the Securities Prospectus Act no pro-spectus has been published at all or the information contained in the prospec-tus was false or incomplete. However, these persons may not be made liable if they prove not to be responsible for the damage caused (Art. 38 al. 1 SPA).

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The persons referred to as responsible for the content of the prospectus can also be made liable for the damages of the investors caused by the assistants or agents of these persons. Also these persons can prevent this liability by prov-ing that they exercised due diligence with regard to the choice, instructions and surveillance of their assistants or agents (Art. 38 al. 2 SPA).

The liability extends to the summary of the prospectus and its translations in case these are false, misleading or contradictory (Art. 38 al. 4 SPA).

Finally, the liability as explained above may not be restricted or excluded in advance if this would result in a disadvantage to the investor (Art. 38 al. 3 SPA).

15.30 The Liechtenstein Persons and Companies Act (‘Personen-und Gesellschaftsrecht’, ‘PGR’) also provides for provisions which deal with the liability for damages resulting from false information in a prospectus or an offering memorandum. In accordance with Article 219 al.1 Z.1 PGR, a person who is active within the framework of the formation or incorporation of a legal entity is liable for damages which result from any false informtion such person has made or distributed in a prospectus or an offering memorandum. This also applies accordingly in relation to damages if such legal entities issue securities at a later stage (Art. 219 al.3 PGR). Provided that the respective prerequisites are fulfilled, not only the creditors of a legal entity but also the shareholders and the entity itself, as the case may be, can be attributed such claim for dam-ages against the responsible persons.

IX Rules applicable to transactions and securities not subject to the Securities Prospectus Act and the Prospectus Regulation

15.31 In case a transaction or securities are not subject to the Securities Prospectus Act and the Prospectus Regulation and even if the a transaction or securities are subject to these regulations it has to be borne in mind that the Act on Mutual Funds25 could be applicable for these transactions or securities. A mutual fund is defined as capital collected via public advertising for the purpose of invest-ing it collectively and on the joint account of the investors. Should this Act on Mutual Funds be applicable, several conditions with regard to the managing corporation of such a mutual fund, with regard to the mandatory prospectus, but also with regard to mandatory periodical reports have to be observed.

Besides this Act on Mutual Funds, the Act for the Protection of Consumers26 or the Act Against Unfair Trade may be applicable.27

X Conclusion

15.32 The Liechtenstein implementation of the Prospectus Directive, the new Securities Prospectus Act, offers issuers a variety of new possibilities. Especially for smaller countries without a regulated market the passporting system is of importance. Via the passporting system the approval for trade

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is valid in the entire EEA and, therefore, possibly also in countries with a regulated market. This upgrades the approval of countries without a regulated market and makes them more attractive as their approval also constitutes an entry to the regulated markets of the EEA.

The harmonisation of the laws of all contracting parties of the EEA with regard to public offers of securities will facilitate such offer in the different countries of the EEA. This should promote the trade of securities and enhance such trade via Liechtenstein.

Notes

1. We thank our colleague Dr Christian Presoly for his assistance in drafting this chapter.

2. Governmental Report on the Securities Prospectus Act for the Liechtenstein Parliament, p. 8 et seq.

3. See footnote 26 below. 4. Governmental Report on the Securities Prospectus Act for the Liechtenstein

Parliament, p. 20 et seq. 5. Wertpapierprospektgesetz (WPPG) of 23 May 2007, LGBl. 2007/Nr. 196. 6. Art. 4 of the Act with regard to the FMA of 18 June 2004. 7. Art. 32 of the Act with regard to the FMA of 18 June 2004. 8. Art. 29 of the Securities Prospectus Act; Governmental Report on the

Securities Prospectus Act for the Liechtenstein Parliament, p. 64. 9. Loc. cit.10. Art. 31 and 42 of the Securities Prospectus Act; see no. 26 et seq. of this

chapter.11. Art. 5 al. 2 of the Securites Prospectus Act; Governmental Report on the

Securities Prospectus Act for the Liechtenstein Parliament, p. 10.12. Art. 15 of the Securities Prospectus Act; Governmental Report on the

Securities Prospectus Act for the Liechtenstein Parliament, p. 48.13. Governmental Report on the Securities Prospectus Act for the Liechtenstein

Parliament, p. 50.14. Governmental Report on the Securities Prospectus Act for the Liechtenstein

Parliament, p. 10; Art. 2 al. 3 Securities Prospectus Act.15. Art. 6 of the Securities Prospectus Act; Governmental Report on the Securities

Prospectus Act for the Liechtenstein Parliament, p. 11.16. Governmental Report on the Securities Prospectus Act for the Liechtenstein




Parliament, p. 56.

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20. Art. 17 al. 1 of the Securities Prospectus Act; Governmental Report on the Securities Prospectus Act for the Liechtenstein Parliament, p. 52.

21. Governmental Report on the Securities Prospectus Act for the Liechtenstein Parliament, p. 57.

22. Art. 22 al. 3 of the Securities Prospectus Act in connection with Art. 23 of the Securities Prospectus Act and Art. 10 al. 4 of the Securities Prospectus Act.

23. Art. 22 al. 3 of the Securities Prospectus Act in connection with Art. 23 of the Securities Prospectus Act.

24. Art. 22 al. 3 of the Securities Prospectus Act in connection with Art. 10 al. 4 of the Securities Prospectus Act.

25. Gesetz vom 19 May 2005 über Investmentunternehmen (IUG), Liechtensteinisches Landesgesetzblatt Nr. 2005/156.

26. Gesetz vom 23 October 2002 zum Schutz der Konsumenten (Konsumentenschutzgesetz, KSchG), Liechtensteinisches Landesgesetzblatt 2002/164.

27. Gesetz vom 22 October 1992 gegen den unlauteren Wettbewerb (UWG), Liechtensteinisches Landesgesetzblatt 1992/121.

PART IV

Annexes

Council Directive (EC) No. 2003/71 of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (the Prospectus Directive)

Annex I

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DIRECTIVE 2003/71/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILof 4 November 2003

on the prospectus to be published when securities are offered to the public or admitted to tradingand amending Directive 2001/34/EC

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THEEUROPEAN UNION,

Having regard to the Treaty establishing the European Com-munity, and in particular Articles 44 and 95 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Economic andSocial Committee (2),

Having regard to the opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article251 of the Treaty (4),

Whereas:

(1) Council Directives 80/390/EEC of 17 March 1980 coor-dinating the requirements for the drawing up, scrutinyand distribution of the listing particulars to be publishedfor the admission of securities to official stock exchangelisting (5) and 89/298/EEC of 17 April 1989 coordi-nating the requirements for the drawing up, scrutiny anddistribution of the prospectus to be published whentransferable securities are offered to the public (6) wereadopted several years ago introducing a partial andcomplex mutual recognition mechanism which is unableto achieve the objective of the single passport providedfor by this Directive. Those directives should beupgraded, updated and grouped together into a singletext.

(2) Meanwhile, Directive 80/390/EEC was integrated intoDirective 2001/34/EC of the European Parliament and ofthe Council of 28 May 2001 on the admission of securi-ties to official stock exchange listing and on informationto be published on those securities (7), which codifiesseveral directives in the field of listed securities.

(3) For reasons of consistency, however, it is appropriate toregroup the provisions of Directive 2001/34/EC whichstem from Directive 80/390/EEC together with Directive89/298/EEC and to amend Directive 2001/34/ECaccordingly.

(4) This Directive constitutes an instrument essential to theachievement of the internal market as set out in time-table form in the Commission communications ‘Risk

capital action plan’ and ‘Implementing the frameworkfor financial market: Action Plan’ facilitating the widestpossible access to investment capital on a Community-wide basis, including for small and medium-sized enter-prises (SMEs) and start-ups, by granting a single passportto the issuer.

(5) On 17 July 2000, the Council set up the Committee ofWise Men on the regulation of European securitiesmarkets. In its initial report of 9 November 2000 theCommittee stresses the lack of an agreed definition ofpublic offer of securities, with the result that the sameoperation is regarded as a private placement in someMember States and not in others; the current systemdiscourages firms from raising capital on a Community-wide basis and therefore from having real access to alarge, liquid and integrated financial market.

(6) In its final report of 15 February 2001 the Committee ofWise Men proposed the introduction of new legislativetechniques based on a four-level approach, namelyframework principles, implementing measures, coopera-tion and enforcement. Level 1, the directive, shouldconfine itself to broad, general ‘framework’ principles,while Level 2 should contain technical implementingmeasures to be adopted by the Commission with theassistance of a committee.

(7) The Stockholm European Council of 23 and 24 March2001 endorsed the final report of the Committee ofWise Men and the proposed four-level approach to makethe regulatory process for Community securities legisla-tion more efficient and transparent.

(8) The resolution of the European Parliament of 5 February2002 on the implementation of financial services legisla-tion also endorsed the Committee of Wise Men's finalreport, on the basis of the solemn declaration madebefore Parliament the same day by the Commission andthe letter of 2 October 2001 addressed by the InternalMarket Commissioner to the chairman of Parliament'sCommittee on Economic and Monetary Affairs withregard to the safeguards for the European Parliament'srole in this process.

31.12.2003L 345/64 Official Journal of the European UnionEN

(1) OJ C 240 E, 28.8.2001, p. 272 and OJ C 20 E, 28.1.2003, p. 122.(2) OJ C 80, 3.4.2002, p. 52.(3) OJ C 344, 6.12.2001, p. 4.(4) Opinion of the European Parliament of 14 March 2002 (OJ C 47 E,

27.2.2003, p. 417), Council Common Position of 24 March 2003(OJ C 125 E, 27.5.2003, p. 21) and Position of the European Parlia-ment of 2 July 2003 (not yet published in the Official Journal).Decision of the Council of 15 July 2003.

(5) OJ L 100, 17.4.1980, p. 1. Directive as last amended by Directive ofthe European Parliament and of the Council 94/18/EC (OJ L 135,31.5.1994, p. 1).

(6) OJ L 124, 5.5.1989, p. 8.(7) OJ L 184, 6.7.2001, p. 1.

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(9) According to the Stockholm European Council, Level 2implementing measures should be used more frequentlyto ensure that technical provisions can be kept up todate with market and supervisory developments anddeadlines should be set for all stages of Level 2.

(10) The aim of this Directive and its implementing measuresis to ensure investor protection and market efficiency, inaccordance with high regulatory standards adopted inthe relevant international fora.

(11) Non-equity securities issued by a Member State or byone of a Member State's regional or local authorities, bypublic international bodies of which one or moreMember States are members, by the European CentralBank or by the central banks of the Member States arenot covered by this Directive and thus remain unaffectedby this Directive; the abovementioned issuers of suchsecurities may, however, if they so choose, draw up aprospectus in accordance with this Directive.

(12) Full coverage of equity and non-equity securities offeredto the public or admitted to trading on regulatedmarkets as defined by Council Directive 93/22/EEC of10 May 1993 on investment services in the securitiesfield (1), and not only securities which have beenadmitted to the official lists of stock exchanges, is alsoneeded to ensure investor protection. The wide defini-tion of securities in this Directive, which includeswarrants and covered warrants and certificates, is onlyvalid for this Directive and consequently in no wayaffects the various definitions of financial instrumentsused in national legislation for other purposes, such astaxation. Some of the securities defined in this Directiveentitle the holder to acquire transferable securities or toreceive a cash amount through a cash settlement deter-mined by reference to other instruments, notably trans-ferable securities, currencies, interest rates or yields,commodities or other indices or measures. Depositaryreceipts and convertible notes, e.g. securities convertibleat the option of the investor, fall within the definition ofnon-equity securities set out in this Directive.

(13) Issuance of securities having a similar type and/or classin the case of non-equity securities issued on the basis ofan offering programme, including warrants and certifi-cates in any form, as well as the case of securities issuedin a continuous or repeated manner, should be under-stood as covering not only identical securities but alsosecurities that belong in general terms to one category.These securities may include different products, such asdebt securities, certificates and warrants, or the same

product under the same programme, and may havedifferent features notably in terms of seniority, types ofunderlying, or the basis on which to determine theredemption amount or coupon payment.

(14) The grant to the issuer of a single passport, validthroughout the Community, and the application of thecountry of origin principle require the identification ofthe home Member State as the one best placed to regu-late the issuer for the purposes of this Directive.

(15) The disclosure requirements of the present Directive donot prevent a Member State or a competent authority oran exchange through its rule book to impose other par-ticular requirements in the context of admission totrading of securities on a regulated market (notablyregarding corporate governance). Such requirementsmay not directly or indirectly restrict the drawing up,the content and the dissemination of a prospectusapproved by a competent authority.

(16) One of the objectives of this Directive is to protectinvestors. It is therefore appropriate to take account ofthe different requirements for protection of the variouscategories of investors and their level of expertise.Disclosure provided by the prospectus is not requiredfor offers limited to qualified investors. In contrast, anyresale to the public or public trading through admissionto trading on a regulated market requires the publicationof a prospectus.

(17) Issuers, offerors or persons asking for the admission totrading on a regulated market of securities which areexempted from the obligation to publish a prospectuswill benefit from the single passport if they comply withthis Directive.

(18) The provision of full information concerning securitiesand issuers of those securities promotes, together withrules on the conduct of business, the protection of inves-tors. Moreover, such information provides an effectivemeans of increasing confidence in securities and thus ofcontributing to the proper functioning and developmentof securities markets. The appropriate way to make thisinformation available is to publish a prospectus.

(19) Investment in securities, like any other form of invest-ment, involves risk. Safeguards for the protection of theinterests of actual and potential investors are required inall Member States in order to enable them to make aninformed assessment of such risks and thus to takeinvestment decisions in full knowledge of the facts.

31.12.2003 L 345/65Official Journal of the European UnionEN

(1) OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive2000/64/EC of the European Parliament and of the Council (OJ L290, 17.11.2000, p. 27).

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(20) Such information, which needs to be sufficient and asobjective as possible as regards the financial circum-stances of the issuer and the rights attaching to the secu-rities, should be provided in an easily analysable andcomprehensible form. Harmonisation of the informationcontained in the prospectus should provide equivalentinvestor protection at Community level.

(21) Information is a key factor in investor protection; asummary conveying the essential characteristics of, andrisks associated with, the issuer, any guarantor and thesecurities should be included in the prospectus. Toensure easy access to this information, the summaryshould be written in non-technical language andnormally should not exceed 2 500 words in thelanguage in which the prospectus was originally drawnup.

(22) Best practices have been adopted at international level inorder to allow cross-border offers of equities to be madeusing a single set of disclosure standards established bythe International Organisation of Securities Commissions(IOSCO); the IOSCO disclosure standards (1) will upgradeinformation available for the markets and investors andat the same time will simplify the procedure for Com-munity issuers wishing to raise capital in third countries.The Directive also calls for tailored disclosure standardsto be adopted for other types of securities and issuers.

(23) Fast-track procedures for issuers admitted to trading ona regulated market and frequently raising capital onthese markets require the introduction at Communitylevel of a new format of prospectuses for offeringprogrammes or mortgage bonds and a new registrationdocument system. Issuers may choose not to use thoseformats and therefore to draft the prospectus as a singledocument.

(24) The content of a base prospectus should, in particular,take into account the need for flexibility in relation tothe information to be provided about the securities.

(25) Omission of sensitive information to be included in aprospectus should be allowed through a derogationgranted by the competent authority in certain circum-stances in order to avoid detrimental situations for anissuer.

(26) A clear time limit should be set for the validity of aprospectus in order to avoid outdated information.

(27) Investors should be protected by ensuring publication ofreliable information. The issuers whose securities areadmitted to trading on a regulated market are subject toan ongoing disclosure obligation but are not required topublish updated information regularly. Further to thisobligation, issuers should, at least annually, list all rele-vant information published or made available to thepublic over the preceding 12 months, including informa-tion provided to the various reporting requirements laiddown in other Community legislation. This should makeit possible to ensure the publication of consistent andeasily understandable information on a regular basis. Toavoid excessive burdens for certain issuers, issuers ofnon-equity securities with high minimum denominationshould not be required to meet this obligation.

(28) It is necessary for the annual information to be providedby issuers whose securities are admitted to trading on aregulated market to be appropriately monitored byMember States in accordance with their obligationsunder the provisions of Community and national lawconcerning the regulation of securities, issuers of securi-ties and securities markets.

(29) The opportunity of allowing issuers to incorporate byreference documents containing the information to bedisclosed in a prospectus — provided that the docu-ments incorporated by reference have been previouslyfiled with or accepted by the competent authority —should facilitate the procedure of drawing up aprospectus and lower the costs for the issuers withoutendangering investor protection.

(30) Differences regarding the efficiency, methods and timingof the checking of the information given in a prospectusnot only make it more difficult for undertakings to raisecapital or to obtain admission to trading on a regulatedmarket in more than one Member State but also hinderthe acquisition by investors established in one MemberState of securities offered by an issuer established inanother Member State or admitted to trading in anotherMember State. These differences should be eliminated byharmonising the rules and regulations in order toachieve an adequate degree of equivalence of the safe-guards required in each Member State to ensure theprovision of information which is sufficient and asobjective as possible for actual or potential securitiesholders.


(1) International disclosure standards for cross-border offering andinitial listings by foreign issuers, Part I, International Organisation ofSecurities Commissions, September 1998.

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(31) To facilitate circulation of the various documentsmaking up the prospectus, the use of electronic commu-nication facilities such as the Internet should be encour-aged. The prospectus should always be delivered inpaper form, free of charge to investors on request.

(32) The prospectus should be filed with the relevant compe-tent authority and be made available to the public by theissuer, the offeror or the person asking for admission totrading on a regulated market, subject to EuropeanUnion provisions relating to data protection.

(33) It is also necessary, in order to avoid loopholes in Com-munity legislation which would undermine public confi-dence and therefore prejudice the proper functioning offinancial markets, to harmonise advertisements.

(34) Any new matter liable to influence the assessment of theinvestment, arising after the publication of theprospectus but before the closing of the offer or the startof trading on a regulated market, should be properlyevaluated by investors and therefore requires theapproval and dissemination of a supplement to theprospectus.

(35) The obligation for an issuer to translate the fullprospectus into all the relevant official languagesdiscourages cross-border offers or multiple trading. Tofacilitate cross-border offers, where the prospectus isdrawn up in a language that is customary in the sphereof international finance, the host or home Member Stateshould only be entitled to require a summary in its offi-cial language(s).

(36) The competent authority of the host Member Stateshould be entitled to receive a certificate from thecompetent authority of the home Member State whichstates that the prospectus has been drawn up in accord-ance with this Directive. In order to ensure that thepurposes of this Directive will be fully achieved, it is alsonecessary to include within its scope securities issued byissuers governed by the laws of third countries.

(37) A variety of competent authorities in Member States,having different responsibilities, may create unnecessarycosts and overlapping of responsibilities withoutproviding any additional benefit. In each Member Stateone single competent authority should be designated toapprove prospectuses and to assume responsibility forsupervising compliance with this Directive. Under strictconditions, a Member State should be allowed to desig-nate more than one competent authority, but only onewill assume the duties for international cooperation.Such an authority or authorities should be established asan administrative authority and in such a form that theirindependence from economic actors is guaranteed andconflicts of interest are avoided. The designation of a

competent authority for prospectus approval should notexclude cooperation between that authority and otherentities, with a view to guaranteeing efficient scrutinyand approval of prospectuses in the interest of issuers,investors, markets participants and markets alike. Anydelegation of tasks relating to the obligations providedfor in this Directive and in its implementing measuresshould be reviewed, in accordance with Article 31, fiveyears after the date of entry into force of this Directiveand should, except for publication on the Internet ofapproved prospectuses, and the filing of prospectuses asmentioned in Article 14, end eight years after the entryinto force of this Directive.

(38) A common minimum set of powers for the competentauthorities will guarantee the effectiveness of their super-vision. The flow of information to the markets requiredby Directive 2001/34/EC should be ensured and actionagainst breaches should be taken by competent authori-ties.

(39) For the purposes of carrying out their duties, coopera-tion between competent authorities of the MemberStates is required.

(40) Technical guidance and implementing measures for therules laid down in this Directive may from time to timebe necessary to take into account developments onfinancial markets. The Commission should accordinglybe empowered to adopt implementing measures,provided that these do not modify the essential elementsof this Directive and provided that the Commission actsin accordance with the principles set out in this Direc-tive, after consulting the European Securities Committeeestablished by Commission Decision 2001/528/EC (1).

(41) In exercising its implementing powers in accordancewith this Directive, the Commission should respect thefollowing principles:

— the need to ensure confidence in financial marketsamong small investors and small and medium-sizedenterprises (SMEs) by promoting high standards oftransparency in financial markets,

— the need to provide investors with a wide range ofcompeting investment opportunities and a level ofdisclosure and protection tailored to their circum-stances,

— the need to ensure that independent regulatoryauthorities enforce the rules consistently, especiallyas regards the fight against white-collar crime,

— the need for a high level of transparency and consul-tation with all market participants and with theEuropean Parliament and the Council,


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— the need to encourage innovation in financialmarkets if they are to be dynamic and efficient,

— the need to ensure systemic stability of the financialsystem by close and reactive monitoring of financialinnovation,

— the importance of reducing the cost of, andincreasing access to, capital,

— the need to balance, on a long-term basis, the costsand benefits to market participants (including SMEsand small investors) of any implementing measures,

— the need to foster the international competitivenessof the Community's financial markets without preju-dice to a much-needed extension of internationalcooperation,

— the need to achieve a level playing field for allmarket participants by establishing Community legis-lation every time it is appropriate,

— the need to respect differences in national financialmarkets where these do not unduly impinge on thecoherence of the single market,

— the need to ensure coherence with other Communitylegislation in this area, as imbalances in informationand a lack of transparency may jeopardise the opera-tion of the markets and above all harm consumersand small investors.

(42) The European Parliament should be given a period ofthree months from the first transmission of draft imple-menting measures to allow it to examine them and togive its opinion. However, in urgent and duly justifiedcases, this period may be shortened. If, within thatperiod, a resolution is passed by the European Parlia-ment, the Commission should re-examine the draftmeasures.

(43) Member States should lay down a system of sanctionsfor breaches of the national provisions adopted pursuantto this Directive and should take all the measures neces-sary to ensure that these sanctions are applied. The sanc-tions thus provided for should be effective, proportionaland dissuasive.

(44) Provision should be made for the right of judicial reviewof decisions taken by Member States' competent authori-ties in respect of the application of this Directive.

(45) In accordance with the principle of proportionality, it isnecessary and appropriate for the achievement of thebasic objective of ensuring the completion of a singlesecurities market to lay down rules on a single passportfor issuers. This Directive does not go beyond what isnecessary in order to achieve the objectives pursued inaccordance with the third paragraph of Article 5 of theTreaty.

(46) The assessment made by the Commission of the applica-tion of this Directive should focus in particular on theprocess of approval of prospectuses by the competentauthorities of the Member States, and more generally onthe application of the home-country principle, andwhether or not problems of investor protection andmarket efficiency might result from this application; theCommission should also examine the functioning ofArticle 10.

(47) For future developments of this Directive, considerationshould be given to the matter of deciding whichapproval mechanism should be adopted to enhancefurther the uniform application of Community legisla-tion on prospectuses, including the possible establish-ment of a European Securities Unit.

(48) This Directive respects the fundamental rights andobserves the principles recognised in particular by theCharter of Fundamental Rights of the European Union.

(49) The measures necessary for the implementation of thisDirective should be adopted in accordance with CouncilDecision 1999/468/EC of 28 June 1999 laying downthe procedures for the exercise of implementing powersconferred on the Commission (1),

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

GENERAL PROVISIONS

Article 1

Purpose and scope

1. The purpose of this Directive is to harmonise require-ments for the drawing up, approval and distribution of theprospectus to be published when securities are offered to thepublic or admitted to trading on a regulated market situated oroperating within a Member State.

2. This Directive shall not apply to:

(a) units issued by collective investment undertakings otherthan the closed-end type;

(b) non-equity securities issued by a Member State or by oneof a Member State's regional or local authorities, by publicinternational bodies of which one or more Member Statesare members, by the European Central Bank or by thecentral banks of the Member States;

(c) shares in the capital of central banks of the Member States;


(1) OJ L 184, 17.7.1999, p. 23.

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(d) securities unconditionally and irrevocably guaranteed by aMember State or by one of a Member State's regional orlocal authorities;

(e) securities issued by associations with legal status or non-profit-making bodies, recognised by a Member State, with aview to their obtaining the means necessary to achievetheir non-profit-making objectives;

(f) non-equity securities issued in a continuous or repeatedmanner by credit institutions provided that these securities:

(i) are not subordinated, convertible or exchangeable;

(ii) do not give a right to subscribe to or acquire othertypes of securities and that they are not linked to aderivative instrument;

(iii) materialise reception of repayable deposits;

(iv) are covered by a deposit guarantee scheme underDirective 94/19/EC of the European Parliament and ofthe Council on deposit-guarantee schemes (1);

(g) non-fungible shares of capital whose main purpose is toprovide the holder with a right to occupy an apartment, orother form of immovable property or a part thereof andwhere the shares cannot be sold on without this right beinggiven up;

(h) securities included in an offer where the total considerationof the offer is less than EUR 2 500 000, which limit shallbe calculated over a period of 12 months;

(i) ‘bostadsobligationer’ issued repeatedly by credit institutionsin Sweden whose main purpose is to grant mortgage loans,provided that

(i) the ‘bostadsobligationer’ issued are of the same series;

(ii) the ‘bostadsobligationer’ are issued on tap during aspecified issuing period;

(iii) the terms and conditions of the ‘bostadsobligationer’are not changed during the issuing period;

(iv) the sums deriving from the issue of the said ‘bostads-obligationer’, in accordance with the articles of associa-tion of the issuer, are placed in assets which providesufficient coverage for the liability deriving from secu-rities;

(j) non-equity securities issued in a continuous or repeatedmanner by credit institutions where the total considerationof the offer is less than EUR 50 000 000, which limit shallbe calculated over a period of 12 months, provided thatthese securities:

(i) are not subordinated, convertible or exchangeable;

(ii) do not give a right to subscribe to or acquire othertypes of securities and that they are not linked to a deri-vative instrument.

3. Notwithstanding paragraph 2(b), (d), (h), (i) and (j), anissuer, an offeror or a person asking for admission to tradingon a regulated market shall be entitled to draw up a prospectusin accordance with this Directive when securities are offered tothe public or admitted to trading.

Article 2

Definitions

1. For the purposes of this Directive, the following defini-tions shall apply:

(a) ‘securities’ means transferable securities as defined byArticle 1(4) of Directive 93/22/EEC with the exception ofmoney market instruments as defined by Article 1(5) ofDirective 93/22/EEC, having a maturity of less than 12months. For these instruments national legislation may beapplicable;

(b) ‘equity securities’ means shares and other transferable secu-rities equivalent to shares in companies, as well as anyother type of transferable securities giving the right toacquire any of the aforementioned securities as a conse-quence of their being converted or the rights conferred bythem being exercised, provided that securities of the lattertype are issued by the issuer of the underlying shares or byan entity belonging to the group of the said issuer;

(c) ‘non-equity securities’ means all securities that are notequity securities;

(d) ‘offer of securities to the public’ means a communicationto persons in any form and by any means, presenting suffi-cient information on the terms of the offer and the securi-ties to be offered, so as to enable an investor to decide topurchase or subscribe to these securities. This definitionshall also be applicable to the placing of securities throughfinancial intermediaries;

(e) ‘qualified investors’ means:

(i) legal entities which are authorised or regulated tooperate in the financial markets, including: credit insti-tutions, investment firms, other authorised or regu-lated financial institutions, insurance companies,collective investment schemes and their managementcompanies, pension funds and their managementcompanies, commodity dealers, as well as entities notso authorised or regulated whose corporate purpose issolely to invest in securities;

(ii) national and regional governments, central banks,international and supranational institutions such asthe International Monetary Fund, the European CentralBank, the European Investment Bank and other similarinternational organisations;

(iii) other legal entities which do not meet two of thethree criteria set out in paragraph (f);


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(iv) certain natural persons: subject to mutual recognition,a Member State may choose to authorise naturalpersons who are resident in the Member State andwho expressly ask to be considered as qualified inves-tors if these persons meet at least two of the criteriaset out in paragraph 2;

(v) certain SMEs: subject to mutual recognition, a MemberState may choose to authorise SMEs which have theirregistered office in that Member State and whoexpressly ask to be considered as qualified investors;

(f) ‘small and medium-sized enterprises’ means companies,which, according to their last annual or consolidatedaccounts, meet at least two of the following three criteria:an average number of employees during the financial yearof less than 250, a total balance sheet not exceedingEUR 43 000 000 and an annual net turnover notexceeding EUR 50 000 000;

(g) ‘credit institution’ means an undertaking as defined byArticle 1(1)(a) of Directive 2000/12/EC of the EuropeanParliament and of the Council of 20 March 2000 relatingto the taking up and pursuit of the business of credit insti-tutions (1);

(h) ‘issuer’ means a legal entity which issues or proposes toissue securities;

(i) ‘person making an offer’ (or ‘offeror’) means a legal entityor individual which offers securities to the public;

(j) ‘regulated market’ means a market as defined by Article1(13) of Directive 93/22/EEC;

(k) ‘offering programme’ means a plan which would permitthe issuance of non-equity securities, including warrants inany form, having a similar type and/or class, in a contin-uous or repeated manner during a specified issuing period;

(l) ‘securities issued in a continuous or repeated manner’means issues on tap or at least two separate issues of secu-rities of a similar type and/or class over a period of 12months;

(m) ‘home Member State’ means:

(i) for all Community issuers of securities which are notmentioned in (ii), the Member State where the issuerhas its registered office;

(ii) for any issues of non-equity securities whose denomi-nation per unit amounts to at least EUR 1 000, andfor any issues of non-equity securities giving the rightto acquire any transferable securities or to receive acash amount, as a consequence of their beingconverted or the rights conferred by them being exer-cised, provided that the issuer of the non-equity secu-rities is not the issuer of the underlying securities oran entity belonging to the group of the latter issuer,the Member State where the issuer has its registeredoffice, or where the securities were or are to beadmitted to trading on a regulated market or where

the securities are offered to the public, at the choice ofthe issuer, the offeror or the person asking for admis-sion, as the case may be. The same regime shall beapplicable to non-equity securities in a currency otherthan euro, provided that the value of such minimumdenomination is nearly equivalent to EUR 1 000;

(iii) for all issuers of securities incorporated in a thirdcountry, which are not mentioned in (ii), the MemberState where the securities are intended to be offered tothe public for the first time after the date of entry intoforce of this Directive or where the first applicationfor admission to trading on a regulated market ismade, at the choice of the issuer, the offeror or theperson asking for admission, as the case may be,subject to a subsequent election by issuers incorpo-rated in a third country if the home Member Statewas not determined by their choice;

(n) ‘host Member State’ means the State where an offer to thepublic is made or admission to trading is sought, whendifferent from the home Member State;

(o) ‘collective investment undertaking other than the closed-end type’ means unit trusts and investment companies:

(i) the object of which is the collective investment ofcapital provided by the public, and which operate onthe principle of risk-spreading;

(ii) the units of which are, at the holder's request, repurch-ased or redeemed, directly or indirectly, out of theassets of these undertakings;

(p) ‘units of a collective investment undertaking’ mean securi-ties issued by a collective investment undertaking as repre-senting the rights of the participants in such an under-taking over its assets;

(q) ‘approval’ means the positive act at the outcome of thescrutiny of the completeness of the prospectus by thehome Member State's competent authority including theconsistency of the information given and its comprehensi-bility;

(r) ‘base prospectus’ means a prospectus containing all rele-vant information as specified in Articles 5, 7 and 16 incase there is a supplement, concerning the issuer and thesecurities to be offered to the public or admitted totrading, and, at the choice of the issuer, the final terms ofthe offering.

2. For the purposes of paragraph 1(e)(iv) the criteria are asfollows:

(a) the investor has carried out transactions of a significant sizeon securities markets at an average frequency of, at least,10 per quarter over the previous four quarters;

(b) the size of the investor's securities portfolio exceedsEUR 0,5 million;


(1) OJ L 126, 26.5.2000, p. 1. Directive as last amended by Directive2000/28/EC (OJ L 275, 27.10.2000, p. 37).

241

(c) the investor works or has worked for at least one year inthe financial sector in a professional position whichrequires knowledge of securities investment.

3. For the purposes of paragraphs 1(e)(iv) and (v) thefollowing shall apply:

Each competent authority shall ensure that appropriatemechanisms are in place for a register of natural persons andSMEs considered as qualified investors, taking into account theneed to ensure an adequate level of data protection. Theregister shall be available to all issuers. Each natural person orSME wishing to be considered as a qualified investor shallregister and each registered investor may decide to opt out atany moment.

4. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure set out in Article 24(2), adopt implementing measuresconcerning the definitions referred to in paragraph 1, includingadjustment of the figures used for the definition of SMEs,taking into account Community legislation and recommenda-tions as well as economic developments and disclosuremeasures relating to the registration of individual qualifiedinvestors.

Article 3

Obligation to publish a prospectus

1. Member States shall not allow any offer of securities to bemade to the public within their territories without prior publi-cation of a prospectus.

2. The obligation to publish a prospectus shall not apply tothe following types of offer:

(a) an offer of securities addressed solely to qualified investors;and/or

(b) an offer of securities addressed to fewer than 100 naturalor legal persons per Member State, other than qualifiedinvestors; and/or

(c) an offer of securities addressed to investors who acquiresecurities for a total consideration of at least EUR 50 000per investor, for each separate offer; and/or

(d) an offer of securities whose denomination per unit amountsto at least EUR 50 000; and/or

(e) an offer of securities with a total consideration of less thanEUR 100 000, which limit shall be calculated over a periodof 12 months.

However, any subsequent resale of securities which werepreviously the subject of one or more of the types of offermentioned in this paragraph shall be regarded as a separateoffer and the definition set out in Article 2(1)(d) shall apply forthe purpose of deciding whether that resale is an offer of secu-rities to the public. The placement of securities through finan-cial intermediaries shall be subject to publication of aprospectus if none of the conditions (a) to (e) are met for thefinal placement.

3. Member States shall ensure that any admission of securi-ties to trading on a regulated market situated or operatingwithin their territories is subject to the publication of aprospectus.

Article 4

Exemptions from the obligation to publish a prospectus

1. The obligation to publish a prospectus shall not apply tooffers of securities to the public of the following types of secu-rities:

(a) shares issued in substitution for shares of the same classalready issued, if the issuing of such new shares does notinvolve any increase in the issued capital;

(b) securities offered in connection with a takeover by meansof an exchange offer, provided that a document is availablecontaining information which is regarded by the competentauthority as being equivalent to that of the prospectus,taking into account the requirements of Community legisla-tion;

(c) securities offered, allotted or to be allotted in connectionwith a merger, provided that a document is availablecontaining information which is regarded by the competentauthority as being equivalent to that of the prospectus,taking into account the requirements of Community legisla-tion;

(d) shares offered, allotted or to be allotted free of charge toexisting shareholders, and dividends paid out in the form ofshares of the same class as the shares in respect of whichsuch dividends are paid, provided that a document is madeavailable containing information on the number and natureof the shares and the reasons for and details of the offer;

(e) securities offered, allotted or to be allotted to existing orformer directors or employees by their employer which hassecurities already admitted to trading on a regulated marketor by an affiliated undertaking, provided that a document ismade available containing information on the number andnature of the securities and the reasons for and details ofthe offer.

2. The obligation to publish a prospectus shall not apply tothe admission to trading on a regulated market of the followingtypes of securities:

(a) shares representing, over a period of 12 months, less than10 per cent of the number of shares of the same classalready admitted to trading on the same regulated market;

(b) shares issued in substitution for shares of the same classalready admitted to trading on the same regulated market,if the issuing of such shares does not involve any increasein the issued capital;

(c) securities offered in connection with a takeover by meansof an exchange offer, provided that a document is availablecontaining information which is regarded by the competentauthority as being equivalent to that of the prospectus,taking into account the requirements of Community legisla-tion;


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(d) securities offered, allotted or to be allotted in connectionwith a merger, provided that a document is availablecontaining information which is regarded by the competentauthority as being equivalent to that of the prospectus,taking into account the requirements of Community legisla-tion;

(e) shares offered, allotted or to be allotted free of charge toexisting shareholders, and dividends paid out in the form ofshares of the same class as the shares in respect of whichsuch dividends are paid, provided that the said shares are ofthe same class as the shares already admitted to trading onthe same regulated market and that a document is madeavailable containing information on the number and natureof the shares and the reasons for and details of the offer;

(f) securities offered, allotted or to be allotted to existing orformer directors or employees by their employer or anaffiliated undertaking, provided that the said securities areof the same class as the securities already admitted totrading on the same regulated market and that a documentis made available containing information on the numberand nature of the securities and the reasons for and detailof the offer;

(g) shares resulting from the conversion or exchange of othersecurities or from the exercise of the rights conferred byother securities, provided that the said shares are of thesame class as the shares already admitted to trading on thesame regulated market;

(h) securities already admitted to trading on another regulatedmarket, on the following conditions:

(i) that these securities, or securities of the same class,have been admitted to trading on that other regulatedmarket for more than 18 months;

(ii) that, for securities first admitted to trading on a regu-lated market after the date of entry into force of thisDirective, the admission to trading on that other regu-lated market was associated with an approvedprospectus made available to the public in conformitywith Article 14;

(iii) that, except where (ii) applies, for securities firstadmitted to listing after 30 June 1983, listing particu-lars were approved in accordance with the require-ments of Directive 80/390/EEC or Directive 2001/34/EC;

(iv) that the ongoing obligations for trading on that otherregulated market have been fulfilled;

(v) that the person seeking the admission of a security totrading on a regulated market under this exemptionmakes a summary document available to the public ina language accepted by the competent authority of theMember State of the regulated market where admis-sion is sought;

(vi) that the summary document referred to in (v) is madeavailable to the public in the Member State of theregulated market where admission to trading is soughtin the manner set out in Article 14(2); and

(vii) that the contents of the summary document shallcomply with Article 5(2). Furthermore the documentshall state where the most recent prospectus can beobtained and where the financial informationpublished by the issuer pursuant to his ongoing disclo-sure obligations is available.

3. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning paragraphs 1(b), 1(c), 2(c) and 2(d), notably in rela-tion to the meaning of equivalence.

CHAPTER II

DRAWING UP OF THE PROSPECTUS

Article 5

The prospectus

1. Without prejudice to Article 8(2), the prospectus shallcontain all information which, according to the particularnature of the issuer and of the securities offered to the publicor admitted to trading on a regulated market, is necessary toenable investors to make an informed assessment of the assetsand liabilities, financial position, profit and losses, andprospects of the issuer and of any guarantor, and of the rightsattaching to such securities. This information shall be presentedin an easily analysable and comprehensible form.

2. The prospectus shall contain information concerning theissuer and the securities to be offered to the public or to beadmitted to trading on a regulated market. It shall also includea summary. The summary shall, in a brief manner and in non-technical language, convey the essential characteristics and risksassociated with the issuer, any guarantor and the securities, inthe language in which the prospectus was originally drawn up.The summary shall also contain a warning that:

(a) it should be read as an introduction to the prospectus;

(b) any decision to invest in the securities should be based onconsideration of the prospectus as a whole by the investor;

(c) where a claim relating to the information contained in aprospectus is brought before a court, the plaintiff investormight, under the national legislation of the Member States,have to bear the costs of translating the prospectus beforethe legal proceedings are initiated; and

(d) civil liability attaches to those persons who have tabled thesummary including any translation thereof, and applied forits notification, but only if the summary is misleading, inac-curate or inconsistent when read together with the otherparts of the prospectus.


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Where the prospectus relates to the admission to trading on aregulated market of non-equity securities having a denomina-tion of at least EUR 50 000, there shall be no requirement toprovide a summary except when requested by a Member Stateas provided for in Article 19(4).

3. Subject to paragraph 4, the issuer, offeror or personasking for the admission to trading on a regulated market maydraw up the prospectus as a single document or separate docu-ments. A prospectus composed of separate documents shalldivide the required information into a registration document, asecurities note and a summary note. The registration documentshall contain the information relating to the issuer. The securi-ties note shall contain the information concerning the securitiesoffered to the public or to be admitted to trading on a regu-lated market.

4. For the following types of securities, the prospectus can,at the choice of the issuer, offeror or person asking for theadmission to trading on a regulated market consist of a baseprospectus containing all relevant information concerning theissuer and the securities offered to the public or to be admittedto trading on a regulated market:

(a) non-equity securities, including warrants in any form,issued under an offering programme;

(b) non-equity securities issued in a continuous or repeatedmanner by credit institutions,

(i) where the sums deriving from the issue of the saidsecurities, under national legislation, are placed in assetswhich provide sufficient coverage for the liabilityderiving from securities until their maturity date;

(ii) where, in the event of the insolvency of the relatedcredit institution, the said sums are intended, as apriority, to repay the capital and interest falling due,without prejudice to the provisions of Directive 2001/24/EC of the European Parliament and of the Councilof 4 April 2001 on the reorganisation and winding upof credit institutions (1).

The information given in the base prospectus shall besupplemented, if necessary, in accordance with Article 16,with updated information on the issuer and on the securi-ties to be offered to the public or to be admitted to tradingon a regulated market.

If the final terms of the offer are not included in either thebase prospectus or a supplement, the final terms shall beprovided to investors and filed with the competentauthority when each public offer is made as soon as prac-ticable and if possible in advance of the beginning of theoffer. The provisions of Article 8(1)(a) shall be applicable inany such case.

5. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning the format of the prospectus or base prospectusand supplements.

Article 6

Responsibility attaching to the prospectus

1. Member States shall ensure that responsibility for theinformation given in a prospectus attaches at least to the issueror its administrative, management or supervisory bodies, theofferor, the person asking for the admission to trading on aregulated market or the guarantor, as the case may be. Thepersons responsible shall be clearly identified in the prospectusby their names and functions or, in the case of legal persons,their names and registered offices, as well as declarations bythem that, to the best of their knowledge, the informationcontained in the prospectus is in accordance with the facts andthat the prospectus makes no omission likely to affect itsimport.

2. Member States shall ensure that their laws, regulation andadministrative provisions on civil liability apply to thosepersons responsible for the information given in a prospectus.

However, Member States shall ensure that no civil liability shallattach to any person solely on the basis of the summary,including any translation thereof, unless it is misleading, inac-curate or inconsistent when read together with the other partsof the prospectus.

Article 7

Minimum information

1. Detailed implementing measures regarding the specificinformation which must be included in a prospectus, avoidingduplication of information when a prospectus is composed ofseparate documents, shall be adopted by the Commission inaccordance with the procedure referred to in Article 24(2). Thefirst set of implementing measures shall be adopted by 1 July2004.

2. In particular, for the elaboration of the various models ofprospectuses, account shall be taken of the following:

(a) the various types of information needed by investorsrelating to equity securities as compared with non-equitysecurities; a consistent approach shall be taken with regardto information required in a prospectus for securities whichhave a similar economic rationale, notably derivative securi-ties;


(1) OJ L 125, 5.5.2001, p. 15.

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(b) the various types and characteristics of offers and admis-sions to trading on a regulated market of non-equity securi-ties. The information required in a prospectus shall beappropriate from the point of view of the investorsconcerned for non-equity securities having a denominationper unit of at least EUR 50 000;

(c) the format used and the information required in prospec-tuses relating to non-equity securities, including warrants inany form, issued under an offering programme;

(d) the format used and the information required in prospec-tuses relating to non-equity securities, in so far as thesesecurities are not subordinated, convertible, exchangeable,subject to subscription or acquisition rights or linked toderivative instruments, issued in a continuous or repeatedmanner by entities authorised or regulated to operate in thefinancial markets within the European Economic Area;

(e) the various activities and size of the issuer, in particularSMEs. For such companies the information shall be adaptedto their size and, where appropriate, to their shorter trackrecord;

(f) if applicable, the public nature of the issuer.

3. The implementing measures referred to in paragraph 1shall be based on the standards in the field of financial andnon-financial information set out by international securitiescommission organisations, and in particular by IOSCO and onthe indicative Annexes to this Directive.

Article 8

Omission of information

1. Member States shall ensure that where the final offerprice and amount of securities which will be offered to thepublic cannot be included in the prospectus:

(a) the criteria, and/or the conditions in accordance with whichthe above elements will be determined or, in the case ofprice, the maximum price, are disclosed in the prospectus;or

(b) the acceptances of the purchase or subscription of securitiesmay be withdrawn for not less than two working days afterthe final offer price and amount of securities which will beoffered to the public have been filed.

The final offer price and amount of securities shall be filed withthe competent authority of the home Member State andpublished in accordance with the arrangements provided for inArticle 14(2).

2. The competent authority of the home Member State mayauthorise the omission from the prospectus of certain informa-tion provided for in this Directive or in the implementingmeasures referred to in Article 7(1), if it considers that:

(a) disclosure of such information would be contrary to thepublic interest; or

(b) disclosure of such information would be seriously detri-mental to the issuer, provided that the omission would notbe likely to mislead the public with regard to facts andcircumstances essential for an informed assessment of theissuer, offeror or guarantor, if any, and of the rightsattached to the securities to which the prospectus relates;or

(c) such information is of minor importance only for a specificoffer or admission to trading on a regulated market and isnot such as will influence the assessment of the financialposition and prospects of the issuer, offeror or guarantor, ifany.

3. Without prejudice to the adequate information of inves-tors, where, exceptionally, certain information required byimplementing measures referred to in Article 7(1) to beincluded in a prospectus is inappropriate to the issuer's sphereof activity or to the legal form of the issuer or to the securitiesto which the prospectus relates, the prospectus shall containinformation equivalent to the required information. If there isno such information, this requirement shall not apply.

4. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning paragraph 2.


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Article 9

Validity of a prospectus, base prospectus and registrationdocument

1. A prospectus shall be valid for 12 months after its publi-cation for offers to the public or admissions to trading on aregulated market, provided that the prospectus is completed byany supplements required pursuant to Article 16.

2. In the case of an offering programme, the baseprospectus, previously filed, shall be valid for a period of up to12 months.

3. In the case of non-equity securities referred to in Article5(4)(b), the prospectus shall be valid until no more of the secu-rities concerned are issued in a continuous or repeated manner.

4. A registration document, as referred to in Article 5(3),previously filed, shall be valid for a period of up to 12 monthsprovided that it has been updated in accordance with Article10(1). The registration document accompanied by the securitiesnote, updated if applicable in accordance with Article 12, andthe summary note shall be considered to constitute a validprospectus.

Article 10

Information

1. Issuers whose securities are admitted to trading on a regu-lated market shall at least annually provide a document thatcontains or refers to all information that they have publishedor made available to the public over the preceding 12 monthsin one or more Member States and in third countries incompliance with their obligations under Community andnational laws and rules dealing with the regulation of securities,issuers of securities and securities markets. Issuers shall refer atleast to the information required pursuant to company lawdirectives, Directive 2001/34/EC and Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July2002 on the application of international accounting stan-dards (1).

2. The document shall be filed with the competent authorityof the home Member State after the publication of the financialstatement. Where the document refers to information, it shallbe stated where the information can be obtained.

3. The obligation set out in paragraph 1 shall not apply toissuers of non-equity securities whose denomination per unitamounts to at least EUR 50 000.

4. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission may, in accordance with the proce-

dure referred to in Article 24(2), adopt implementing measuresconcerning paragraph 1. These measures will relate only to themethod of publication of the disclosure requirementsmentioned in paragraph 1 and will not entail new disclosurerequirements. The first set of implementing measures shall beadopted by 1 July 2004.

Article 11

Incorporation by reference

1. Member States shall allow information to be incorporatedin the prospectus by reference to one or more previously orsimultaneously published documents that have been approvedby the competent authority of the home Member State or filedwith it in accordance with this Directive, in particular pursuantto Article 10, or with Titles IV and V of Directive 2001/34/EC.This information shall be the latest available to the issuer. Thesummary shall not incorporate information by reference.

2. When information is incorporated by reference, a cross-reference list must be provided in order to enable investors toidentify easily specific items of information.

3. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning the information to be incorporated by reference.The first set of implementing measures shall be adopted by 1July 2004.

Article 12

Prospectuses consisting of separate documents

1. An issuer which already has a registration documentapproved by the competent authority shall be required to drawup only the securities note and the summary note when securi-ties are offered to the public or admitted to trading on a regu-lated market.

2. In this case, the securities note shall provide informationthat would normally be provided in the registration documentif there has been a material change or recent developmentwhich could affect investors' assessments since the latestupdated registration document or any supplement as providedfor in Article 16 was approved. The securities and summarynotes shall be subject to a separate approval.

3. Where an issuer has only filed a registration documentwithout approval, the entire documentation, including updatedinformation, shall be subject to approval.


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CHAPTER III

ARRANGEMENTS FOR APPROVAL AND PUBLICATION OFTHE PROSPECTUS

Article 13

Approval of the prospectus

1. No prospectus shall be published until it has beenapproved by the competent authority of the home MemberState.

2. This competent authority shall notify the issuer, theofferor or the person asking for admission to trading on a regu-lated market, as the case may be, of its decision regarding theapproval of the prospectus within 10 working days of thesubmission of the draft prospectus.

If the competent authority fails to give a decision on theprospectus within the time limits laid down in this paragraphand paragraph 3, this shall not be deemed to constituteapproval of the application.

3. The time limit referred to in paragraph 2 shall beextended to 20 working days if the public offer involves securi-ties issued by an issuer which does not have any securitiesadmitted to trading on a regulated market and who has notpreviously offered securities to the public.

4. If the competent authority finds, on reasonable grounds,that the documents submitted to it are incomplete or thatsupplementary information is needed, the time limits referredto in paragraphs 2 and 3 shall apply only from the date onwhich such information is provided by the issuer, the offeroror the person asking for admission to trading on a regulatedmarket.

In the case referred to in paragraph 2 the competent authorityshould notify the issuer if the documents are incomplete within10 working days of the submission of the application.

5. The competent authority of the home Member State maytransfer the approval of a prospectus to the competentauthority of another Member State, subject to the agreement ofthat authority. Furthermore, this transfer shall be notified tothe issuer, the offeror or the person asking for admission totrading on a regulated market within three working days fromthe date of the decision taken by the competent authority ofthe home Member State. The time limit referred to in para-graph 2 shall apply from that date.

6. This Directive shall not affect the competent authority'sliability, which shall continue to be governed solely by nationallaw.

Member States shall ensure that their national provisions onthe liability of competent authorities apply only to approvals ofprospectuses by their competent authority or authorities.

7. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission may, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning the conditions in accordance with which time limitsmay be adjusted.

Article 14

Publication of the prospectus

1. Once approved, the prospectus shall be filed with thecompetent authority of the home Member State and shall bemade available to the public by the issuer, offeror or personasking for admission to trading on a regulated market as soonas practicable and in any case, at a reasonable time in advanceof, and at the latest at the beginning of, the offer to the publicor the admission to trading of the securities involved. In addi-tion, in the case of an initial public offer of a class of sharesnot already admitted to trading on a regulated market that is tobe admitted to trading for the first time, the prospectus shall beavailable at least six working days before the end of the offer.

2. The prospectus shall be deemed available to the publicwhen published either:

(a) by insertion in one or more newspapers circulatedthroughout, or widely circulated in, the Member States inwhich the offer to the public is made or the admission totrading is sought; or

(b) in a printed form to be made available, free of charge, tothe public at the offices of the market on which the securi-ties are being admitted to trading, or at the registered officeof the issuer and at the offices of the financial intermedi-aries placing or selling the securities, including payingagents; or

(c) in an electronic form on the issuer's website and, if applic-able, on the website of the financial intermediaries placingor selling the securities, including paying agents; or

(d) in an electronic form on the website of the regulatedmarket where the admission to trading is sought; or

(e) in electronic form on the website of the competentauthority of the home Member State if the said authorityhas decided to offer this service.

A home Member State may require issuers which publish theirprospectus in accordance with (a) or (b) also to publish theirprospectus in an electronic form in accordance with (c).

3. In addition, a home Member State may require publica-tion of a notice stating how the prospectus has been madeavailable and where it can be obtained by the public.


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4. The competent authority of the home Member State shallpublish on its website over a period of 12 months, at itschoice, all the prospectuses approved, or at least the list ofprospectuses approved in accordance with Article 13,including, if applicable, a hyperlink to the prospectus publishedon the website of the issuer, or on the website of the regulatedmarket.

5. In the case of a prospectus comprising several documentsand/or incorporating information by reference, the documentsand information making up the prospectus may be publishedand circulated separately provided that the said documents aremade available, free of charge, to the public, in accordance withthe arrangements established in paragraph 2. Each documentshall indicate where the other constituent documents of the fullprospectus may be obtained.

6. The text and the format of the prospectus, and/or thesupplements to the prospectus, published or made available tothe public, shall at all times be identical to the original versionapproved by the competent authority of the home MemberState.

7. Where the prospectus is made available by publication inelectronic form, a paper copy must nevertheless be delivered tothe investor, upon his request and free of charge, by the issuer,the offeror, the person asking for admission to trading or thefinancial intermediaries placing or selling the securities.

8. In order to take account of technical developments onfinancial markets and to ensure uniform application of theDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning paragraphs 1, 2, 3 and 4. The first set of imple-menting measures shall be adopted by 1 July 2004.

Article 15

Advertisements

1. Any type of advertisements relating either to an offer tothe public of securities or to an admission to trading on a regu-lated market shall observe the principles contained in para-graphs 2 to 5. Paragraphs 2 to 4 shall apply only to caseswhere the issuer, the offeror or the person applying for admis-sion to trading is covered by the obligation to draw up aprospectus.

2. Advertisements shall state that a prospectus has been orwill be published and indicate where investors are or will beable to obtain it.

3. Advertisements shall be clearly recognisable as such. Theinformation contained in an advertisement shall not be inaccu-rate, or misleading. This information shall also be consistentwith the information contained in the prospectus, if alreadypublished, or with the information required to be in theprospectus, if the prospectus is published afterwards.

4. In any case, all information concerning the offer to thepublic or the admission to trading on a regulated marketdisclosed in an oral or written form, even if not for advertisingpurposes, shall be consistent with that contained in theprospectus.

5. When according to this Directive no prospectus isrequired, material information provided by an issuer or anofferor and addressed to qualified investors or special categoriesof investors, including information disclosed in the context ofmeetings relating to offers of securities, shall be disclosed to allqualified investors or special categories of investors to whomthe offer is exclusively addressed. Where a prospectus isrequired to be published, such information shall be included inthe prospectus or in a supplement to the prospectus in accord-ance with Article 16(1).

6. The competent authority of the home Member State shallhave the power to exercise control over the compliance ofadvertising activity, relating to a public offer of securities or anadmission to trading on a regulated market, with the principlesreferred to in paragraphs 2 to 5.

7. In order to take account of technical developments onfinancial markets and to ensure uniform application of thisDirective, the Commission shall, in accordance with the proce-dure referred to in Article 24(2), adopt implementing measuresconcerning the dissemination of advertisements announcingthe intention to offer securities to the public or the admissionto trading on a regulated market, in particular before theprospectus has been made available to the public or before theopening of the subscription, and concerning paragraph 4. Thefirst set of implementing measures shall be adopted by theCommission by 1 July 2004.

Article 16

Supplements to the prospectus

1. Every significant new factor, material mistake or inaccu-racy relating to the information included in the prospectuswhich is capable of affecting the assessment of the securitiesand which arises or is noted between the time when theprospectus is approved and the final closing of the offer to thepublic or, as the case may be, the time when trading on a regu-lated market begins, shall be mentioned in a supplement to theprospectus. Such a supplement shall be approved in the sameway in a maximum of seven working days and published inaccordance with at least the same arrangements as were appliedwhen the original prospectus was published. The summary,and any translations thereof, shall also be supplemented, ifnecessary to take into account the new information included inthe supplement.

2. Investors who have already agreed to purchase orsubscribe for the securities before the supplement is publishedshall have the right, exercisable within a time limit which shallnot be shorter than two working days after the publication ofthe supplement, to withdraw their acceptances.


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CHAPTER IV

CROSS-BORDER OFFERS AND ADMISSION TO TRADING

Article 17

Community scope of approvals of prospectuses

1. Without prejudice to Article 23, where an offer to thepublic or admission to trading on a regulated market isprovided for in one or more Member States, or in a MemberState other than the home Member State, the prospectusapproved by the home Member State and any supplementsthereto shall be valid for the public offer or the admission totrading in any number of host Member States, provided thatthe competent authority of each host Member State is notifiedin accordance with Article 18. Competent authorities of hostMember States shall not undertake any approval or administra-tive procedures relating to prospectuses.

2. If there are significant new factors, material mistakes orinaccuracies, as referred to in Article 16, arising since theapproval of the prospectus, the competent authority of thehome Member State shall require the publication of a supple-ment to be approved as provided for in Article 13(1). Thecompetent authority of the host Member State may draw theattention of the competent authority of the home MemberState to the need for any new information.

Article 18

Notification

1. The competent authority of the home Member State shall,at the request of the issuer or the person responsible fordrawing up the prospectus and within three working daysfollowing that request or, if the request is submitted togetherwith the draft prospectus, within one working day after theapproval of the prospectus provide the competent authority ofthe host Member State with a certificate of approval attestingthat the prospectus has been drawn up in accordance with thisDirective and with a copy of the said prospectus. If applicable,this notification shall be accompanied by a translation of thesummary produced under the responsibility of the issuer orperson responsible for drawing up the prospectus. The sameprocedure shall be followed for any supplement to theprospectus.

2. The application of the provisions of Article 8(2) and (3)shall be stated in the certificate, as well as its justification.

CHAPTER V

USE OF LANGUAGES AND ISSUERS INCORPORATED INTHIRD COUNTRIES

Article 19

Use of languages

1. Where an offer to the public is made or admission totrading on a regulated market is sought only in the homeMember State, the prospectus shall be drawn up in a languageaccepted by the competent authority of the home MemberState.

2. Where an offer to the public is made or admission totrading on a regulated market is sought in one or moreMember States excluding the home Member State, theprospectus shall be drawn up either in a language accepted bythe competent authorities of those Member States or in alanguage customary in the sphere of international finance, atthe choice of the issuer, offeror or person asking for admission,as the case may be. The competent authority of each hostMember State may only require that the summary be translatedinto its official language(s).

For the purpose of the scrutiny by the competent authority ofthe home Member State, the prospectus shall be drawn upeither in a language accepted by this authority or in a languagecustomary in the sphere of international finance, at the choiceof the issuer, offeror or person asking for admission to trading,as the case may be.

3. Where an offer to the public is made or admission totrading on a regulated market is sought in more than oneMember State including the home Member State, theprospectus shall be drawn up in a language accepted by thecompetent authority of the home Member State and shall alsobe made available either in a language accepted by the compe-tent authorities of each host Member State or in a languagecustomary in the sphere of international finance, at the choiceof the issuer, offeror, or person asking for admission to trading,as the case may be. The competent authority of each hostMember State may only require that the summary referred toin Article 5(2) be translated into its official language(s).

4. Where admission to trading on a regulated market ofnon-equity securities whose denomination per unit amounts toat least EUR 50 000 is sought in one or more Member States,the prospectus shall be drawn up either in a language acceptedby the competent authorities of the home and host MemberStates or in a language customary in the sphere of internationalfinance, at the choice of the issuer, offeror or person asking foradmission to trading, as the case may be. Member States maychoose to require in their national legislation that a summarybe drawn up in their official language(s).

Article 20

Issuers incorporated in third countries

1. The competent authority of the home Member State ofissuers having their registered office in a third country mayapprove a prospectus for an offer to the public or for admis-sion to trading on a regulated market, drawn up in accordancewith the legislation of a third country, provided that:

(a) the prospectus has been drawn up in accordance with inter-national standards set by international securities commis-sion organisations, including the IOSCO disclosure stan-dards;


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(b) the information requirements, including information of afinancial nature, are equivalent to the requirements underthis Directive.

2. In the case of an offer to the public or admission totrading on a regulated market of securities, issued by an issuerincorporated in a third country, in a Member State other thanthe home Member State, the requirements set out in Articles17, 18 and 19 shall apply.

3. In order to ensure uniform application of this Directive,the Commission may adopt implementing measures in accord-ance with the procedure referred to in Article 24(2), statingthat a third country ensures the equivalence of prospectusesdrawn up in that country with this Directive, by reason of itsnational law or of practices or procedures based on interna-tional standards set by international organisations, includingthe IOSCO disclosure standards.

CHAPTER VI

COMPETENT AUTHORITIES

Article 21

Powers

1. Each Member State shall designate a central competentadministrative authority responsible for carrying out the obliga-tions provided for in this Directive and for ensuring that theprovisions adopted pursuant to this Directive are applied.

However, a Member State may, if so required by national law,designate other administrative authorities to apply Chapter III.

These competent authorities shall be completely independentfrom all market participants.

If an offer of securities is made to the public or admission totrading on a regulated market is sought in a Member Stateother than the home Member State, only the central competentadministrative authority designated by each Member State shallbe entitled to approve the prospectus.

2. Member States may allow their competent authority orauthorities to delegate tasks. Except for delegation of the publi-cation on the Internet of approved prospectuses and the filingof prospectuses as mentioned in Article 14, any delegation oftasks relating to the obligations provided for in this Directiveand in its implementing measures shall be reviewed, in accord-ance with Article 31 by 31 December 2008, and shall end on31 December 2011. Any delegation of tasks to entities otherthan the authorities referred to in paragraph 1 shall be made ina specific manner stating the tasks to be undertaken and theconditions under which they are to be carried out.

These conditions shall include a clause obliging the entity inquestion to act and be organised in such a manner as to avoidconflict of interest and so that information obtained fromcarrying out the delegated tasks is not used unfairly or to

prevent competition. In any case, the final responsibility forsupervising compliance with this Directive and with its imple-menting measures and for approving the prospectus shall liewith the competent authority or authorities designated inaccordance with paragraph 1.

Member States shall inform the Commission and the competentauthorities of other Member States of any arrangements enteredinto with regard to delegation of tasks, including the preciseconditions regulating such delegation.

3. Each competent authority shall have all the powers neces-sary for the performance of its functions. A competentauthority that has received an application for approving aprospectus shall be empowered at least to:

(a) require issuers, offerors or persons asking for admission totrading on a regulated market to include in the prospectussupplementary information, if necessary for investorprotection;

(b) require issuers, offerors or persons asking for admission totrading on a regulated market, and the persons that controlthem or are controlled by them, to provide informationand documents;

(c) require auditors and managers of the issuer, offeror orperson asking for admission to trading on a regulatedmarket, as well as financial intermediaries commissioned tocarry out the offer to the public or ask for admission totrading, to provide information;

(d) suspend a public offer or admission to trading for amaximum of 10 consecutive working days on any singleoccasion if it has reasonable grounds for suspecting thatthe provisions of this Directive have been infringed;

(e) prohibit or suspend advertisements for a maximum of 10consecutive working days on any single occasion if it hasreasonable grounds for believing that the provisions of thisDirective have been infringed;

(f) prohibit a public offer if it finds that the provisions of thisDirective have been infringed or if it has reasonablegrounds for suspecting that they would be infringed;

(g) suspend or ask the relevant regulated markets to suspendtrading on a regulated market for a maximum of 10 conse-cutive working days on any single occasion if it has reason-able grounds for believing that the provisions of this Direc-tive have been infringed;

(h) prohibit trading on a regulated market if it finds that theprovisions of this Directive have been infringed;

(i) make public the fact that an issuer is failing to comply withits obligations.

Where necessary under national law, the competent authoritymay ask the relevant judicial authority to decide on the use ofthe powers referred to in points (d) to (h) above.


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4. Each competent authority shall also, once the securitieshave been admitted to trading on a regulated market, beempowered to:

(a) require the issuer to disclose all material information whichmay have an effect on the assessment of the securitiesadmitted to trading on regulated markets in order to ensureinvestor protection or the smooth operation of the market;

(b) suspend or ask the relevant regulated market to suspendthe securities from trading if, in its opinion, the issuer'ssituation is such that trading would be detrimental to inves-tors' interests;

(c) ensure that issuers whose securities are traded on regulatedmarkets comply with the obligations provided for in Arti-cles 102 and 103 of Directive 2001/34/EC and that equiva-lent information is provided to investors and equivalenttreatment is granted by the issuer to all securities holderswho are in the same position, in all Member States wherethe offer to the public is made or the securities are admittedto trading;

(d) carry out on-site inspections in its territory in accordancewith national law, in order to verify compliance with theprovisions of this Directive and its implementing measures.Where necessary under national law, the competentauthority or authorities may use this power by applying tothe relevant judicial authority and/or in cooperation withother authorities.

5. Paragraphs 1 to 4 shall be without prejudice to the possi-bility for a Member State to make separate legal and adminis-trative arrangements for overseas European territories forwhose external relations that Member State is responsible.

Article 22

Professional secrecy and cooperation between authorities

1. The obligation of professional secrecy shall apply to allpersons who work or have worked for the competent authorityand for entities to which competent authorities may have dele-gated certain tasks. Information covered by professional secrecymay not be disclosed to any other person or authority exceptin accordance with provisions laid down by law.

2. Competent authorities of Member States shall cooperatewith each other whenever necessary for the purpose of carryingout their duties and making use of their powers. Competentauthorities shall render assistance to competent authorities ofother Member States. In particular, they shall exchange infor-mation and cooperate when an issuer has more than one homecompetent authority because of its various classes of securities,or where the approval of a prospectus has been transferred tothe competent authority of another Member State pursuant toArticle 13(5). They shall also closely cooperate when requiringsuspension or prohibition of trading for securities traded invarious Member States in order to ensure a level playing fieldbetween trading venues and protection of investors. Where

appropriate, the competent authority of the host Member Statemay request the assistance of the competent authority of thehome Member State from the stage at which the case is scruti-nised, in particular as regards a new type or rare forms of secu-rities. The competent authority of the home Member State mayask for information from the competent authority of the hostMember State on any items specific to the relevant market.

Without prejudice to Article 21, the competent authorities ofMember States may consult with operators of regulated marketsas necessary and, in particular, when deciding to suspend, or toask a regulated market to suspend or prohibit trading.

3. Paragraph 1 shall not prevent the competent authoritiesfrom exchanging confidential information. Information thusexchanged shall be covered by the obligation of professionalsecrecy, to which the persons employed or formerly employedby the competent authorities receiving the information aresubject.

Article 23

Precautionary measures

1. Where the competent authority of the host Member Statefinds that irregularities have been committed by the issuer orby the financial institutions in charge of the public offer or thatbreaches have been committed of the obligations attaching tothe issuer by reason of the fact that the securities are admittedto trading on a regulated market, it shall refer these findings tothe competent authority of the home Member State.

2. If, despite the measures taken by the competent authorityof the home Member State or because such measures proveinadequate, the issuer or the financial institution in charge ofthe public offer persists in breaching the relevant legal or regu-latory provisions, the competent authority of the host MemberState, after informing the competent authority of the homeMember State, shall take all the appropriate measures in orderto protect investors. The Commission shall be informed of suchmeasures at the earliest opportunity.

CHAPTER VII

IMPLEMENTING MEASURES

Article 24

Committee procedure

1. The Commission shall be assisted by the European Securi-ties Committee, instituted by Decision 2001/528/EC (herein-after referred to as ‘the Committee’).

2. Where reference is made to this paragraph, Articles 5 and7 of Decision 1999/468/EC shall apply, having regard to theprovisions of Article 8 thereof and provided that the imple-menting measures adopted in accordance with this proceduredo not modify the essential provisions of this Directive.


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The period laid down in Article 5(6) of Decision 1999/468/ECshall be set at three months.

3. The Committee shall adopt its rules of procedure.

4. Without prejudice to the implementing measures alreadyadopted, on the expiry of a four-year period following the entryinto force of this Directive the application of its provisionsproviding for the adoption of technical rules and decisions inaccordance with the procedure referred to in paragraph 2 shallbe suspended. On a proposal from the Commission, the Euro-pean Parliament and the Council may renew the provisionsconcerned in accordance with the procedure laid down inArticle 251 of the Treaty and, to that end, shall review themprior to the expiry of the four-year period.

Article 25

Sanctions

1. Without prejudice to the right of Member States toimpose criminal sanctions and without prejudice to their civilliability regime, Member States shall ensure, in conformity withtheir national law, that the appropriate administrative measurescan be taken or administrative sanctions be imposed againstthe persons responsible, where the provisions adopted in theimplementation of this Directive have not been complied with.Member States shall ensure that these measures are effective,proportionate and dissuasive.

2. Member States shall provide that the competent authoritymay disclose to the public every measure or sanction that hasbeen imposed for infringement of the provisions adoptedpursuant to this Directive, unless the disclosure would seriouslyjeopardise the financial markets or cause disproportionatedamage to the parties involved.

Article 26

Right of appeal

Member States shall ensure that decisions taken pursuant tolaws, regulations and administrative provisions adopted inaccordance with this Directive are subject to the right to appealto the courts.

CHAPTER VIII

TRANSITIONAL AND FINAL PROVISIONS

Article 27

Amendments

With effect from the date set out in Article 29, Directive 2001/34/EC is hereby amended as follows:

1. Articles 3, 20 to 41, 98 to 101, 104 and 108(2)(c)(ii) shallbe deleted;

2. in Article 107(3), the first subparagraph shall be deleted;

3. in Article 108(2)(a), the words ‘the conditions of establish-ment, the control and circulation of listing particulars to bepublished for admission’ shall be deleted;

4. Annex I shall be deleted.

Article 28

Repeal

With effect from the date indicated in Article 29, Directive 89/298/EEC shall be repealed. References to the repealed Directiveshall be construed as references to this Directive.

Article 29

Transposition

Member States shall bring into force the laws, regulations andadministrative provisions necessary to comply with this Direc-tive not later than 1 July 2005. They shall forthwith inform theCommission thereof. When Member States adopt thosemeasures they shall contain a reference to this Directive or shallbe accompanied by such a reference on the occasion of theirofficial publication. The methods for making such referenceshall be laid down by Member States.

Article 30

Transitional provision

1. Issuers which are incorporated in a third country andwhose securities have already been admitted to trading on aregulated market shall choose their competent authority inaccordance with Article 2(1)(m)(iii) and notify their decision tothe competent authority of their chosen home Member Stateby 31 December 2005.

2. By way of derogation from Article 3, Member Stateswhich have used the exemption in Article 5(a) of Directive 89/298/EEC may continue to allow credit institutions or otherfinancial institutions equivalent to credit institutions which arenot covered by Article 1(2)(j) of this Directive to offer debtsecurities or other transferable securities equivalent to debtsecurities issued in a continuous or repeated manner withintheir territory for five years following the date of entry intoforce of this Directive.

3. By way of derogation from Article 29, the FederalRepublic of Germany shall comply with Article 21(1) by 31December 2008.

Article 31

Review

Five years after the date of entry into force of this Directive, theCommission shall make an assessment of the application of thisDirective and present a report to the European Parliament andthe Council, accompanied where appropriate by proposals forits review.


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Article 32

Entry into force

This Directive shall enter into force on the day of its publication in the Official Journal of the EuropeanUnion.

Article 33

Addressees

This Directive is addressed to the Member States.

Done at Brussels, 4 November 2003.

For the European Parliament

The PresidentP. COX

For the Council

The PresidentG. ALEMANNO


253

ANNEX I

PROSPECTUS

I. Summary

The summary shall provide in a few pages the most important information included in the prospectus, covering atleast the following items:

A. identity of directors, senior management, advisers and auditors

B. offer statistics and expected timetable

C. key information concerning selected financial data; capitalisation and indebtedness; reasons for the offer anduse of proceeds; risk factors

D. information concerning the issuer

— history and development of the issuer

— business overview

E. operating and financial review and prospects

— research and development, patents and licences, etc.

— trends

F. directors, senior management and employees

G. major shareholders and related-party transactions

H. financial information

— consolidated statement and other financial information

— significant changes

I. details of the offer and admission to trading

— offer and admission to trading

— plan for distribution

— markets

— selling shareholders

— dilution (equity securities only)

— expenses of the issue

J. additional information

— share capital

— memorandum and articles of association

— documents on display

II. Identity of directors, senior management, advisers and auditors

The purpose is to identify the company representatives and other individuals involved in the company's offer oradmission to trading; these are the persons responsible for drawing up the prospectus as required by Article 5 ofthe Directive and those responsible for auditing the financial statements.

III. Offer statistics and expected timetable

The purpose is to provide key information regarding the conduct of any offer and the identification of importantdates relating to that offer.

A. Offer statistics

B. Method and expected timetable


254

IV. Key information

The purpose is to summarise key information about the company's financial condition, capitalisation and riskfactors. If the financial statements included in the document are restated to reflect material changes in the compa-ny's group structure or accounting policies, the selected financial data must also be restated.

A. Selected financial data

B. Capitalisation and indebtedness

C. Reasons for the offer and use of proceeds

D. Risk factors

V. Information on the company

The purpose is to provide information about the company's business operations, the products it makes or theservices it provides, and the factors which affect the business. It is also intended to provide information regardingthe adequacy and suitability of the company's properties, plant and equipment, as well as its plans for future capa-city increases or decreases.

A. History and development of the company

B. Business overview

C. Organisational structure

D. Property, plant and equipment

VI. Operating and financial review and prospects

The purpose is to provide the management's explanation of factors that have affected the company's financialcondition and results of operations for the historical periods covered by the financial statements, and management'sassessment of factors and trends which are expected to have a material effect on the company's financial conditionand results of operations in future periods.

A. Operating results

B. Liquidity and capital resources

C. Research and development, patents and licences, etc.

D. Trends

VII. Directors, senior management and employees

The purpose is to provide information concerning the company's directors and managers that will allow investorsto assess their experience, qualifications and levels of remuneration, as well as their relationship with the company.

A. Directors and senior management

B. Remuneration

C. Board practices

D. Employees

E. Share ownership

VIII. Major shareholders and related-party transactions

The purpose is to provide information regarding the major shareholders and others that may control or have aninfluence on the company. It also provides information regarding transactions the company has entered into withpersons affiliated with the company and whether the terms of such transactions are fair to the company.

A. Major shareholders

B. Related-party transactions

C. Interests of experts and advisers


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IX. Financial information

The purpose is to specify which financial statements must be included in the document, as well as the periods tobe covered, the age of the financial statements and other information of a financial nature. The accounting andauditing principles that will be accepted for use in preparation and audit of the financial statements will be deter-mined in accordance with international accounting and auditing standards.

A. Consolidated statements and other financial information

B. Significant changes

X. Details of the offer and admission to trading details

The purpose is to provide information regarding the offer and the admission to trading of securities, the plan fordistribution of the securities and related matters.

A. Offer and admission to trading

B. Plan for distribution

C. Markets

D. Holders of securities who are selling

E. Dilution (for equity securities only)

F. Expenses of the issue

XI. Additional information

The purpose is to provide information, most of which is of a statutory nature, that is not covered elsewhere in theprospectus.

A. Share capital

B. Memorandum and articles of association

C. Material contracts

D. Exchange controls

E. Taxation

F. Dividends and paying agents

G. Statement by experts

H. Documents on display

I. Subsidiary information


256

ANNEX II

REGISTRATION DOCUMENT

I. Identity of directors, senior management, advisers and auditors

The purpose is to identify the company representatives and other individuals involved in the company's offer oradmission to trading; these are the persons responsible for drawing up the prospectus and those responsible forauditing the financial statements.

II. Key information about the issuer

The purpose is to summarise key information about the company's financial condition, capitalisation and riskfactors. If the financial statements included in the document are restated to reflect material changes in the compa-ny's group structure or accounting policies, the selected financial data must also be restated.

A. Selected financial data

B. Capitalisation and indebtedness

C. Risk factors

III. Information on the company

The purpose is to provide information about the company's business operations, the products it makes or theservices it provides and the factors which affect the business. It is also intended to provide information regardingthe adequacy and suitability of the company's properties, plants and equipment, as well as its plans for future capa-city increases or decreases.

A. History and development of the company

B. Business overview

C. Organisational structure

D. Property, plants and equipment

IV. Operating and financial review and prospects

The purpose is to provide the management's explanation of factors that have affected the company's financialcondition and results of operations for the historical periods covered by the financial statements, and management'sassessment of factors and trends which are expected to have a material effect on the company's financial conditionand results of operations in future periods.

A. Operating results

B. Liquidity and capital resources

C. Research and development, patents and licences, etc.

D. Trends

V. Directors, senior management and employees

The purpose is to provide information concerning the company's directors and managers that will allow investorsto assess their experience, qualifications and levels of remuneration, as well as their relationship with the company.

A. Directors and senior management

B. Remuneration

C. Board practices

D. Employees

E. Share ownership


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VI. Major shareholders and related-party transactions

The purpose is to provide information regarding the major shareholders and others that may control or have aninfluence on the company. It also provides information regarding transactions the company has entered into withpersons affiliated with the company and whether the terms of such transactions are fair to the company.

A. Major shareholders

B. Related-party transactions

C. Interests of experts and advisers

VII. Financial information

The purpose is to specify which financial statements must be included in the document, as well as the periods tobe covered, the age of the financial statements and other information of a financial nature. The accounting andauditing principles that will be accepted for use in preparation and audit of the financial statements will be deter-mined in accordance with international accounting and auditing standards.

A. Consolidated statements and other financial information

B. Significant changes

VIII. Additional information


A. Share capital

B. Memorandum and articles of association

C. Material contracts

D. Statement by experts

E. Documents on display

F. Subsidiary information


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ANNEX III

SECURITIES NOTE

I. Identity of directors, senior management, advisers and auditors

The purpose is to identify the company representatives and other individuals involved in the company's offer oradmission to trading; these are the persons responsible for drawing up the prospectus and those responsible forauditing the financial statements.

II. Offer statistics and expected timetable

The purpose is to provide key information regarding the conduct of any offer and the identification of importantdates relating to that offer.

A. Offer statistics

B. Method and expected timetable

III. Key information about the issuer

The purpose is to summarise key information about the company's financial condition, capitalisation and riskfactors. If the financial statements included in the document are restated to reflect material changes in the company'sgroup structure or accounting policies, the selected financial data must also be restated.

A. Capitalisation and indebtedness

B. Reasons for the offer and use of proceeds

C. Risk factors

IV. Interests of experts

The purpose is to provide information regarding transactions the company has entered into with experts or advisersemployed on a contingent basis.

V. Details of the offer and admission to trading

The purpose is to provide information regarding the offer and the admission to trading of securities, the plan fordistribution of the securities and related matters.

A. Offer and admission to trading

B. Plan for distribution

C. Markets

D. Selling securities holders

E. Dilution (for equity securities only)

F. Expenses of the issue

VI. Additional information


A. Exchange controls

B. Taxation

C. Dividends and paying agents

D. Statement by experts

E. Documents on display


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ANNEX IV

SUMMARY NOTE

The summary note shall provide in a few pages the most important information included in the prospectus, covering atleast the following items:

— identity of directors, senior management, advisers and auditors

— offer statistics and expected timetable

— key information concerning selected financial data; capitalisation and indebtedness; reasons for the offer and use ofproceeds; risk factors

— information concerning the issuer— history and development of the issuer— business overview

— operating and financial review and prospects— research and development, patents and licences, etc.— trends

— directors, senior management and employees

— major shareholders and related-party transactions

— financial information— consolidated statement and other financial information— significant changes

— details on the offer and admission to trading— offer and admission to trading— plan for distribution— markets— selling shareholders— dilution (for equity securities only)— expenses of the issue

— additional information— share capital— memorandum and articles of incorporation— documents available for inspection


Commission Regulation (EC) No. 809/2004 of 29 April 2004 implementing the Prospectus Directive as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospec-tuses and dissemination of advertisements (the Prospectus Regulation)

Annex II

261

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

►B COMMISSION REGULATION (EC) No 809/2004

of 29 April 2004

implementing Directive 2003/71/EC of the European Parliament and of the Council as regardsinformation contained in prospectuses as well as the format, incorporation by reference and

publication of such prospectuses and dissemination of advertisements


(OJ L 215, 16.6.2004, p. 3)

Amended by:

Official Journal

No page date

►M1 Commission Regulation (EC) No 1787/2006 of 4 December 2006 L 337 17 5.12.2006

►M2 Commission Regulation (EC) No 211/2007 of 27 February 2007 L 61 24 28.2.2007

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COMMISSION REGULATION (EC) No 809/2004

of 29 April 2004

implementing Directive 2003/71/EC of the European Parliament andof the Council as regards information contained in prospectuses aswell as the format, incorporation by reference and publication of

such prospectuses and dissemination of advertisements


THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Directive 2003/71/EC of the European Parliament andthe Council of 4 November 2003 on the prospectus to be publishedwhen securities are offered to the public or admitted to trading andamending Directive 2001/34/EC ( 1), and in particular Article 5(5),Article 7, Article 10(4), Article 11(3), Article 14(8) and Article 15(7)thereof,

After consulting the Committee of European Securities Regulators(CESR) ( 2) for technical advice,

Whereas:

(1) Directive 2003/71/EC lays down principles to be observed whendrawing up prospectuses. These principles need to be supple-mented as far as the information to be given therein, the formatand aspects of publication, the information to be incorporated byreference in a prospectus and dissemination of advertisements areconcerned.

(2) Depending on the type of issuer and securities involved, atypology of minimum information requirements should be estab-lished corresponding to those schedules that are in practice mostfrequently applied. The schedules should be based on the infor-mation items required in the IOSCO ‘Disclosure Standards forcross-border offering and initial listings’ (part I) and on theexisting schedules of Directive 2001/34/EC of the EuropeanParliament and of the Council of 28 May on the admission ofsecurities to official stock exchange listing and on information tobe published on those securities ( 3).

(3) Information given by the issuer, the offeror or the person askingfor admission to trading on a regulated market, according to thisRegulation, should be subject to European Union provisionsrelating to data protection.

(4) Care should be taken that, in those cases where a prospectus iscomposed of separate documents, duplication of information isavoided; to this end separate detailed schedules for the regis-tration document and for the securities note, adapted to theparticular type of issuer and the securities concerned, should belaid down in order to cover each type of security.

(5) The issuer, the offeror or the person asking for admission totrading on a regulated market are entitled to include in aprospectus or base prospectus additional information goingbeyond the information items provided for in the schedules andbuilding blocks. Any additional information provided should be

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appropriate to the type of securities or the nature of the issuerinvolved.

(6) In most cases, given the variety of issuers, the types of securities,the involvement or not of a third party as a guarantor, whether ornot there is a listing etc, one single schedule will not give theappropriate information for an investor to make his investmentdecision. Therefore the combination of various schedules shouldbe possible. A non exhaustive table of combinations, providingfor different possible combinations of schedules and ‘buildingblocks’ for most of the different type of securities, should beset up in order to assist issuers when drafting their prospectus.

(7) The share registration document schedule should be applicable toshares and other transferable securities equivalent to shares butalso to other securities giving access to the capital of the issuerby way of conversion or exchange. In the latter case this scheduleshould not be used where the underlying shares to be deliveredhave already been issued before the issuance of the securitiesgiving access to the capital of the issuer; however this scheduleshould be used where the underlying shares to be delivered havealready been issued but are not yet admitted to trading on aregulated market.

(8) Voluntary disclosure of profit forecasts in a share registrationdocument should be presented in a consistent and comparablemanner and accompanied by a statement prepared by independentaccountants or auditors. This information should not be confusedwith the disclosure of known trends or other factual data withmaterial impact on the issuers' prospects. Moreover, they shouldprovide an explanation of any changes in disclosure policyrelating to profit forecasts when supplementing a prospectus ordrafting a new prospectus.

(9) Pro forma financial information is needed in case of significantgross change, i. e. a variation of more than 25 % relative to oneor more indicators of the size of the issuer's business, in thesituation of an issuer due to a particular transaction, with theexception of those situations where merger accounting isrequired.

(10) The schedule for the share securities note should be applicable toany class of share since it considers information regarding adescription of the rights attached to the securities and theprocedure for the exercise of any rights attached to the securities.

(11) Some debt securities such as structured bonds incorporate certainelements of a derivative security, therefore additional disclosurerequirements related to the derivative component in the interestpayment should be included in the securities note schedule fordebt securities.

(12) The additional ‘building block’ related to guarantee should applyto any obligation in relation to any kind of security.

(13) The asset backed securities registration document should notapply to mortgage bonds as provided for in Article 5(4)(b) ofDirective 2003/71/EC and other covered bonds. The same shouldapply for the asset backed securities additional ‘building block’that has to be combined with the securities note for debt secu-rities.

(14) Wholesale investors should be able to make their investmentdecision on other elements than those taken into considerationby retail investors. Therefore a differentiated content ofprospectus is necessary for debt and derivative securities aimedat those investors who purchase debt or derivative securities witha denomination per unit of at least EUR 50 000 or a denomi-nation in another currency provided that the value of such

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minimum denomination when converted to EURO amounts to atleast EURO 50 000.

(15) In the context of depository receipts, emphasis should be put onthe issuer of the underlying shares and not on the issuer of thedepository receipt. Where there is legal recourse to the depositoryover and above a breach of its fiduciary or agency duties, the riskfactors section in the prospectus should contain full informationon this fact and on the circumstances of such recourse. Where aprospectus is drafted as a tripartite document (i.e. registrationdocument, securities note and summary), the registrationdocument should be limited to the information on the depository.

(16) The banks registration document schedule should be applicable tobanks from third countries which do not fall under the definitionof credit institution provided for in Article 1(1)(a) of Directive2000/12/EC of the European Parliament and of the Council of20 March 2000 relating to the taking up and pursuit of thebusiness of credit institutions (1) but have their registered officein a state which is a member of the OECD.

(17) If a special purpose vehicle issues debt and derivative securitiesguaranteed by a bank, it should not use the banks registrationdocument schedule.

(18) The schedule ‘securities note for derivative securities’ should beapplicable to securities which are not covered by the otherschedules and building blocks. The scope of this schedule isdetermined by reference to the other two generic categories ofshares and debt securities. In order to provide a clear and compre-hensive explanation to help investors understand how the value oftheir investment is affected by the value of the underlying, issuersshould be able to use appropriate examples on a voluntary basis.For instance, for some complex derivatives securities, examplesmight be the most effective way to explain the nature of thosesecurities.

(19) The additional information ‘building block’ on the underlyingshare for certain equity securities should be added to the secu-rities note for debt securities or substitute the item referring to‘information required in respect of the underlying’ of theschedule securities note for derivative securities, depending onthe characteristics of the securities being issued.

(20) Member States and their regional or local authorities are outsidethe scope of Directive 2003/71/EC. However, they may choose toproduce a prospectus in accordance with this Directive. Thirdcountry sovereign issuers and their regional or local authoritiesare not outside the scope of Directive 2003/71/EC and areobliged to produce a prospectus if they wish to make a publicoffer of securities in the Community or wish their securities to beadmitted to trading on a regulated market. For those cases,particular schedules should be used for the securities issued byStates, their regional and local authorities and by public interna-tional bodies.

(21) A base prospectus and its final terms should contain the sameinformation as a prospectus. All the general principles applicableto a prospectus are applicable also to the final terms. Never-theless, where the final terms are not included in the baseprospectus they do not have to be approved by the competentauthority.

(22) For some categories of issuers the competent authority should beentitled to require adapted information going beyond the infor-mation items included in the schedules and building blocks

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because of the particular nature of the activities carried out bythose issuers. A precise and restrictive list of issuers for whichadapted information may be required is necessary. The adaptedinformation requirements for each category of issuers included inthis list should be appropriate and proportionate to the type ofbusiness involved. The Committee of European Securities Regu-lators could actively try to reach convergence on these infor-mation requirements within the Community. Inclusion of newcategories in the list should be restricted to those cases wherethis can be duly justified.

(23) In the case of completely new types of securities which cannot becovered by the existing schedules or any of their combinations,the issuer should still have the possibility to apply for approvalfor a prospectus. In those cases he should be able to discuss thecontent of the information to be provided with the competentauthority. The prospectus approved by the competent authorityunder those circumstances should benefit from the single passportestablished in Directive 2003/71/EC. The competent authorityshould always try to find similarities and make use as much aspossible of existing schedules. Any additional informationrequirements should be proportionate and appropriate to thetype of securities involved.

(24) Certain information items required in the schedules and buildingblocks or equivalent information items are not relevant to aparticular security and thus may be inapplicable in somespecific cases; in those cases the issuer should have the possi-bility to omit this information.

(25) The enhanced flexibility in the articulation of the base prospectuswith its final terms compared to a single issue prospectus shouldnot hamper the easy access to material information for investors.

(26) With respect to base prospectuses, it should be set out in aneasily identifiable manner which kind of information will haveto be included as final terms. This requirement should be able tobe satisfied in a number of different ways, for example, if thebase prospectus contains blanks for any information to beinserted in the final terms or if the base prospectus contains alist of the missing information.

(27) Where a single document includes more than one base prospectusand each base prospectus would require approval by a differenthome competent authority, the respective competent authoritiesshould act in cooperation and, where appropriate, transfer theapproval of the prospectus in accordance with Article 13(5) ofDirective 2003/71/EC, so that the approval by only onecompetent authority is sufficient for the entire document.

(28) Historical financial information as required in the schedulesshould principally be presented in accordance with Regulation(EC) No 1606/2002 of the European Parliament and of theCouncil of 19 July 2002 on the application of internationalaccounting standard (1 ) or Member States’ accounting standards.Specific requirements should, however, be laid down for thirdcountry issuers.

(29) For the purposes of publication of the document referred to inArticle 10 of Directive 2003/71/EC, issuers should be allowed tochoose the method of publication they consider adequate amongthose referred to in Article 14 of that Directive. In selecting themethod of publication they should consider the objective of thedocument and that it should permit investors a fast and cost-efficient access to that information.

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(30) The aim of incorporation by reference, as provided for inArticle 11 of Directive 2003/71/EC, is to simplify and reducethe costs of drafting a prospectus; however this aim should notbe achieved to the detriment of other interests the prospectus ismeant to protect. For instance, the fact that the natural location ofthe information required is the prospectus, and that the infor-mation should be presented in an easily and comprehensibleform, should also be considered. Particular attention should begranted to the language used for information incorporated byreference and its consistency with the prospectus itself. Infor-mation incorporated by reference may refer to historical data,however if this information is no more relevant due to materialchange, this should be clearly stated in the prospectus and theupdated information should also be provided.

(31) Where a prospectus is published in electronic form, additionalsafety measures compared to traditional means of publication,using best practices available, are necessary in order tomaintain the integrity of the information, to avoid manipulationor modification from unauthorised persons, to avoid altering itscomprehensibility and to escape from possible adverse conse-quences from different approaches on offer of securities to thepublic in third countries.

(32) The newspaper chosen for the publication of a prospectus shouldhave a wide area of distribution and a high circulation.

(33) A home Member State should be able to require publication of anotice stating how the prospectus has been made available andwhere it can be obtained by the public. Where a home MemberState requires publication of notices in its legislation, the contentof such a notice should be kept to the necessary items infor-mation to avoid duplication with the summary. These homeMember States may also require that an additional notice inrelation to the final terms of a base prospectus is to be published.

(34) In order to facilitate centralising useful information for investors amention should be included in the list of approved prospectusesposted in the web-site of the competent authority of the homeMember State, indicating how a prospectus has been publishedand where it can be obtained.

(35) Member States should ensure effective compliance of advertisingrules concerning public offers and admission to trading on aregulated market. Proper co-ordination between competent autho-rities should be achieved in cross-border offerings or cross-borderadmission to trading.

(36) In view of the interval between the entry into force of Regulation(EC) No 1606/2002 and the production of certain of its effects, anumber of transitional arrangements for historical financial infor-mation to be included in a prospectus should be provided for, inorder to prevent excessive burden on issuers and enable them toadapt the way they prepare and present historical financial infor-mation within a reasonable period of time after the entry intoforce of Directive 2003/71/EC.

(37) The obligation to restate in a prospectus historical financial infor-mation according to Regulation (EC) N° 1606/2002 does notcover securities with a denomination per unit of at leastEUR 50 000; consequently such transitional arrangements arenot necessary for such securities.

(38) For reasons of coherence it is appropriate that this Regulationapplies from the date of transposition of Directive 2003/71/EC.

(39) Whereas the measures provided for in this Regulation are inaccordance with the opinion of the European SecuritiesCommittee,

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HAS ADOPTED THIS REGULATION:

CHAPTER I

SUBJECT MATTER AND DEFINITIONS

Article 1

Subject matter

This Regulation lays down:

1. the format of prospectus referred to in Article 5 of Directive2003/71/EC;

2. the minimum information requirements to be included in aprospectus provided for in Article 7 of Directive 2003/71/EC;

3. the method of publication referred to in Article 10 of Directive2003/71/EC;

4. the modalities according to which information can be incorporatedby reference in a prospectus provided for in Article 11 of Directive2003/71/EC;

5. the publication methods of a prospectus in order to ensure that aprospectus is publicly available according to Article 14 of Directive2003/71/EC;

6. the methods of dissemination of advertisements referred to inArticle 15 of Directive 2003/71/EC.

Article 2

Definitions

For the purposes of this Regulation, the following definitions shallapply in addition to those laid down in Directive 2003/71/EC:

1. ‘schedule’ means a list of minimum information requirementsadapted to the particular nature of the different types of issuersand/or the different securities involved;

2. ‘building block’ means a list of additional informationrequirements, not included in one of the schedules, to be addedto one or more schedules, as the case may be, depending on thetype of instrument and/or transaction for which a prospectus or baseprospectus is drawn up;

3. ‘risk factors’ means a list of risks which are specific to the situationof the issuer and/or the securities and which are material for takinginvestment decisions;

4. ‘special purpose vehicle’ means an issuer whose objects andpurposes are primarily the issue of securities;

5. ‘asset backed securities’ means securities which:

(a) represent an interest in assets, including any rights intended toassure servicing, or the receipt or timeliness of receipts byholders of assets of amounts payable there under;

or

(b) are secured by assets and the terms of which provide forpayments which relate to payments or reasonable projectionsof payments calculated by reference to identified or identifiableassets;

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6. ‘umbrella collective investment undertaking’ means a collectiveinvestment undertaking invested in one or more collectiveinvestment undertakings, the asset of which is composed ofseparate class(es) or designation(s) of securities;

7. ‘property collective investment undertaking’ means a collectiveinvestment undertaking whose investment objective is the partici-pation in the holding of property in the long term;

8. ‘public international body’ means a legal entity of public natureestablished by an international treaty between sovereign Statesand of which one or more Member States are members;

9. ‘advertisement’ means announcements:

(a) relating to an specific offer to the public of securities or to anadmission to trading on a regulated market;

and

(b) aiming to specifically promote the potential subscription oracquisition of securities.

10. ‘profit forecast’ means a form of words which expressly states or byimplication indicates a figure or a minimum or maximum figure forthe likely level of profits or losses for the current financial periodand/or financial periods subsequent to that period, or contains datafrom which a calculation of such a figure for future profits or lossesmay be made, even if no particular figure is mentioned and theword ‘profit’ is not used.

11. ‘profit estimate’ means a profit forecast for a financial period whichhas expired and for which results have not yet been published.

12. ‘regulated information’ means all information which the issuer, orany person who has applied for the admission of securities totrading on a regulated market without the issuer’s consent, isrequired to disclose under Directive 2001/34/EC or underArticle 6 of Directive 2003/6/EC of the European Parliament andof the Council ( 1).

CHAPTER II

MINIMUM INFORMATION

Article 3

Minimum information to be included in a prospectus

A prospectus shall be drawn up by using one or a combination of thefollowing schedules and building blocks set out in Articles 4 to 20,according to the combinations for various types of securities providedfor in Article 21.

A prospectus shall contain the information items required in Annexes Ito XVII depending on the type of issuer and securities involved,provided for in the schedules and building blocks set out inArticles 4 to 20. ►M2 Subject to Article 4a(1), a competentauthority shall not request that a prospectus contain information itemswhich are not included in Annexes I to XVII. ◄

In order to ensure conformity with the obligation referred to in Article 5(1) of Directive 2003/71/EC, the competent authority of the homeMember State, when approving a prospectus in accordance withArticle 13 of that Directive, may require that the informationprovided by the issuer, the offeror or the person asking for admission

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to trading on a regulated market be completed, for each of the infor-mation items, on a case by case basis.

Article 4

Share registration document schedule

1 For the share registration document information shall be given inaccordance with the schedule set out in Annex I.

2 The schedule set out in paragraph 1 shall apply to the following:

1. shares and other transferable securities equivalent to shares;

2. other securities which comply with the following conditions:

(a) they can be converted or exchanged into shares or other trans-ferable securities equivalent to shares, at the issuer’s or at theinvestor’s discretion, or on the basis of the conditions establisheda the moment of the issue, or give, in any other way, the possi-bility to acquire shares or other transferable securities equivalentto shares;

and

(b) provided that these shares or other transferable securitiesequivalent to shares are or will be issued by the issuer of thesecurity and are not yet traded on a regulated market or anequivalent market outside the Community at the time of theapproval of the prospectus covering the securities, and that theunderlying shares or other transferable securities equivalent toshares can be delivered with physical settlement.

▼M2

Article 4a

Share registration document schedule in cases of complex financialhistory or significant financial commitment

1. Where the issuer of a security covered by Article 4(2) has acomplex financial history, or has made a significant financialcommitment, and in consequence the inclusion in the registrationdocument of certain items of financial information relating to anentity other than the issuer is necessary in order to satisfy the obligationlaid down in Article 5(1) of Directive 2003/71/EC, those items offinancial information shall be deemed to relate to the issuer. Thecompetent authority of the home Member State shall in such casesrequest that the issuer, the offeror or the person asking for admissionto trading include those items of information in the registrationdocument.

Those items of financial information may include pro forma informationprepared in accordance with Annex II. In this context, where the issuerhas made a significant financial commitment any such pro forma infor-mation shall illustrate the anticipated effects of the transaction that theissuer has agreed to undertake, and references in Annex II to ‘thetransaction’ shall be read accordingly.

2. The competent authority shall base any request pursuant toparagraph 1 on the requirements set out in item 20.1 of Annex I asregards the content of financial information and the applicableaccounting and auditing principles, subject to any modification whichis appropriate in view of any of the following factors:

(a) the nature of the securities;

(b) the nature and range of information already included in theprospectus, and the existence of financial information relating to

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an entity other than the issuer in a form that might be included in aprospectus without modification;

(c) the facts of the case, including the economic substance of thetransactions by which the issuer has acquired or disposed of itsbusiness undertaking or any part of it, and the specific nature ofthat undertaking;

(d) the ability of the issuer to obtain financial information relating toanother entity with reasonable effort.

Where, in the individual case, the obligation laid down in Article 5(1) ofDirective 2003/71/EC may be satisfied in more than one way,preference shall be given to the way that is the least costly or onerous.

3. Paragraph 1 is without prejudice to the responsibility undernational law of any other person, including the persons referred to inArticle 6(1) of Directive 2003/71/EC, for the information contained inthe prospectus. In particular, those persons shall be responsible for theinclusion in the registration document of any items of informationrequested by the competent authority pursuant to paragraph 1.

4. For the purposes of paragraph 1, an issuer shall be treated ashaving a complex financial history if all of the following conditionsapply:

(a) its entire business undertaking at the time that the prospectus isdrawn up is not accurately represented in the historical financialinformation which it is required to provide under item 20.1 ofAnnex I;

(b) that inaccuracy will affect the ability of an investor to make aninformed assessment as mentioned in Article 5(1) of Directive2003/71/EC; and

(c) information relating to its business undertaking that is necessary foran investor to make such an assessment is included in financialinformation relating to another entity.

5. For the purposes of paragraph 1, an issuer shall be treated ashaving made a significant financial commitment if it has entered intoa binding agreement to undertake a transaction which, on completion, islikely to give rise to a significant gross change.

In this context, the fact that an agreement makes completion of thetransaction subject to conditions, including approval by a regulatoryauthority, shall not prevent that agreement from being treated asbinding if it is reasonably certain that those conditions will be fulfilled.

In particular, an agreement shall be treated as binding where it makesthe completion of the transaction conditional on the outcome of theoffer of the securities that are the subject matter of the prospectus or,in the case of a proposed takeover, if the offer of securities that are thesubject matter of the prospectus has the objective of funding thattakeover.

6. For the purposes of paragraph 5 of this Article, and of item 20.2of Annex I, a significant gross change means a variation of more than25 %, relative to one or more indicators of the size of the issuer'sbusiness, in the situation of an issuer.

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Article 5

Pro forma financial information building block

For pro forma financial information, information shall be given inaccordance with the building block set out in Annex II.

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Pro forma financial information should be preceded by an introductoryexplanatory paragraph that states in clear terms the purpose of includingthis information in the prospectus.

Article 6

Share securities note schedule

1 For the share securities note information is necessary to be given inaccordance with the schedule set out in Annex III.

2 The schedule shall apply to shares and other transferable securitiesequivalent to shares.

Article 7

Debt and derivative securities registration document schedule forsecurities with a denomination per unit of less than EUR 50 000

For the debt and derivative securities registration document concerningsecurities which are not covered in Article 4 with a denomination perunit of less than EUR 50 000 or, where there is no individual denomi-nation, securities that can only be acquired on issue for less thanEUR 50 000 per security, information shall be given in accordancewith the schedule set out in Annex IV.

Article 8

Securities note schedule for debt securities with a denomination perunit of less than EUR 50 000

1 For the securities note for debt securities with a denomination perunit of less than EUR 50 000 information shall be given in accordancewith the schedule set out in Annex V.

2 The schedule shall apply to debt where the issuer has an obligationarising on issue to pay the investor 100 % of the nominal value inaddition to which there may be also an interest payment.

Article 9

Guarantees building block

For guarantees information shall be given in accordance with thebuilding block set out in Annex VI.

Article 10

Asset backed securities registration document schedule

For the asset backed securities registration document information shallbe given in accordance with the schedule set out in Annex VII.

Article 11

Asset backed securities building block

For the additional information building block to the securities note forasset backed securities information shall be given in accordance with thebuilding block set out in Annex VIII.

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Article 12

Debt and derivative securities registration document schedule forsecurities with a denomination per unit of at least EUR 50 000

For the debt and derivative securities registration document concerningsecurities which are not covered in Article 4 with a denomination perunit of at least EUR 50 000 or, where there is no individual denomi-nation, securities that can only be acquired on issue for at leastEUR 50 000 per security, information shall be given in accordancewith the schedule set out in Annex IX.

Article 13

Depository receipts schedule

For depository receipts issued over shares information shall be given inaccordance with the schedule set out in Annex X.

Article 14

Banks registration document schedule

1 For the banks registration document for debt and derivative secu-rities and those securities which are not covered by Article 4 infor-mation shall be given in accordance with the schedule set out inAnnex XI.

2 The schedule set out in paragraph 1 shall apply to credit insti-tutions as defined in point (a) of Article 1(1) of Directive 2000/12/ECas well as to third country credit institutions which do not fall under thatdefinition but have their registered office in a state which is a memberof the OECD.

These entities may also use alternatively the registration documentschedules provided for under in Articles 7 and 12.

Article 15

Securities note schedule for derivative securities

1 For the securities note for derivative securities information shall begiven in accordance with the schedule set out in Annex XII.

2 The schedule shall apply to securities which are not in the scope ofapplication of the other securities note schedules referred to inArticles 6, 8 and 16, including certain securities where the paymentand/or delivery obligations are linked to an underlying.

Article 16

Securities note schedule for debt securities with a denomination perunit of at least EUR 50 000

1 For the securities note for debt securities with a denomination perunit of at least EUR 50 000 information shall be given in accordancewith the schedule set out in Annex XIII.

2 The schedule shall apply to debt where the issuer has an obligationarising on issue to pay the investor 100 % of the nominal value inaddition to which there may be also an interest payment.

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Article 17

Additional information building block on the underlying share

1 For the additional information on the underlying share, thedescription of the underlying share shall be given in accordance withthe building block set out in Annex XIV.

In addition, if the issuer of the underlying share is an entity belongingto the same group, the information required by the schedule referred toin Article 4 shall be given in respect of that issuer.

2 The additional information referred to in the first subparagraph ofparagraph 1 shall only apply to those securities which comply with bothof the following conditions:

1. they can be converted or exchanged into shares or other transferablesecurities equivalent to shares, at the issuer’s or at the investor’sdiscretion, or on the basis of the conditions established a themoment of the issue or give, in any other way, the possibility toacquire shares or other transferable securities equivalent to shares;

and

2. provided that these shares or other transferable securities equivalentto shares are or will be issued by the issuer of the security or by anentity belonging to the group of that issuer and are not yet traded ona regulated market or an equivalent market outside the Community atthe time of the approval of the prospectus covering the securities,and that the underlying shares or other transferable securitiesequivalent to shares can be delivered with physical settlement.

Article 18

Registration document schedule for collective investmentundertakings of the closed-end type

1 In addition to the information required pursuant to items 1, 2, 3, 4,5.1, 7, 9.1, 9.2.1, 9.2.3, 10.4, 13, 14, 15, 16, 17.2, 18, 19, 20, 21, 22,23, 24, 25 of Annex I, for the registration document for securities issuedby collective investment undertakings of the closed-end type infor-mation shall be given in accordance with the schedule set out inAnnex XV.

2 The schedule shall apply to collective investment undertakings ofthe closed-end type holding a portfolio of assets on behalf of investorsthat:

1. are recognised by national law in the Member State in which it isincorporated as a collective investment undertaking of the closed endtype;

or

2. do not take or seek to take legal or management control of any of theissuers of its underlying investments. In such a case, legal controland/or participation in the administrative, management or supervisorybodies of the underlying issuer(s) may be taken where such action isincidental to the primary investment objective, necessary for theprotection of shareholders and only in circumstances where thecollective investment undertaking will not exercise significantmanagement control over the operations of that underlying issuer(s).

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Article 19

Registration document schedule for Member States, third countriesand their regional and local authorities

1 For the registration document for securities issued by MemberStates, third countries and their regional and local authorities infor-mation shall be given in accordance with the schedule set out inAnnex XVI.

2 The schedule shall apply to all types of securities issued byMember States, third countries and their regional and local authorities.

Article 20

Registration document schedule for public international bodies andfor issuers of debt securities guaranteed by a member state of the

OECD

1 For the registration document for securities issued by public inter-national bodies and for securities unconditionally and irrevocably guar-anteed, on the basis of national legislation, by a state which is memberof the OECD information shall be given in accordance with theschedule set out in Annex XVII.

2 The schedule shall apply to:

— all types of securities issued by public international bodies,

— to debt securities unconditionally and irrevocably guaranteed, on thebasis of national legislation, by a state which is member of theOECD.

Article 21

Combination of schedules and building blocks

1 The use of the combinations provided for in the table set out inAnnex XVIII shall be mandatory when drawing up prospectuses for thetypes of securities to which those combinations correspond according tothis table.

However, for securities not covered by those combinations furthercombinations may be used.

2 The most comprehensive and stringent registration documentschedule, i.e. the most demanding schedule in term of number of infor-mation items and the extent of the information included in them, mayalways be used to issue securities for which a less comprehensive andstringent registration document schedule is provided for, according tothe following ranking of schedules:

1. share registration document schedule;

2. debt and derivative securities registration document schedule forsecurities with a denomination per unit of less than EUR 50 000;

3. debt and derivative securities registration document schedule forsecurities with a denomination per unit at least EUR 50 000.

Article 22

Minimum information to be included in a base prospectus and itsrelated final terms

1 A base prospectus shall be drawn up by using one or a combi-nation of schedules and building blocks provided for in Articles 4 to 20

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according to the combinations for various types of securities set out inAnnex XVIII.

A base prospectus shall contain the information items required inAnnexes I to XVII depending on the type of issuer and securitiesinvolved, provided for in the schedules and building blocks set out inArticles 4 to 20. A competent authority shall not request that a baseprospectus contains information items which are not included inAnnexes I to XVII.

In order to ensure conformity with the obligation referred to in Article 5(1) of Directive 2003/71/EC, the competent authority of the homeMember State, when approving a base prospectus in accordance withArticle 13 of that Directive, may require that the information providedby the issuer, the offeror or the person asking for admission to tradingon a regulated market be completed, for each of the information items,on a case by case basis.

2 The issuer, the offeror or the person asking for admission totrading on a regulated market may omit information items which arenot known when the base prospectus is approved and which can only bedetermined at the time of the individual issue.

3 The use of the combinations provided for in the table inAnnex XVIII shall be mandatory when drawing up base prospectusesfor the types of securities to which those combinations correspondaccording to this table.

However, for securities not covered by those combinations furthercombinations may be used.

4 The final terms attached to a base prospectus shall only contain theinformation items from the various securities note schedules accordingto which the base prospectus is drawn up.

5 In addition to the information items set out in the schedules andbuilding blocks referred to in Articles 4 to 20 the following informationshall be included in a base prospectus:

1. indication on the information that will be included in the final terms;

2. the method of publication of the final terms; if the issuer is not in aposition to determine, at the time of the approval of the prospectus,the method of publication of the final terms, an indication of how thepublic will be informed about which method will be used for thepublication of the final terms;

3. in the case of issues of non equity securities according to point (a) ofArticle 5(4) of Directive 2003/71/EC, a general description of theprogramme.

6 Only the following categories of securities may be contained in abase prospectus and its related final terms covering issues of varioustypes of securities:

1. asset backed securities;

2. warrants falling under Article 17;

3. non-equity securities provided for under point (b) of Article 5(4) ofDirective 2003/71/EC;

4. all other non-equity securities including warrants with the exceptionof those mentioned in (2).

In drawing up a base prospectus the issuer, the offeror or the personasking for admission to trading on a regulated market shall clearlysegregate the specific information on each of the different securitiesincluded in these categories.

7 Where an event envisaged under Article 16(1) of Directive2003/71/EC occurs between the time that the base prospectus hasbeen approved and the final closing of the offer of each issue of secu-

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rities under the base prospectus or, as the case may be, the time thattrading on a regulated market of those securities begins, the issuer, theofferor or the person asking for admission to trading on a regulatedmarket shall publish a supplement prior to the final closing of the offeror the admission of those securities to trading.

Article 23

Adaptations to the minimum information given in prospectuses andbase prospectuses

1 Notwithstanding Articles 3 second paragraph and 22(1)second subparagraph, where the issuer’s activities fall under one ofthe categories included in Annex XIX, the competent authority of thehome Member State, taking into consideration the specific nature of theactivities involved, may ask for adapted information, in addition to theinformation items included in the schedules and building blocks set outin Articles 4 to 20, including, where appropriate, a valuation or otherexpert’s report on the assets of the issuer, in order to comply with theobligation referred to in Article 5(1) of Directive 2003/71/EC. Thecompetent authority shall forthwith inform the Commission thereof.

In order to obtain the inclusion of a new category in Annex XIX aMember State shall notify its request to the Commission. TheCommission shall update this list following the Committee procedureprovided for in Article 24 of Directive 2003/71/EC.

2 By way of derogation of Articles 3 to 22, where an issuer, anofferor or a person asking for admission to trading on a regulatedmarket applies for approval of a prospectus or a base prospectus for asecurity which is not the same but comparable to the various types ofsecurities mentioned in the table of combinations set out inAnnex XVIII, the issuer, the offeror or the person asking foradmission to trading on a regulated market shall add the relevant infor-mation items from another securities note schedule provided for inArticles 4 to 20 to the main securities note schedule chosen. Thisaddition shall be done in accordance with the main characteristics ofthe securities being offered to the public or admitted to trading on aregulated market.

3 By way of derogation of Articles 3 to 22, where an issuer, anofferor or a person asking for admission to trading on a regulatedmarket applies for approval of a prospectus or a base prospectus for anew type of security, the issuer, the offeror or the person asking foradmission to trading on a regulated market shall notify a draftprospectus or base prospectus to the competent authority of the homeMember State.

The competent authority shall decide, in consultation with the issuer, theofferor or the person asking for admission to trading on a regulatedmarket, what information shall be included in the prospectus or baseprospectus in order to comply with the obligation referred to in Article 5(1) of Directive 2003/71/EC. The competent authority shall forthwithinform the Commission thereof.

The derogation referred to in the first subparagraph shall only apply incase of a new type of security which has features completely differentfrom the various types of securities mentioned in Annex XVIII, if thecharacteristics of this new security are such that a combination of thedifferent information items referred to in the schedules and buildingblocks provided for in Articles 4 to 20 is not pertinent.

4 By way of derogation of Articles 3 to 22, in the cases where one ofthe information items required in one of the schedules or buildingblocks referred to in 4 to 20 or equivalent information is notpertinent to the issuer, to the offer or to the securities to which theprospectus relates, that information may be omitted.

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Article 24

Content of the summary of prospectus and base prospectus

The issuer, the offeror or the person asking for admission to trading ona regulated market shall determine on its own the detailed content of thesummary to the prospectus or base prospectus referred to in Article 5(2)of Directive 2003/71/EC.

CHAPTER III

FORMAT OF THE PROSPECTUS, BASE PROSPECTUS ANDSUPPLEMENTS

Article 25

Format of the prospectus

1 Where an issuer, an offeror or a person asking for the admission totrading on a regulated market chooses, according to Article 5(3) ofDirective 2003/71/EC to draw up a prospectus as a single document,the prospectus shall be composed of the following parts in the followingorder:

1. a clear and detailed table of contents;

2. the summary provided for in Article 5 (2) of Directive 2003/71/EC;

3. the risk factors linked to the issuer and the type of security coveredby the issue;

4. the other information items included in the schedules and buildingblocks according to which the prospectus is drawn up.

2 Where an issuer, an offeror or a person asking for the admission totrading on a regulated market chooses, according to in Article 5(3) ofDirective 2003/71/EC, to draw up a prospectus composed of separatedocuments, the securities note and the registration document shall beeach composed of the following parts in the following order:

1. a clear and detailed table of content;

2. as the case may be, the risk factors linked to the issuer and the typeof security covered by the issue;


3 In the cases mentioned in paragraphs 1 and 2, the issuer, theofferor or the person asking for admission to trading on a regulatedmarket shall be free in defining the order in the presentation of therequired information items included in the schedules and buildingblocks according to which the prospectus is drawn up.

4 Where the order of the items does not coincide with the order ofthe information provided for in the schedules and building blocksaccording to which the prospectus is drawn up, the competentauthority of the home Member State may ask the issuer, the offeroror the person asking for the admission to trading on a regulated marketto provide a cross reference list for the purpose of checking theprospectus before its approval. Such list shall identify the pageswhere each item can be found in the prospectus.

5 Where the summary of a prospectus must be supplementedaccording to Article 16(1) of Directive 2003/71/EC, the issuer, theofferor or the person asking for admission to trading on a regulatedmarket shall decide on a case-by-case basis whether to integrate the new

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information in the original summary by producing a new summary, orto produce a supplement to the summary.

If the new information is integrated in the original summary, the issuer,the offeror or the person asking for admission to trading on a regulatedmarket shall ensure that investors can easily identify the changes, inparticular by way of footnotes.

Article 26

Format of the base prospectus and its related final terms

1 Where an issuer, an offeror or a person asking for the admission totrading on a regulated market chooses, according to Article 5 (4) ofDirective 2003/71/EC to draw up a base prospectus, the base prospectusshall be composed of the following parts in the following order:

1. a clear and detailed table of contents;

2. the summary provided for in Article 5 (2) of Directive 2003/71/EC;

3. the risk factors linked to the issuer and the type of security orsecurities covered by the issue(s);


2 Notwithstanding paragraph 1, the issuer, the offeror or the personasking for admission to trading on a regulated market shall be free indefining the order in the presentation of the required information itemsincluded in the schedules and building blocks according to which theprospectus is drawn up. The information on the different securitiescontained in the base prospectus shall be clearly segregated.

3 Where the order of the items does not coincide with the order ofthe information provided for by the schedules and building blocksaccording to which the prospectus is drawn up, the home competentauthority may ask the issuer, the offeror or the person asking foradmission to trading on a regulated market to provide a crossreference list for the purpose of checking the prospectus before itsapproval. Such list should identify the pages where each item can befound in the prospectus.

4 In case the issuer, the offeror or the person asking for admission totrading on a regulated market has previously filed a registrationdocument for a particular type of security and, at a later stage,chooses to draw up base prospectus in conformity with the conditionsprovided for in points (a) and (b) of Article 5(4) of Directive 2003/71/EC, the base prospectus shall contain:

1. the information contained in the previously or simultaneously filedand approved registration document which shall be incorporated byreference, following the conditions provided for in Article 28 of thisRegulation;

2. the information which would otherwise be contained in the relevantsecurities note less the final terms where the final terms are notincluded in the base prospectus.

5 The final terms attached to a base prospectus shall be presented inthe form of a separate document containing only the final terms or byinclusion of the final terms into the base prospectus.

In the case that the final terms are included in a separate documentcontaining only the final terms, they may replicate some informationwhich has been included in the approved base prospectus according tothe relevant securities note schedule that has been used for drawing upthe base prospectus. In this case the final terms have to be presented insuch a way that they can be easily identified as such.

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A clear and prominent statement shall be inserted in the final termsindicating that the full information on the issuer and on the offer isonly available on the basis of the combination of base prospectus andfinal terms and where the base prospectus is available.

6 Where a base prospectus relates to different securities, the issuer,the offeror or the person asking for admission to trading on a regulatedmarket shall include a single summary in the base prospectus for allsecurities. The information on the different securities contained in thesummary, however, shall be clearly segregated.

7 Where the summary of a base prospectus must be supplementedaccording to Article 16(1) of Directive 2003/71/EC, the issuer, theofferor or the person asking for admission to trading on a regulatedmarket shall decide on a case-by-case basis whether to integrate the newinformation in the original summary by producing a new summary, orby producing a supplement to the summary.

If the new information is integrated in the original summary of the baseprospectus by producing a new summary, the issuer, the offeror or theperson asking for admission to trading on a regulated market shallensure that investors can easily identify the changes, in particular byway of footnotes.

8 Issuers, offerors or persons asking for admission to trading on aregulated market may compile in one single document two or moredifferent base prospectuses.

CHAPTER IV

INFORMATION AND INCORPORATION BY REFERENCE

Article 27

Publication of the document referred to in Article 10(1) of Directive2003/71/EC

1 The document referred to in Article 10(1) of Directive 2003/71/ECshall be made available to the public, at the choice of the issuer, theofferor or the person asking for admission to trading on a regulatedmarket, through one of the means permitted under Article 14 of thatDirective in the home Member State of the issuer.

2 The document shall be filed with the competent authority of thehome Member State and made available to the public at the latest 20working days after the publication of the annual financial statements inthe home Member State.

3 The document shall include a statement indicating that some infor-mation may be out-of-date, if such is the case.

Article 28

Arrangements for incorporation by reference

1 Information may be incorporated by reference in a prospectus orbase prospectus, notably if it is contained in one the followingdocuments:

1. annual and interim financial information;

2. documents prepared on the occasion of a specific transaction such asa merger or de-merger;

3. audit reports and financial statements;

4. memorandum and articles of association;

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5. earlier approved and published prospectuses and/or baseprospectuses;

6. regulated information;

7. circulars to security holders.

2 The documents containing information that may be incorporated byreference in a prospectus or base prospectus or in the documentscomposing it shall be drawn up following the provisions ofArticle 19 of Directive 2003/71/EC.

3 If a document which may be incorporated by reference containsinformation which has undergone material changes, the prospectus orbase prospectus shall clearly state such a circumstance and shall givethe updated information.

4 The issuer, the offeror or the person asking for admission totrading on a regulated market may incorporate information in aprospectus or base prospectus by making reference only to certainparts of a document, provided that it states that the non- incorporatedparts are either not relevant for the investor or covered elsewhere in theprospectus.

5 When incorporating information by reference, issuers, offerors orpersons asking for admission to trading on a regulated market shallendeavour not to endanger investor protection in terms of comprehen-sibility and accessibility of the information.

CHAPTER V

PUBLICATION AND DISSEMINATION OF ADVERTISEMENTS

Article 29

Publication in electronic form

1 The publication of the prospectus or base prospectus in electronicform, either pursuant to points (c) (d) and (e) of Article 14(2) ofDirective 2003/71/EC, or as an additional means of availability, shallbe subject to the following requirements:

1. the prospectus or base prospectus shall be easily accessible whenentering the web-site;

2. the file format shall be such that the prospectus or base prospectuscannot be modified;

3. the prospectus or base prospectus shall not contain hyper-links, withexception of links to the electronic addresses where informationincorporated by reference is available;

4. the investors shall have the possibility of downloading and printingthe prospectus or base prospectus.

The exception referred to in point 3 of the first subparagraph shall onlybe valid for documents incorporated by reference; those documents shallbe available with easy and immediate technical arrangements.

2 If a prospectus or base prospectus for offer of securities to thepublic is made available on the web-sites of issuers and financial inter-mediaries or of regulated markets, these shall take measures, to avoidtargeting residents in Members States or third countries where the offerof securities to the public does not take place, such as the insertion of adisclaimer as to who are the addressees of the offer.

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Article 30

Publication in newspapers

1 In order to comply with point (a) of Article 14(2) of Directive2003/71/EC the publication of a prospectus or a base prospectus shallbe made in a general or financial information newspaper having nationalor supra-regional scope;

2 If the competent authority is of the opinion that the newspaperchosen for publication does not comply with the requirements set outin paragraph 1, it shall determine a newspaper whose circulation isdeemed appropriate for this purpose taking into account, in particular,the geographic area, number of inhabitants and reading habits in eachMember State.

Article 31

Publication of the notice

1 If a Member State makes use of the option, referred to inArticle 14(3) of Directive 2003/71/EC, to require the publication of anotice stating how the prospectus or base prospectus has been madeavailable and where it can be obtained by the public, that notice shall bepublished in a newspaper that fulfils the requirements for publication ofprospectuses according to Article 30 of this Regulation.

If the notice relates to a prospectus or base prospectus published for theonly purpose of admission of securities to trading on a regulated marketwhere securities of the same class are already admitted, it may alterna-tively be inserted in the gazette of that regulated market, irrespective ofwhether that gazette is in paper copy or electronic form.

2 The notice shall be published no later than the next working dayfollowing the date of publication of the prospectus or base prospectuspursuant to Article 14(1) of Directive 2003/71/EC.

3 The notice shall contain the following information:

1. the identification of the issuer;

2. the type, class and amount of the securities to be offered and/or inrespect of which admission to trading is sought, provided that theseelements are known at the time of the publication of the notice;

3. the intended time schedule of the offer/admission to trading;

4. a statement that a prospectus or base prospectus has been publishedand where it can be obtained;

5. if the prospectus or base prospectus has been published in a printedform, the addresses where and the period of time during which suchprinted forms are available to the public;

6. if the prospectus or base prospectus has been published in electronicform, the addresses to which investors shall refer to ask for a papercopy;

7. the date of the notice.

Article 32

List of approved prospectuses

The list of the approved prospectuses and base prospectuses publishedon the web-site of the competent authority, in accordance withArticle 14(4) of Directive 2003/71/EC, shall mention how suchprospectuses have been made available and where they can be obtained.

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Article 33

Publication of the final terms of base prospectuses

The publication method for final terms related to a base prospectus doesnot have to be the same as the one used for the base prospectus as longas the publication method used is one of the publication methodsindicated in Article 14 of the Directive 2003/71/EC.

Article 34

Dissemination of advertisements

Advertisements related to an offer to the public of securities or to anadmission to trading on a regulated market may be disseminated to thepublic by interested parties, such as issuer, offeror or person asking foradmission, the financial intermediaries that participate in the placingand/or underwriting of securities, notably by one of the followingmeans of communication:

1. addressed or unaddressed printed matter;

2. electronic message or advertisement received via a mobiletelephone or pager;

3. standard letter;

4. Press advertising with or without order form;

5. catalogue;

6. telephone with or without human intervention;

7. seminars and presentations;

8. radio;

9. videophone;

10. videotext;

11. electronic mail;

12. facsimile machine (fax);

13. television;

14. notice;

15. bill;

16. poster;

17. brochure;

18. web posting including internet banners.

CHAPTER VI

TRANSITIONAL AND FINAL PROVISIONS

Article 35

Historical financial information

1 The obligation for Community issuers to restate in a prospectushistorical financial information according to Regulation (EC)No 1606/2002, set out in Annex I item 20.1, Annex IV item 13.1,Annex VII items 8.2, Annex X items 20.1 and Annex XI item 11.1shall not apply to any period earlier than 1 January 2004 or, where anissuer has securities admitted to trading on a regulated market on 1 July

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2005, until the issuer has published its first consolidated annualaccounts with accordance with Regulation (EC) No 1606/2002.

2 Where a Community issuer is subject to transitional nationalprovisions adopted pursuant Article 9 of Regulation (EC)No 1606/2002, the obligation to restate in a prospectus historicalfinancial information does not apply to any period earlier than1 January 2006 or, where an issuer has securities admitted to tradingon a regulated market on 1 July 2005, until the issuer has published itsfirst consolidated annual accounts with accordance with Regulation(EC) No 1606/2002.

3 Until 1 January 2007 the obligation to restate in a prospectushistorical financial information according to Regulation (EC)No 1606/2002, set out in Annex I item 20.1, Annex IV item 13.1,Annex VII items 8.2, Annex X items 20.1 and Annex XI item 11.1shall not apply to issuers from third countries:

1. who have their securities admitted to trading on a regulated marketon 1 January 2007;

and

2. who have presented and prepared historical financial informationaccording to the national accounting standards of a third country.

In this case, historical financial information shall be accompanied withmore detailed and/or additional information if the financial statementsincluded in the prospectus do not give a true and fair view of theissuer's assets and liabilities, financial position and profit and loss.

4 Third country issuers having prepared historical financial infor-mation according to internationally accepted standards as referred toin Article 9 of Regulation (EC) No 1606/2002 may use that informationin any prospectus filed before 1 January 2007, without being subject torestatement obligations.

▼M15. Subject to paragraph 5A, from 1 January 2007, third countryissuers referred to in paragraphs 3 and 4 shall present their historicalfinancial information in accordance with international accountingstandards adopted under Regulation (EC) No 1606/2002 or a thirdcountry's national accounting standards equivalent to those standards.If such historical financial information is not in accordance with anysuch standards, it must be presented in the form of restated financialstatements.

5A. Third country issuers are not subject to a requirement, underAnnex I, item 20.1; Annex IV, item 13.1; Annex VII, item 8.2;Annex X, item 20.1 or Annex XI, item 11.1, to restate historicalfinancial information or to a requirement under Annex VII, item 8.2.bis; Annex IX, item 11.1; or Annex X, item 20.1.bis, to provide anarrative description of the differences between international accountingstandards adopted under Regulation (EC) No 1606/2002 and theaccounting principles in accordance with which such information isdrawn up, included in a prospectus filed with a competent authoritybefore 1 January 2009, where one of the following conditions is met:

(a) the notes to the financial statements that form part of the historicalfinancial information contain an explicit and unreserved statementthat they comply with International Financial Reporting Standardsin accordance with IAS 1 Presentation of Financial Statements;

(b) the historical financial information is prepared in accordance withthe Generally Accepted Accounting Principles of either Canada,Japan or the United States of America;

(c) the historical financial information is prepared in accordance withthe Generally Accepted Accounting Principles of a third countryother than Canada, Japan or the United States of America, andthe following conditions are satisfied:

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(i) the third country authority responsible for the nationalaccounting standards in question has made a publiccommitment, before the start of the financial year in whichthe prospectus is filed, to converge those standards with Inter-national Financial Reporting Standards;

(ii) that authority has established a work programme which demon-strates the intention to progress towards convergence before 31December 2008; and

(iii) the issuer provides evidence that satisfies the competentauthority that the conditions in (i) and (ii) are met.

5B. By 1 April 2007, the Commission shall present to the EuropeanSecurities Committee and the European Parliament a first report on thework timetable of the authorities responsible for national accountingstandards in the US, Japan and Canada for the convergence betweenIFRS and the Generally Accepted Accounting Principles of thosecountries.

The Commission shall closely monitor, and regularly inform theEuropean Securities Committee and the European Parliament aboutthe amount of progress in the convergence between InternationalFinancial Reporting Standards and the Generally Accepted AccountingPrinciples of Canada, Japan and the United States of America and ofprogress on the elimination of reconciliation requirements that apply toCommunity issuers in those countries. In particular, it shall inform theEuropean Securities Committee and the European Parliament imme-diately if the process is not proceeding satisfactorily.

5C. The Commission shall also regularly inform the European Secu-rities Committee and the European Parliament about the development ofregulatory discussions and the amount of progress in the convergencebetween International Financial Reporting Standards and the GenerallyAccepted Accounting Principles of third countries mentioned inparagraph 5A(c) and progress towards the elimination of any reconci-liation requirements. In particular, the Commission shall inform theEuropean Securities Committee and the European Parliament imme-diately if the process is not proceeding satisfactorily.

5D. In addition to the obligations under paragraphs 5B and 5C, theCommission shall engage in and maintain a regular dialogue with thirdcountry authorities and, before 1 April 2008 at the latest, theCommission shall present a report to the European SecuritiesCommittee and to the European Parliament on the progress inconvergence and progress towards the elimination of any reconciliationrequirements that apply to Community issuers under the rules of a thirdcountry covered by paragraph 5A (b) or (c). The Commission mayrequest or require another person to prepare the report.

5E. At least six months before 1 January 2009, the Commission shallensure a determination of the equivalence of the Generally AcceptedAccounting Principles of third countries, pursuant to a definition ofequivalence and an equivalence mechanism that it will have establishedbefore 1 January 2008 in accordance with the procedure referred to inArticle 24 of Directive 2003/71/EC. When complying with thisparagraph, the Commission shall first consult the Committee ofEuropean Securities Regulators on the appropriateness of the definitionof equivalence, the equivalence mechanism and the determination of theequivalence that is made.

▼B6 The provisions of this Article shall also apply to Annex VI, item 3.

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Article 36

Entry into force

This Regulation shall enter into force in Member States on the twentiethday after its publication in the Official Journal of the European Union.

It shall apply from 1 July 2005.

This Regulation shall be binding in its entirety and directly applicable inall Member States.

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Entry into force

This Regulation shall enter into force in Member States on the twentiethday after its publication in the Official Journal of the European Union.

It shall apply from 1 July 2005.

This Regulation shall be binding in its entirety and directly applicable inall Member States.

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ANNEXES

Annexes I to XVII: Schedules and building blocks

Annex XVIII: Table of combinations of schedules and building blocks

Annex XIX: List of specialist issuers

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ANNEX I

Minimum Disclosure Requirements for the Share Registration Document(schedule)

1. PERSONS RESPONSIBLE

1.1. All persons responsible for the information given in the RegistrationDocument and, as the case may be, for certain parts of it, with, in thelatter case, an indication of such parts. In the case of natural personsincluding members of the issuer's administrative, management or super-visory bodies indicate the name and function of the person; in case oflegal persons indicate the name and registered office.

1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case, theinformation contained in the registration document is, to the best oftheir knowledge, in accordance with the facts and contains no omissionlikely to affect its import. As the case may be, a declaration by thoseresponsible for certain parts of the registration document that, havingtaken all reasonable care to ensure that such is the case, the informationcontained in the part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.

2. STATUTORY AUDITORS

2.1. Names and addresses of the issuer’s auditors for the period covered bythe historical financial information (together with their membership in aprofessional body).

2.2. If auditors have resigned, been removed or not been re-appointedduring the period covered by the historical financial information,indicate details if material.

3. SELECTED FINANCIAL INFORMATION

3.1. Selected historical financial information regarding the issuer, presentedfor each financial year for the period covered by the historical financialinformation, and any subsequent interim financial period, in the samecurrency as the financial information.

The selected historical financial information must provide the keyfigures that summarise the financial condition of the issuer.

3.2. If selected financial information for interim periods is provided,comparative data from the same period in the prior financial yearmust also be provided, except that the requirement for comparativebalance sheet information is satisfied by presenting the year endbalance sheet information.

4. RISK FACTORS

Prominent disclosure of risk factors that are specific to the issuer or itsindustry in a section headed ‘Risk Factors’.

5. INFORMATION ABOUT THE ISSUER

5.1. History and development of the issuer

5.1.1. The legal and commercial name of the issuer

5.1.2. The place of registration of the issuer and its registration number

5.1.3. The date of incorporation and the length of life of the issuer, exceptwhere indefinite

5.1.4. The domicile and legal form of the issuer, the legislation under whichthe issuer operates, its country of incorporation, and the address andtelephone number of its registered office (or principal place of businessif different from its registered office)

5.1.5. The important events in the development of the issuer's business.

5.2. Investments

5.2.1. A description, (including the amount) of the issuer's principalinvestments for each financial year for the period covered by the

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historical financial information up to the date of the registrationdocument

5.2.2. A description of the issuer’s principal investments that are in progress,including the geographic distribution of these investments (home andabroad) and the method of financing (internal or external)

5.2.3. Information concerning the issuer's principal future investments onwhich its management bodies have already made firm commitments.

6. BUSINESS OVERVIEW

6.1. Principal Activities

6.1.1. A description of, and key factors relating to, the nature of the issuer'soperations and its principal activities, stating the main categories ofproducts sold and/or services performed for each financial year forthe period covered by the historical financial information;

and

6.1.2. An indication of any significant new products and/or services that havebeen introduced and, to the extent the development of new products orservices has been publicly disclosed, give the status of development.

6.2. Principal Markets

A description of the principal markets in which the issuer competes,including a breakdown of total revenues by category of activity andgeographic market for each financial year for the period covered by thehistorical financial information.

6.3. Where the information given pursuant to items 6.1 and 6.2 has beeninfluenced by exceptional factors, mention that fact.

6.4. If material to the issuer's business or profitability, a summary infor-mation regarding the extent to which the issuer is dependent, on patentsor licences, industrial, commercial or financial contracts or new manu-facturing processes.

6.5. The basis for any statements made by the issuer regarding its compe-titive position.

7. ORGANISATIONAL STRUCTURE

7.1. If the issuer is part of a group, a brief description of the group and theissuer's position within the group.

7.2. A list of the issuer's significant subsidiaries, including name, country ofincorporation or residence, proportion of ownership interest and, ifdifferent, proportion of voting power held.

8. PROPERTY, PLANTS AND EQUIPMENT

8.1. Information regarding any existing or planned material tangible fixedassets, including leased properties, and any major encumbrancesthereon.

8.2. A description of any environmental issues that may affect the issuer’sutilisation of the tangible fixed assets.

9. OPERATING AND FINANCIAL REVIEW

9.1. Financial Condition

To the extent not covered elsewhere in the registration document,provide a description of the issuer’s financial condition, changes infinancial condition and results of operations for each year andinterim period, for which historical financial information is required,including the causes of material changes from year to year in thefinancial information to the extent necessary for an understanding ofthe issuer’s business as a whole.

9.2. Operating Results

9.2.1. Information regarding significant factors, including unusual orinfrequent events or new developments, materially affecting theissuer's income from operations, indicating the extent to whichincome was so affected.

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9.2.2. Where the financial statements disclose material changes in net sales orrevenues, provide a narrative discussion of the reasons for suchchanges.

9.2.3. Information regarding any governmental, economic, fiscal, monetary orpolitical policies or factors that have materially affected, or couldmaterially affect, directly or indirectly, the issuer's operations.

10. CAPITAL RESOURCES

10.1. Information concerning the issuer’s capital resources (both short andlong term);

10.2. An explanation of the sources and amounts of and a narrativedescription of the issuer's cash flows;

10.3. Information on the borrowing requirements and funding structure of theissuer;

10.4. Information regarding any restrictions on the use of capital resourcesthat have materially affected, or could materially affect, directly orindirectly, the issuer’s operations.

10.5. Information regarding the anticipated sources of funds needed to fulfilcommitments referred to in items 5.2.3 and 8.1.

11. RESEARCH AND DEVELOPMENT, PATENTS ANDLICENCES

Where material, provide a description of the issuer's research anddevelopment policies for each financial year for the period coveredby the historical financial information, including the amount spent onissuer-sponsored research and development activities.

12. TREND INFORMATION

12.1. The most significant recent trends in production, sales and inventory,and costs and selling prices since the end of the last financial year tothe date of the registration document.

12.2. Information on any known trends, uncertainties, demands,commitments or events that are reasonably likely to have a materialeffect on the issuer's prospects for at least the current financial year.

13. PROFIT FORECASTS OR ESTIMATES

If an issuer chooses to include a profit forecast or a profit estimate theregistration document must contain the information set out initems 13.1 and 13.2:

13.1. A statement setting out the principal assumptions upon which the issuerhas based its forecast, or estimate.

There must be a clear distinction between assumptions about factorswhich the members of the administrative, management or supervisorybodies can influence and assumptions about factors which are exclu-sively outside the influence of the members of the administrative,management or supervisory bodies; the assumptions must be readilyunderstandable by investors, be specific and precise and not relate tothe general accuracy of the estimates underlying the forecast.

13.2. A report prepared by independent accountants or auditors stating that inthe opinion of the independent accountants or auditors the forecast orestimate has been properly compiled on the basis stated and that thebasis of accounting used for the profit forecast or estimate is consistentwith the accounting policies of the issuer.

13.3. The profit forecast or estimate must be prepared on a basis comparablewith the historical financial information.

13.4. If a profit forecast in a prospectus has been published which is stilloutstanding, then provide a statement setting out whether or not thatforecast is still correct as at the time of the registration document, andan explanation of why such forecast is no longer valid if that is thecase.

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14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORYBODIES AND SENIOR MANAGEMENT

14.1. Names, business addresses and functions in the issuer of the followingpersons and an indication of the principal activities performed by themoutside that issuer where these are significant with respect to thatissuer:

(a) members of the administrative, management or supervisory bodies;

(b) partners with unlimited liability, in the case of a limited partnershipwith a share capital;

(c) founders, if the issuer has been established for fewer than fiveyears;

and

(d) any senior manager who is relevant to establishing that the issuerhas the appropriate expertise and experience for the management ofthe issuer's business.

The nature of any family relationship between any of those persons.

In the case of each member of the administrative, management orsupervisory bodies of the issuer and of each person mentioned inpoints (b) and (d) of the first subparagraph, details of that person’srelevant management expertise and experience and the following infor-mation:

(a) the names of all companies and partnerships of which such personhas been a member of the administrative, management or super-visory bodies or partner at any time in the previous five years,indicating whether or not the individual is still a member of theadministrative, management or supervisory bodies or partner. It isnot necessary to list all the subsidiaries of an issuer of which theperson is also a member of the administrative, management orsupervisory bodies;

(b) any convictions in relation to fraudulent offences for at least theprevious five years;

(c) details of any bankruptcies, receiverships or liquidations withwhich a person described in (a) and (d) of the first subparagraphwho was acting in the capacity of any of the positions set out in (a)and (d) of the first subparagraph was associated for at least theprevious five years;

(d) details of any official public incrimination and/or sanctions of suchperson by statutory or regulatory authorities (including designatedprofessional bodies) and whether such person has ever been disqua-lified by a court from acting as a member of the administrative,management or supervisory bodies of an issuer or from acting inthe management or conduct of the affairs of any issuer for at leastthe previous five years.

If there is no such information to be disclosed, a statement to that effectis to be made.

14.2. Administrative, Management, and Supervisory bodies' and SeniorManagement conflicts of interests

Potential conflicts of interests between any duties to the issuer, of thepersons referred to in item 14.1 and their private interests and or otherduties must be clearly stated. In the event that there are no suchconflicts, a statement to that effect must be made.

Any arrangement or understanding with major shareholders, customers,suppliers or others, pursuant to which any person referred to initem 14.1 was selected as a member of the administrative, managementor supervisory bodies or member of senior management.

Details of any restrictions agreed by the persons referred to initem 14.1 on the disposal within a certain period of time of theirholdings in the issuer’s securities.

15. REMUNERATION AND BENEFITS

In relation to the last full financial year for those persons referred to inpoints (a) and (d) of the first subparagraph of item 14.1:

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15.1. The amount of remuneration paid (including any contingent or deferredcompensation), and benefits in kind granted to such persons by theissuer and its subsidiaries for services in all capacities to the issuerand its subsidiaries by any person.

That information must be provided on an individual basis unless indi-vidual disclosure is not required in the issuer’s home country and is nototherwise publicly disclosed by the issuer.

15.2. The total amounts set aside or accrued by the issuer or its subsidiariesto provide pension, retirement or similar benefits.

16. BOARD PRACTICES

In relation to the issuer's last completed financial year, and unlessotherwise specified, with respect to those persons referred to inpoint (a) of the first subparagraph of 14.1:

16.1. Date of expiration of the current term of office, if applicable, and theperiod during which the person has served in that office.

16.2. Information about members of the administrative, management orsupervisory bodies' service contracts with the issuer or any of itssubsidiaries providing for benefits upon termination of employment,or an appropriate negative statement.

16.3. Information about the issuer's audit committee and remunerationcommittee, including the names of committee members and asummary of the terms of reference under which the committee operates.

16.4. A statement as to whether or not the issuer complies with its country’sof incorporation corporate governance regime(s). In the event that theissuer does not comply with such a regime, a statement to that effectmust be included together with an explanation regarding why the issuerdoes not comply with such regime.

17. EMPLOYEES

17.1. Either the number of employees at the end of the period or the averagefor each financial year for the period covered by the historical financialinformation up to the date of the registration document (and changes insuch numbers, if material) and, if possible and material, a breakdownof persons employed by main category of activity and geographiclocation. If the issuer employs a significant number of temporaryemployees, include disclosure of the number of temporary employeeson average during the most recent financial year.

17.2. Shareholdings and stock options

With respect to each person referred to in points (a) and (d) of the firstsubparagraph of item 14.1. provide information as to their shareownership and any options over such shares in the issuer as of themost recent practicable date.

17.3. Description of any arrangements for involving the employees in thecapital of the issuer.

18. MAJOR SHAREHOLDERS

18.1. In so far as is known to the issuer, the name of any person other than amember of the administrative, management or supervisory bodies who,directly or indirectly, has an interest in the issuer’s capital or votingrights which is notifiable under the issuer's national law, together withthe amount of each such person’s interest or, if there are no suchpersons, an appropriate negative statement.

18.2. Whether the issuer's major shareholders have different voting rights, oran appropriate negative statement.

18.3. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom and describe the nature ofsuch control and describe the measures in place to ensure that suchcontrol is not abused.

18.4. A description of any arrangements, known to the issuer, the operationof which may at a subsequent date result in a change in control of theissuer.

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19. RELATED PARTY TRANSACTIONS

Details of related party transactions (which for these purposes are thoseset out in the Standards adopted according to the Regulation (EC)No 1606/2002), that the issuer has entered into during the periodcovered by the historical financial information and up to the date ofthe registration document, must be disclosed in accordance with therespective standard adopted according to Regulation (EC)No 1606/2002 if applicable.

If such standards do not apply to the issuer the following informationmust be disclosed:

(a) the nature and extent of any transactions which are - as a singletransaction or in their entirety - material to the issuer. Where suchrelated party transactions are not concluded at arm's length providean explanation of why these transactions were not concluded atarms length. In the case of outstanding loans including guaranteesof any kind indicate the amount outstanding;

(b) the amount or the percentage to which related party transactionsform part of the turnover of the issuer.

20. FINANCIAL INFORMATION CONCERNING THE ISSUER’SASSETS AND LIABILITIES, FINANCIAL POSITION ANDPROFITS AND LOSSES

20.1. Historical Financial Information

Audited historical financial information covering the latest 3 financialyears (or such shorter period that the issuer has been in operation), andthe audit report in respect of each year. ►M2 If the issuer haschanged its accounting reference date during the period for whichhistorical financial information is required, the audited historical infor-mation shall cover at least 36 months, or the entire period for which theissuer has been in operation, whichever is the shorter. ◄ Suchfinancial information must be prepared according to Regulation (EC)No 1606/2002, or if not applicable to a Member State nationalaccounting standards for issuers from the Community. For thirdcountry issuers, such financial information must be preparedaccording to the international accounting standards adopted pursuantto the procedure of Article 3 of Regulation (EC) No 1606/2002 or to athird country’s national accounting standards equivalent to thesestandards. If such financial information is not equivalent to thesestandards, it must be presented in the form of restated financialstatements.

The last two years audited historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next published annual financial statementshaving regard to accounting standards and policies and legislationapplicable to such annual financial statements.

If the issuer has been operating in its current sphere of economicactivity for less than one year, the audited historical financial infor-mation covering that period must be prepared in accordance with thestandards applicable to annual financial statements under the Regu-lation (EC) No 1606/2002, or if not applicable to a Member Statenational accounting standards where the issuer is an issuer from theCommunity. For third country issuers, the historical financial infor-mation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. This historical financial infor-mation must be audited.

If the audited financial information is prepared according to nationalaccounting standards, the financial information required under thisheading must include at least:

(a) balance sheet;

(b) income statement;

(c) a statement showing either all changes in equity or changes inequity other than those arising from capital transactions withowners and distributions to owners;

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(d) cash flow statement;

(e) accounting policies and explanatory notes.

The historical annual financial information must be independentlyaudited or reported on as to whether or not, for the purposes of theregistration document, it gives a true and fair view, in accordance withauditing standards applicable in a Member State or an equivalentstandard.

20.2. Pro forma financial information

In the case of a significant gross change, a description of how thetransaction might have affected the assets and liabilities and earningsof the issuer, had the transaction been undertaken at thecommencement of the period being reported on or at the date reported.

This requirement will normally be satisfied by the inclusion of proforma financial information.

This pro forma financial information is to be presented as set out inAnnex II and must include the information indicated therein.

Pro forma financial information must be accompanied by a reportprepared by independent accountants or auditors.

20.3. Financial statements

If the issuer prepares both own and consolidated annual financialstatements, include at least the consolidated annual financial statementsin the registration document.

20.4. Auditing of historical annual financial information

20.4.1. A statement that the historical financial information has been audited. Ifaudit reports on the historical financial information have been refusedby the statutory auditors or if they contain qualifications or disclaimers,such refusal or such qualifications or disclaimers must be reproduced infull and the reasons given.

20.4.2. Indication of other information in the registration document which hasbeen audited by the auditors.

20.4.3. Where financial data in the registration document is not extracted fromthe issuer's audited financial statements state the source of the data andstate that the data is unaudited.

20.5. Age of latest financial information

20.5.1. The last year of audited financial information may not be older thanone of the following:

(a) 18 months from the date of the registration document if the issuerincludes audited interim financial statements in the registrationdocument;

(b) 15 months from the date of the registration document if the issuerincludes unaudited interim financial statements in the registrationdocument.

20.6. Interim and other financial information

20.6.1. If the issuer has published quarterly or half yearly financial informationsince the date of its last audited financial statements, these must beincluded in the registration document. If the quarterly or half yearlyfinancial information has been reviewed or audited, the audit or reviewreport must also be included. If the quarterly or half yearly financialinformation is unaudited or has not been reviewed state that fact.

20.6.2. If the registration document is dated more than nine months after theend of the last audited financial year, it must contain interim financialinformation, which may be unaudited (in which case that fact must bestated) covering at least the first six months of the financial year.

The interim financial information must include comparative statementsfor the same period in the prior financial year, except that therequirement for comparative balance sheet information may besatisfied by presenting the years end balance sheet.

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20.7. Dividend policy

A description of the issuer’s policy on dividend distributions and anyrestrictions thereon.

20.7.1. The amount of the dividend per share for each financial year for theperiod covered by the historical financial information adjusted, wherethe number of shares in the issuer has changed, to make it comparable.

20.8. Legal and arbitration proceedings

Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the issuer is aware), during a period covering at least theprevious 12 months which may have, or have had in the recent pastsignificant effects on the issuer and/or group's financial position orprofitability, or provide an appropriate negative statement.

20.9. Significant change in the issuer’s financial or trading position

A description of any significant change in the financial or tradingposition of the group which has occurred since the end of the lastfinancial period for which either audited financial information orinterim financial information have been published, or provide an appro-priate negative statement.

21. ADDITIONAL INFORMATION

21.1. Share Capital

The following information as of the date of the most recent balancesheet included in the historical financial information:

21.1.1. The amount of issued capital, and for each class of share capital:

(a) the number of shares authorised;

(b) the number of shares issued and fully paid and issued but not fullypaid;

(c) the par value per share, or that the shares have no par value;

and

(d) a reconciliation of the number of shares outstanding at thebeginning and end of the year. If more than 10 % of capital hasbeen paid for with assets other than cash within the period coveredby the historical financial information, state that fact.

21.1.2. If there are shares not representing capital, state the number and maincharacteristics of such shares.

21.1.3. The number, book value and face value of shares in the issuer held byor on behalf of the issuer itself or by subsidiaries of the issuer.

21.1.4. The amount of any convertible securities, exchangeable securities orsecurities with warrants, with an indication of the conditions governingand the procedures for conversion, exchange or subscription.

21.1.5. Information about and terms of any acquisition rights and or obli-gations over authorised but unissued capital or an undertaking toincrease the capital.

21.1.6. Information about any capital of any member of the group which isunder option or agreed conditionally or unconditionally to be put underoption and details of such options including those persons to whomsuch options relate.

21.1.7. A history of share capital, highlighting information about any changes,for the period covered by the historical financial information.

21.2. Memorandum and Articles of Association

21.2.1. A description of the issuer’s objects and purposes and where they canbe found in the memorandum and articles of association.

21.2.2. A summary of any provisions of the issuer's articles of association,statutes, charter or bylaws with respect to the members of the admin-istrative, management and supervisory bodies.

21.2.3. A description of the rights, preferences and restrictions attaching toeach class of the existing shares.

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21.2.4. A description of what action is necessary to change the rights ofholders of the shares, indicating where the conditions are moresignificant than is required by law.

21.2.5. A description of the conditions governing the manner in which annualgeneral meetings and extraordinary general meetings of shareholdersare called including the conditions of admission.

21.2.6. A brief description of any provision of the issuer's articles of asso-ciation, statutes, charter or bylaws that would have an effect ofdelaying, deferring or preventing a change in control of the issuer.

21.2.7. An indication of the articles of association, statutes, charter or bylawprovisions, if any, governing the ownership threshold above whichshareholder ownership must be disclosed.

21.2.8. A description of the conditions imposed by the memorandum andarticles of association statutes, charter or bylaw governing changes inthe capital, where such conditions are more stringent than is requiredby law.

22. MATERIAL CONTRACTS

A summary of each material contract, other than contracts entered intoin the ordinary course of business, to which the issuer or any memberof the group is a party, for the two years immediately preceding publi-cation of the registration document.

A summary of any other contract (not being a contract entered into inthe ordinary course of business) entered into by any member of thegroup which contains any provision under which any member of thegroup has any obligation or entitlement which is material to the groupas at the date of the registration document.

23. THIRD PARTY INFORMATION AND STATEMENT BYEXPERTS AND DECLARATIONS OF ANY INTEREST

23.1. Where a statement or report attributed to a person as an expert isincluded in the registration document, provide such person’s name,business address, qualifications and material interest if any in theissuer. If the report has been produced at the issuer’s request astatement to the effect that such statement or report is included, inthe form and context in which it is included, with the consent of theperson who has authorised the contents of that part of the registrationdocument.

23.2. Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced andthat as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading. Inaddition, identify the source(s) of the information.

24. DOCUMENTS ON DISPLAY

A statement that for the life of the registration document the followingdocuments (or copies thereof), where applicable, may be inspected:

(a) the memorandum and articles of association of the issuer;

(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at theissuer’s request any part of which is included or referred to in theregistration document;

(c) the historical financial information of the issuer or, in the case of agroup, the historical financial information for the issuer and itssubsidiary undertakings for each of the two financial yearspreceding the publication of the registration document.

An indication of where the documents on display may be inspected, byphysical or electronic means.

25. INFORMATION ON HOLDINGS

Information relating to the undertakings in which the issuer holds aproportion of the capital likely to have a significant effect on theassessment of its own assets and liabilities, financial position orprofits and losses.

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ANNEX II

Pro forma financial information building block

1. The pro forma information must include a description of the trans-action, the businesses or entities involved and the period to which itrefers, and must clearly state the following:

(a) the purpose to which it has been prepared;

(b) the fact that it has been prepared for illustrative purposes only;

(c) the fact that because of its nature, the pro forma financial infor-mation addresses a hypothetical situation and, therefore, does notrepresent the company’s actual financial position or results.

2. In order to present pro forma financial information, a balance sheet andprofit and loss account, and accompanying explanatory notes,depending on the circumstances may be included.

3. Pro forma financial information must normally be presented incolumnar format, composed of:

(a) the historical unadjusted information;

(b) the pro forma adjustments;

and

(c) the resulting pro forma financial information in the final column.

The sources of the pro forma financial information have to be statedand, if applicable, the financial statements of the acquired businesses orentities must be included in the prospectus

4. The pro forma information must be prepared in a manner consistentwith the accounting policies adopted by the issuer in its last or nextfinancial statements and shall identify the following:

(a) the basis upon which it is prepared;

(b) the source of each item of information and adjustment.

5. Pro forma information may only be published in respect of:

(a) the current financial period;

(b) the most recently completed financial period;

and/or

(c) the most recent interim period for which relevant unadjusted infor-mation has been or will be published or is being published in thesame document.

6. Pro forma adjustments related to the pro forma financial informationmust be:

(a) clearly shown and explained;

(b) directly attributable to the transaction;

(c) factually supportable.

In addition, in respect of a pro forma profit and loss or cash flowstatement, they must be clearly identified as to those expected tohave a continuing impact on the issuer and those which are not.

7. The report prepared by the independent accountants or auditors muststate that in their opinion:

(a) the pro forma financial information has been properly compiled onthe basis stated;

(b) that basis is consistent with the accounting policies of the issuer.

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ANNEX III

Minimum disclosure requirements for the share securities note (schedule)


1.1. All persons responsible for the information given in the prospectus and,as the case may be, for certain parts of it, with, in the latter case, anindication of such parts. In the case of natural persons includingmembers of the issuer's administrative, management or supervisorybodies indicate the name and function of the person; in case of legalpersons indicate the name and registered office.

1.2. A declaration by those responsible for the prospectus that, having takenall reasonable care to ensure that such is the case the informationcontained in the prospectus is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import. As the case may be, declaration by those responsible forcertain parts of the prospectus that, having taken all reasonable care toensure that such is the case the information contained in the part of theprospectus for which they are responsible is, to the best of theirknowledge, in accordance with the facts and contains no omissionlikely to affect its import.

2. RISK FACTORS

Prominent disclosure of risk factors that are material to the securitiesbeing offered and/or admitted to trading in order to assess the marketrisk associated with these securities in a section headed ‘Risk Factors’.

3. KEY INFORMATION

3.1. Working capital Statement

Statement by the issuer that, in its opinion, the working capital issufficient for the issuer’s present requirements or, if not, how itproposes to provide the additional working capital needed.

3.2. Capitalisation and indebtedness

A statement of capitalisation and indebtedness (distinguishing betweenguaranteed and unguaranteed, secured and unsecured indebtedness) asof a date no earlier than 90 days prior to the date of the document.Indebtedness also includes indirect and contingent indebtedness.

3.3. Interest of natural and legal persons involved in the issue/offer

A description of any interest, including conflicting ones that is materialto the issue/offer, detailing the persons involved and the nature of theinterest.

3.4. Reasons for the offer and use of proceeds

Reasons for the offer and, where applicable, the estimated net amountof the proceeds broken into each principal intended use and presentedby order of priority of such uses. If the issuer is aware that theanticipated proceeds will not be sufficient to fund all the proposeduses, state the amount and sources of other funds needed. Detailsmust be given with regard to the use of the proceeds, in particularwhen they are being used to acquire assets, other than in theordinary course of business, to finance announced acquisitions ofother business, or to discharge, reduce or retire indebtedness.

4. INFORMATION CONCERNING THE SECURITIES TO BEOFFERED/ADMITTED TO TRADING

4.1. A description of the type and the class of the securities being offeredand/or admitted to trading, including the ISIN (international securityidentification number) or other such security identification code.

4.2. Legislation under which the securities have been created.

4.3. An indication whether the securities are in registered form or bearerform and whether the securities are in certificated form or book-entryform. In the latter case, name and address of the entity in charge ofkeeping the records.

4.4. Currency of the securities issue.

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4.5. A description of the rights attached to the securities, including anylimitations of those rights, and procedure for the exercise of thoserights.

— Dividend rights:

— fixed date(s) on which the entitlement arises,

— time limit after which entitlement to dividend lapses and anindication of the person in whose favour the lapse operates,

— dividend restrictions and procedures for non-resident holders,

— rate of dividend or method of its calculation, periodicity andcumulative or non-cumulative nature of payments.

— Voting rights.

— Pre-emption rights in offers for subscription of securities of thesame class.

— Right to share in the issuer’s profits.

— Rights to share in any surplus in the event of liquidation.

— Redemption provisions.

— Conversion provisions.

4.6. In the case of new issues, a statement of the resolutions, authorisationsand approvals by virtue of which the securities have been or will becreated and/or issued.

4.7. In the case of new issues, the expected issue date of the securities.

4.8. A description of any restrictions on the free transferability of the secu-rities.

4.9. An indication of the existence of any mandatory takeover bids and/orsqueeze-out and sell-out rules in relation to the securities.

4.10. An indication of public takeover bids by third parties in respect of theissuer’s equity, which have occurred during the last financial year andthe current financial year. The price or exchange terms attaching tosuch offers and the outcome thereof must be stated.

4.11. In respect of the country of registered office of the issuer and thecountry(ies) where the offer is being made or admission to trading isbeing sought:

— information on taxes on the income from the securities withheld atsource,

— indication as to whether the issuer assumes responsibility for thewithholding of taxes at the source.

5. TERMS AND CONDITIONS OF THE OFFER

5.1. Conditions, offer statistics, expected timetable and action required toapply for the offer

5.1.1. Conditions to which the offer is subject.

5.1.2. Total amount of the issue/offer, distinguishing the securities offered forsale and those offered for subscription; if the amount is not fixed,description of the arrangements and time for announcing to thepublic the definitive amount of the offer.

5.1.3. The time period, including any possible amendments, during which theoffer will be open and description of the application process.

5.1.4. An indication of when, and under which circumstances, the offer maybe revoked or suspended and whether revocation can occur afterdealing has begun.

5.1.5. A description of the possibility to reduce subscriptions and the mannerfor refunding excess amount paid by applicants.

5.1.6. Details of the minimum and/or maximum amount of application(whether in number of securities or aggregate amount to invest).

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5.1.7. An indication of the period during which an application may bewithdrawn, provided that investors are allowed to withdraw theirsubscription.

5.1.8. Method and time limits for paying up the securities and for delivery ofthe securities.

5.1.9. A full description of the manner and date in which results of the offerare to be made public.

5.1.10. The procedure for the exercise of any right of pre-emption, the negotia-bility of subscription rights and the treatment of subscription rights notexercised.

5.2. Plan of distribution and allotment

5.2.1. The various categories of potential investors to which the securities areoffered. If the offer is being made simultaneously in the markets of twoor more countries and if a tranche has been or is being reserved forcertain of these, indicate any such tranche.

5.2.2. To the extent known to the issuer, an indication of whether majorshareholders or members of the issuer's management, supervisory oradministrative bodies intended to subscribe in the offer, or whether anyperson intends to subscribe for more than five per cent of the offer.

5.2.3. Pre-allotment disclosure:

(a) the division into tranches of the offer including the institutional,retail and issuer’s employee tranches and any other tranches;

(b) the conditions under which the clawback may be used, themaximum size of such claw back and any applicable minimumpercentages for individual tranches;

(c) the allotment method or methods to be used for the retail andissuer’s employee tranche in the event of an over-subscription ofthese tranches;

(d) a description of any pre-determined preferential treatment to beaccorded to certain classes of investors or certain affinity groups(including friends and family programmes) in the allotment, thepercentage of the offer reserved for such preferential treatmentand the criteria for inclusion in such classes or groups;

(e) whether the treatment of subscriptions or bids to subscribe in theallotment may be determined on the basis of which firm they aremade through or by;

(f) a target minimum individual allotment if any within the retailtranche;

(g) the conditions for the closing of the offer as well as the date onwhich the offer may be closed at the earliest;

(h) whether or not multiple subscriptions are admitted, and where theyare not, how any multiple subscriptions will be handled.

5.2.4. Process for notification to applicants of the amount allotted and indi-cation whether dealing may begin before notification is made.

5.2.5. Over-allotment and ‘green shoe’:

(a) the existence and size of any over-allotment facility and/or ‘greenshoe’.

(b) the existence period of the over-allotment facility and/or ‘greenshoe’.

(c) any conditions for the use of the over-allotment facility or exerciseof the ‘green shoe’.

5.3. Pricing

5.3.1. An indication of the price at which the securities will be offered. If theprice is not known or if there is no established and/or liquid market forthe securities, indicate the method for determining the offer price,including a statement as to who has set the criteria or is formallyresponsible for the determination. Indication of the amount of anyexpenses and taxes specifically charged to the subscriber or purchaser.

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5.3.2. Process for the disclosure of the offer price.

5.3.3. If the issuer’s equity holders have pre-emptive purchase rights and thisright is restricted or withdrawn, indication of the basis for the issueprice if the issue is for cash, together with the reasons for and bene-ficiaries of such restriction or withdrawal.

5.3.4 Where there is or could be a material disparity between the public offerprice and the effective cash cost to members of the administrative,management or supervisory bodies or senior management, or affiliatedpersons, of securities acquired by them in transactions during the pastyear, or which they have the right to acquire, include a comparison ofthe public contribution in the proposed public offer and the effectivecash contributions of such persons.

5.4. Placing and Underwriting

5.4.1 Name and address of the coordinator(s) of the global offer and ofsingle parts of the offer and, to the extend known to the issuer or tothe offeror, of the placers in the various countries where the offer takesplace.

5.4.2 Name and address of any paying agents and depository agents in eachcountry.

5.4.3. Name and address of the entities agreeing to underwrite the issue on afirm commitment basis, and name and address of the entities agreeingto place the issue without a firm commitment or under ‘best efforts’arrangements. Indication of the material features of the agreements,including the quotas. Where not all of the issue is underwritten, astatement of the portion not covered. Indication of the overallamount of the underwriting commission and of the placingcommission.

5.4.4. When the underwriting agreement has been or will be reached.

6. ADMISSION TO TRADING AND DEALING ARRANGEMENTS

6.1. An indication as to whether the securities offered are or will be theobject of an application for admission to trading, with a view to theirdistribution in a regulated market or other equivalent markets withindication of the markets in question. This circumstance must bementioned, without creating the impression that the admission totrading will necessarily be approved. If known, the earliest dates onwhich the securities will be admitted to trading.

6.2. All the regulated markets or equivalent markets on which, to theknowledge of the issuer, securities of the same class of the securitiesto be offered or admitted to trading are already admitted to trading.

6.3. If simultaneously or almost simultaneously with the creation of thesecurities for which admission to a regulated market is being soughtsecurities of the same class are subscribed for or placed privately or ifsecurities of other classes are created for public or private placing, givedetails of the nature of such operations and of the number and char-acteristics of the securities to which they relate.

6.4. Details of the entities which have a firm commitment to act as inter-mediaries in secondary trading, providing liquidity through bid andoffer rates and description of the main terms of their commitment.

6.5. Stabilisation: where an issuer or a selling shareholder has granted anover-allotment option or it is otherwise proposed that price stabilisingactivities may be entered into in connection with an offer:

6.5.1. The fact that stabilisation may be undertaken, that there is no assurancethat it will be undertaken and that it may be stopped at any time,

6.5.2. The beginning and the end of the period during which stabilisation mayoccur,

6.5.3. The identity of the stabilisation manager for each relevant jurisdictionunless this is not known at the time of publication,

6.5.4. The fact that stabilisation transactions may result in a market price thatis higher than would otherwise prevail.

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7. SELLING SECURITIES HOLDERS

7.1. Name and business address of the person or entity offering to sell thesecurities, the nature of any position office or other material rela-tionship that the selling persons has had within the past three yearswith the issuer or any of its predecessors or affiliates.

7.2. The number and class of securities being offered by each of the sellingsecurity holders.

7.3. Lock-up agreements

The parties involved.

Content and exceptions of the agreement.

Indication of the period of the lock up.

8. EXPENSE OF THE ISSUE/OFFER

8.1. The total net proceeds and an estimate of the total expenses of theissue/offer.

9. DILUTION

9.1. The amount and percentage of immediate dilution resulting from theoffer.

9.2. In the case of a subscription offer to existing equity holders, theamount and percentage of immediate dilution if they do notsubscribe to the new offer.


10.1. If advisors connected with an issue are mentioned in the SecuritiesNote, a statement of the capacity in which the advisors have acted.

10.2. An indication of other information in the Securities Note which hasbeen audited or reviewed by statutory auditors and where auditors haveproduced a report. Reproduction of the report or, with permission ofthe competent authority, a summary of the report.

10.3. Where a statement or report attributed to a person as an expert isincluded in the Securities Note, provide such persons' name, businessaddress, qualifications and material interest if any in the issuer. If thereport has been produced at the issuer’s request a statement to theeffect that such statement or report is included, in the form andcontext in which it is included, with the consent of the person whohas authorised the contents of that part of the Securities Note.


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ANNEX IV

Minimum disclosure requirements for the debt and derivative securitiesregistration document (schedule)

(Debt and derivative securities with a denomination per unit of less thanEUR 50 000)


1.1. All persons responsible for the information given in the registrationdocument and, as the case may be, for certain parts of it, with, inthe latter case, an indication of such parts. In the case of naturalpersons including members of the issuer's administrative, managementor supervisory bodies indicate the name and function of the person; incase of legal persons indicate the name and registered office.

1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case theinformation contained in the registration document is, to the best oftheir knowledge, in accordance with the facts and contains no omissionlikely to affect its import. As the case may be, declaration by thoseresponsible for certain parts of the registration document that, havingtaken all reasonable care to ensure that such is the case, the informationcontained in the part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.



2.2. If auditors have resigned, been removed or not been re-appointedduring the period covered by the historical financial information,details if material.


3.1. Selected historical financial information regarding the issuer, presented,for each financial year for the period covered by the historical financialinformation, and any subsequent interim financial period, in the samecurrency as the financial information.

The selected historical financial information must provide key figuresthat summarise the financial condition of the issuer.

3.2. If selected financial information for interim periods is provided,comparative data from the same period in the prior financial yearmust also be provided, except that the requirement for comparativebalance sheet data is satisfied by presenting the year end balancesheet information.

4. RISK FACTORS

Prominent disclosure of risk factors that may affect the issuer’s abilityto fulfil its obligations under the securities to investors in a sectionheaded ‘Risk Factors’.


5.1. History and development of the Issuer

5.1.1. the legal and commercial name of the issuer;

5.1.2. the place of registration of the issuer and its registration number;

5.1.3. the date of incorporation and the length of life of the issuer, exceptwhere indefinite;

5.1.4. the domicile and legal form of the issuer, the legislation under whichthe issuer operates, its country of incorporation, and the address andtelephone number of its registered office (or principal place of businessif different from its registered office);

5.1.5. any recent events particular to the issuer which are to a material extentrelevant to the evaluation of the issuer’s solvency.

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5.2. Investments

5.2.1. A description of the principal investments made since the date of thelast published financial statements.

5.2.2. Information concerning the issuer’s principal future investments, onwhich its management bodies have already made firm commitments.

5.2.3. Information regarding the anticipated sources of funds needed to fulfilcommitments referred to in item 5.2.2.


6.1. Principal activities

6.1.1. A description of the issuer’s principal activities stating the main cate-gories of products sold and/or services performed;

and

6.1.2. an indication of any significant new products and/or activities.

6.2. Principal markets

A brief description of the principal markets in which the issuercompetes.



7.1. If the issuer is part of a group, a brief description of the group and ofthe issuer's position within it.

7.2. If the issuer is dependent upon other entities within the group, thismust be clearly stated together with an explanation of this dependence.


8.1. Include a statement that there has been no material adverse change inthe prospects of the issuer since the date of its last published auditedfinancial statements.

In the event that the issuer is unable to make such a statement, providedetails of this material adverse change.



If an issuer chooses to include a profit forecast or a profit estimate, theregistration document must contain the information items 9.1 and 9.2:



9.2. A report prepared by independent accountants or auditors must beincluded stating that in the opinion of the independent accountants orauditors the forecast or estimate has been properly compiled on thebasis stated and that the basis of accounting used for the profit forecastor estimate is consistent with the accounting policies of the issuer.


10. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORYBODIES

10.1. Names, business addresses and functions in the issuer of the followingpersons, and an indication of the principal activities performed by themoutside the issuer where these are significant with respect to that issuer:

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(b) partners with unlimited liability, in the case of a limited partnershipwith a share capital.

10.2. Administrative, Management, and Supervisory bodies' conflicts ofinterests

Potential conflicts of interests between any duties to the issuing entityof the persons referred to in item 10.1 and their private interests and orother duties must be clearly stated. In the event that there are no suchconflicts, make a statement to that effect.

11. BOARD PRACTICES

11.1. Details relating to the issuer's audit committee, including the names ofcommittee members and a summary of the terms of reference underwhich the committee operates.

11.2. A statement as to whether or not the issuer complies with its country’sof incorporation corporate governance regime(s). In the event that theissuer does not comply with such a regime a statement to that effectmust be included together with an explanation regarding why the issuerdoes not comply with such regime.


12.1. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom and describe the nature ofsuch control, and describe the measures in place to ensure that suchcontrol is not abused.




Audited historical financial information covering the latest 2 financialyears (or such shorter period that the issuer has been in operation), andthe audit report in respect of each year. ►M2 If the issuer haschanged its accounting reference date during the period for whichhistorical financial information is required, the audited historical infor-mation shall cover at least 24 months, or the entire period for which theissuer has been in operation, whichever is the shorter. ◄ Suchfinancial information must be prepared according to Regulation (EC)No 1606/2002, or if not applicable to a Member States nationalaccounting standards for issuers from the Community. For thirdcountry issuers, such financial information must be preparedaccording to the international accounting standards adopted pursuantto the procedure of Article 3 of Regulation (EC) No 1606/2002 or to athird country’s national accounting standards equivalent to thesestandards. If such financial information is not equivalent to thesestandards, it must be presented in the form of restated financialstatements.

The most recent year’s historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next published annual financial statementshaving regard to accounting standards and policies and legislationapplicable to such annual financial statements.

If the issuer has been operating in its current sphere of economicactivity for less than one year, the audited historical financial infor-mation covering that period must be prepared in accordance with thestandards applicable to annual financial statements under the Regu-lation (EC) No 1606/2002, or if not applicable to a Member Statesnational accounting standards where the issuer is an issuer from theCommunity. For third country issuers, the historical financial infor-mation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. This historical financial infor-mation must be audited.

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If the audited financial information is prepared according to nationalaccounting standards, the financial information required under thisheading must include at least:

(a) balance sheet;

(b) income statement;

(c) cash flow statement;

and

(d) accounting policies and explanatory notes

The historical annual financial information must have been indepen-dently audited or reported on as to whether or not, for the purposes ofthe registration document, it gives a true and fair view, in accordancewith auditing standards applicable in a Member State or an equivalentstandard.


If the issuer prepares both own and consolidated financial statements,include at least the consolidated financial statements in the registrationdocument.



13.3.2. An indication of other information in the registration document whichhas been audited by the auditors.

13.3.3. Where financial data in the registration document is not extracted fromthe issuer's audited financial statements state the source of the data andstate that the data is unaudited.


13.4.1. The last year of audited financial information may not be older than 18months from the date of the registration document.


13.5.1. If the issuer has published quarterly or half yearly financial informationsince the date of its last audited financial statements, these must beincluded in the registration document. If the quarterly or half yearlyfinancial information has been reviewed or audited the audit or reviewreport must also be included. If the quarterly or half yearly financialinformation is unaudited or has not been reviewed state that fact.

13.5.2. If the registration document is dated more than nine months after theend of the last audited financial year, it must contain interim financialinformation, covering at least the first six months of the financial year.If the interim financial information is un-audited state that fact.



Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the issuer is aware), during a period covering at least theprevious 12 months which may have, or have had in the recent past,significant effects on the issuer and/or group's financial position orprofitability, or provide an appropriate negative statement.


A description of any significant change in the financial or tradingposition of the group which has occurred since the end of the lastfinancial period for which either audited financial information orinterim financial information have been published, or an appropriatenegative statement.

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14.1. Share Capital

14.1.1. The amount of the issued capital, the number and classes of the sharesof which it is composed with details of their principal characteristics,the part of the issued capital still to be paid up, with an indication ofthe number, or total nominal value, and the type of the shares not yetfully paid up, broken down where applicable according to the extent towhich they have been paid up.


14.2.1. The register and the entry number therein, if applicable, and adescription of the issuer’s objects and purposes and where they canbe found in the memorandum and articles of association.


A brief summary of all material contracts that are not entered into inthe ordinary course of the issuer's business, which could result in anygroup member being under an obligation or entitlement that is materialto the issuer’s ability to meet its obligation to security holders inrespect of the securities being issued.


16.1. Where a statement or report attributed to a person as an expert isincluded in the registration document, provide such person’s name,business address, qualifications and material interest if any in theissuer. If the report has been produced at the issuer’s request astatement to that effect that such statement or report is included, inthe form and context in which it is included, with the consent of thatperson who has authorised the contents of that part of the registrationdocument.

16.2. Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced andthat as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading. Inaddition, the issuer shall identify the source(s) of the information.




(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at theissuer's request any part of which is included or referred to in theregistration document;

(c) the historical financial information of the issuer or, in the case of agroup, the historical financial information of the issuer and itssubsidiary undertakings for each of the two financial yearspreceding the publication of the registration document.


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ANNEX V

Minimum disclosure requirements for the securities note related to debtsecurities (schedule)

(Debt securities with a denomination per unit of less than EUR 50 000)



1.2. A declaration by those responsible for the prospectus that, having takenall reasonable care to ensure that such is the case, the informationcontained in the prospectus is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import. As the case may be, declaration by those responsible forcertain parts of the prospectus that the information contained in the partof the prospectus for which they are responsible is, to the best of theirknowledge, in accordance with the facts and contains no omissionlikely to affect its import.

2. RISK FACTORS

2.1. Prominent disclosure of risk factors that are material to the securitiesbeing offered and/or admitted to trading in order to assess the marketrisk associated with these securities in a section headed ‘Risk Factors’.

3. KEY INFORMATION


A description of any interest, including conflicting ones, that is materialto the issue/offer, detailing the persons involved and the nature of theinterest.


Reasons for the offer if different from making profit and/or hedgingcertain risks. Where applicable, disclosure of the estimated totalexpenses of the issue/offer and the estimated net amount of theproceeds. These expenses and proceeds shall be broken into eachprincipal intended use and presented by order of priority of suchuses. If the issuer is aware that the anticipated proceeds will not besufficient to fund all the proposed uses, state the amount and sources ofother funds needed.


4.1. A description of the type and the class of the securities being offeredand/or admitted to trading, including the ISIN (International SecurityIdentification Number) or other such security identification code.


4.3. An indication of whether the securities are in registered form or bearerform and whether the securities are in certificated form or book-entryform. In the latter case, name and address of the entity in charge ofkeeping the records.


4.5. Ranking of the securities being offered and/or admitted to trading,including summaries of any clauses that are intended to affectranking or subordinate the security to any present or future liabilitiesof the issuer.

4.6. A description of the rights attached to the securities, including anylimitations of those rights, and procedure for the exercise of thoserights.

4.7. The nominal interest rate and provisions relating to interest payable.

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— The date from which interest becomes payable and the due datesfor interest

— The time limit on the validity of claims to interest and repayment ofprincipal.

Where the rate is not fixed, description of the underlying on which it isbased and of the method used to relate the two and an indication whereinformation about the past and the further performance of theunderlying and its volatility can be obtained.

— A description of any market disruption or settlement disruptionevents that affect the underlying

— Adjustment rules with relation to events concerning the underlying

— Name of the calculation agent.

If the security has a derivative component in the interest payment,provide a clear and comprehensive explanation to help investorsunderstand how the value of their investment is affected by the valueof the underlying instrument(s), especially under the circumstanceswhen the risks are most evident.

4.8. Maturity date and arrangements for the amortisation of the loan,including the repayment procedures. Where advance amortisation iscontemplated, on the initiative of the issuer or of the holder, it shallbe described, stipulating amortisation terms and conditions.

4.9. An indication of yield. Describe the method whereby that yield iscalculated in summary form.

4.10. Representation of debt security holders including an identification ofthe organisation representing the investors and provisions applying tosuch representation. Indication of where the public may have access tothe contracts relating to these forms of representation.

4.11. In the case of new issues, a statement of the resolutions, authorisationsand approvals by virtue of which the securities have been or will becreated and/or issued.

4.12. In the case of new issues, the expected issue date of the securities.


4.14. In respect of the country of registered office of the issuer and thecountry(ies) where the offer being made or admission to trading isbeing sought:

— information on taxes on the income from the securities withheld atsource;

— indication as to whether the issuer assumes responsibility for thewithholding of taxes at the source.




5.1.2. Total amount of the issue/offer; if the amount is not fixed, descriptionof the arrangements and time for announcing to the public the defi-nitive amount of the offer.



5.1.5. Details of the minimum and/or maximum amount of application,(whether in number of securities or aggregate amount to invest).



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5.3. Pricing

5.3.1. An indication of the expected price at which the securities will beoffered or the method of determining the price and the process forits disclosure. Indicate the amount of any expenses and taxes speci-fically charged to the subscriber or purchaser.

5.4. Placing and Underwriting

5.4.1. Name and address of the co-ordinator(s) of the global offer and ofsingle parts of the offer and, to the extend known to the issuer or tothe offeror, of the placers in the various countries where the offer takesplace.

5.4.2. Name and address of any paying agents and depository agents in eachcountry.




6.1. An indication as to whether the securities offered are or will be theobject of an application for admission to trading, with a view to theirdistribution in a regulated market or other equivalent markets withindication of the markets in question. This circumstance must bementioned, without creating the impression that the admission totrading will necessarily be approved. If known, give the earliest dateson which the securities will be admitted to trading.


6.3. Name and address of the entities which have a firm commitment to actas intermediaries in secondary trading, providing liquidity through bidand offer rates and description of the main terms of their commitment.




7.3. Where a statement or report attributed to a person as an expert isincluded in the Securities Note, provide such persons' name, businessaddress, qualifications and material interest if any in the issuer. If thereport has been produced at the issuer’s request a statement to thateffect that such statement or report is included, in the form andcontext in which it is included, with the consent of that person whohas authorised the contents of that part of the Securities Note.

7.4. Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced and

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that as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading. Inaddition, identify the source(s) of the information.

7.5. Credit ratings assigned to an issuer or its debt securities at the requestor with the co-operation of the issuer in the rating process. A briefexplanation of the meaning of the ratings if this has previously beenpublished by the rating provider.

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ANNEX VI

Minimum disclosure requirements for guarantees

(Additional building block)

1. Nature of the Guarantee

A description of any arrangement intended to ensure that any obligationmaterial to the issue will be duly serviced, whether in the form ofguarantee, surety, Keep well Agreement, Mono-line Insurance policy orother equivalent commitment (hereafter referred to generically as ‘guar-antees’ and their provider as ‘guarantor’ for convenience).

Without prejudice to the generality of the foregoing, such arrangementsencompass commitments to ensure obligations to repay debt securitiesand/or the payment of interest and the description shall set out how thearrangement is intended to ensure that the guaranteed payments will beduly serviced.

2. Scope of the Guarantee

Details shall be disclosed about the terms and conditions and scope of theguarantee. Without prejudice to the generality of the foregoing, these detailsshould cover any conditionality on the application of the guarantee in theevent of any default under the terms of the security and the material terms ofany mono-line insurance or keep well agreement between the issuer and theguarantor. Details must also be disclosed of any guarantor’s power of vetoin relation to changes to the security holder’s rights, such as is often foundin Mono-line Insurance.

3. Information to be disclosed about the guarantor

The guarantor must disclose information about itself as if it were the issuerof that same type of security that is the subject of the guarantee.

4. Documents on display

Indication of the places where the public may have access to the materialcontracts and other documents relating to the guarantee.

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ANNEX VII

Minimum disclosure requirements for asset-backed securities registrationdocument (schedule)



1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case, theinformation given in the registration document is, to the best of theirknowledge, in accordance with the facts and does not omit anythinglikely to affect its import. As the case may be, declaration by thoseresponsible for certain parts of the registration document that havingtaken all reasonable care to ensure that such is the case, the informationcontained in that part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.


2.1. Names and addresses of the issuer’s auditors for the period covered bythe historical financial information (together with any membership ofany relevant professional body).

3. RISK FACTORS

3.1. The document must prominently disclose risk factors in a sectionheaded ‘Risk Factors’ that are specific to the issuer and its industry.

4. INFORMATION ABOUT THE ISSUER:

4.1. A statement whether the issuer has been established as a specialpurpose vehicle or entity for the purpose of issuing asset backed secu-rities;

4.2. The legal and commercial name of the issuer;

4.3. The place of registration of the issuer and its registration number;

4.4. The date of incorporation and the length of life of the issuer, exceptwhere indefinite;

4.5. The domicile and legal form of the issuer, the legislation under whichthe issuer operates its country of incorporation and the address andtelephone number of its registered office (or principal place ofbusiness if different from its registered office).

4.6. Description of the amount of the issuer’s authorised and issued capitaland the amount of any capital agreed to be issued, the number andclasses of the securities of which it is composed.


5.1. A brief description of the issuer’s principal activities.

5.2. A global overview of the parties to the securitisation program includinginformation on the direct or indirect ownership or control betweenthose parties.

6. ADMINISTRATIVE, MANAGEMENT AND SUPERVISORYBODIES




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7.1. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom, and describe the nature ofsuch control and describe the measures in place to ensure that suchcontrol is not abused.

8. FINANCIAL INFORMATION CONCERNING THE ISSUER’SASSETS AND LIABILITIES, FINANCIAL POSITION, ANDPROFITS AND LOSSES

8.1. Where, since the date of incorporation or establishment, an issuer hasnot commenced operations and no financial statements have been madeup as at the date of the registration document, a statement to that effectshall be provided in the registration document.


Where, since the date of incorporation or establishment, an issuer hascommenced operations and financial statements have been made up, theregistration document must contain audited historical financial infor-mation covering the latest 2 financial years (or shorter period thatthe issuer has been in operation) and the audit report in respect ofeach year. ►M2 If the issuer has changed its accounting referencedate during the period for which historical financial information isrequired, the audited historical information shall cover at least 24months, or the entire period for which the issuer has been inoperation, whichever is the shorter. ◄Such financial informationmust be prepared according to Regulation (EC) No 1606/2002, or ifnot applicable to a Member’s State national accounting standards forissuers from the Community. For third country issuers, such financialinformation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. If such financial informationis not equivalent to these standards, it must be presented in the form ofrestated financial statements.

The most recent year's historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next annual published financial statementshaving regard to accounting standards and policies and legislationapplicable to such annual financial statements.

If the issuer has been operating in its current sphere of economicactivity for less than one year, the audited historical financial infor-mation covering that period must be prepared in accordance with thestandards applicable to annual financial statements under Regulation(EC) No 1606/2002, or if not applicable to a Member States nationalaccounting standards where the issuer is from the Community. Forthird country issuers, the historical financial information must beprepared according to the international accounting standards adoptedpursuant to the procedure of Article 3 of Regulation (EC)No 1606/2002 or to a third country’s national accounting standardsequivalent to these standards. This historical financial informationmust be audited.

If the audited financial information is prepared according to nationalaccounting standards, the financial information required under thisheading must include at least the following:

(a) the balance sheet;

(b) the income statement;

(c) the accounting policies and explanatory notes.


8.2a This paragraph may be used only for issues of asset backed securitieshaving a denomination per unit of at least EUR 50 000.

Where, since the date of incorporation or establishment, an issuer hascommenced operations and financial statements have been made up, the

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registration document must contain audited historical financial infor-mation covering the latest 2 financial years (or shorter period thatthe issuer has been in operation) and the audit report in respect ofeach year. ►M2 If the issuer has changed its accounting referencedate during the period for which historical financial information isrequired, the audited historical information shall cover at least 24months, or the entire period for which the issuer has been inoperation, whichever is the shorter. ◄ Such financial informationmust be prepared according to Regulation (EC) No 1606/2002 or, ifnot applicable, to a Member’s State national accounting standards forissuers from the Community. For third country issuers, such financialinformation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. Otherwise, the following infor-mation must be included in the registration document:

(a) a prominent statement that the financial information included in theregistration document has not been prepared in accordance with theinternational accounting standards adopted pursuant to theprocedure of Article 3 of Regulation (EC) No 1606/2002 andthat there may be material differences in the financial informationhad Regulation (EC) No 1606/2002 been applied to the historicalfinancial information;

(b) immediately following the historical financial information anarrative description of the differences between the internationalaccounting standards adopted pursuant to the procedure ofArticle 3 of Regulation (EC) No 1606/2002 and the accountingprinciples adopted by the issuer in preparing its annual financialstatements.

The most recent year’s historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next annual financial statements having regardto accounting standards and policies and legislation applicable to suchannual financial statements.





The historical annual financial information must be independentlyaudited or reported on as to whether or not, for the purposes of theregistration document, it gives a true and fair view, in accordance withauditing standards applicable in a Member State or an equivalentstandard. Otherwise, the following information must be included inthe registration document:

(a) a prominent statement disclosing which auditing standards havebeen applied;

(b) an explanation of any significant departures from InternationalStandards on Auditing.


Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the company is aware), during a period covering at least theprevious 12 months, which may have, or have had in the recent past,significant effects on the issuer and/or group’s financial position orprofitability, or provide an appropriate negative statement.

8.4. Material adverse change in the issuer’s financial position

Where an issuer has prepared financial statements, include a statementthat there has been no material adverse change in the financial positionor prospects of the issuer since the date of its last published auditedfinancial statements. Where a material adverse change has occurred,this must be disclosed in the registration document.

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9.2. Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced andthat as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading Inaddition, the issuer shall identify the source(s) of the information.


10.1. A statement that for the life of the registration document the followingdocuments (or copies thereof), where applicable, may be inspected:


(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at theissuer’s request any part of which is included or referred to in theregistration document;



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ANNEX VIII

Minimum disclosure requirements for the asset-backed securities additionalbuilding block

1. THE SECURITIES

1.1. The minimum denomination of an issue.

1.2. Where information is disclosed about an undertaking/obligor which isnot involved in the issue, provide a confirmation that the informationrelating to the undertaking/obligor has been accurately reproduced frominformation published by the undertaking/obligor. So far as the issuer isaware and is able to ascertain from information published by the under-taking/obligor no facts have been omitted which would render thereproduced information misleading.

In addition, identify the source(s) of information in the Securities Notethat has been reproduced from information published by an under-taking/obligor.

2. THE UNDERLYING ASSETS

2.1. Confirmation that the securitised assets backing the issue have charac-teristics that demonstrate capacity to produce funds to service anypayments due and payable on the securities.

2.2. In respect of a pool of discrete assets backing the issue:

2.2.1. The legal jurisdiction by which the pool of assets is governed

2.2.2. (a) In the case of a small number of easily identifiable obligors, ageneral description of each obligor.

(b) In all other cases, a description of: the general characteristics of theobligors; and the economic environment, as well as globalstatistical data referred to the securitised assets.

2.2.3. the legal nature of the assets;

2.2.4. the expiry or maturity date(s) of the assets;

2.2.5. the amount of the assets;

2.2.6. loan to value ratio or level of collateralisation;

2.2.7. the method of origination or creation of the assets, and for loans andcredit agreements, the principal lending criteria and an indication ofany loans which do not meet these criteria and any rights or obligationsto make further advances;

2.2.8. an indication of significant representations and collaterals given to theissuer relating to the assets;

2.2.9. any rights to substitute the assets and a description of the manner inwhich and the type of assets which may be so substituted; if there isany capacity to substitute assets with a different class or quality ofassets a statement to that effect together with a description of theimpact of such substitution;

2.2.10. a description of any relevant insurance policies relating to the assets.Any concentration with one insurer must be disclosed if it is material tothe transaction.

2.2.11. Where the assets comprise obligations of 5 or fewer obligors which arelegal persons or where an obligor accounts for 20 % or more of theassets, or where an obligor accounts for a material portion of the assets,so far as the issuer is aware and/or is able to ascertain from informationpublished by the obligor(s) indicate either of the following:

(a) information relating to each obligor as if it were an issuer draftinga registration document for debt and derivative securities with anindividual denomination of at least EUR 50 000;

(b) if an obligor or guarantor has securities already admitted to tradingon a regulated or equivalent market or the obligations are guar-anteed by an entity admitted to trading on a regulated or equivalentmarket, the name, address, country of incorporation, nature of

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business and name of the market in which its securities areadmitted.

2.2.12. If a relationship exists that is material to the issue, between the issuer,guarantor and obligor, details of the principal terms of that relationship.

2.2.13. Where the assets comprise obligations that are not traded on a regulatedor equivalent market, a description of the principal terms andconditions of the obligations.

2.2.14. Where the assets comprise equity securities that are admitted to tradingon a regulated or equivalent market indicate the following:

(a) a description of the securities;

(b) a description of the market on which they are traded including itsdate of establishment, how price information is published, an indi-cation of daily trading volumes, information as to the standing ofthe market in the country and the name of the market’s regulatoryauthority;

(c) the frequency with which prices of the relevant securities, arepublished.

2.2.15. Where more than ten (10) per cent of the assets comprise equity secu-rities that are not traded on a regulated or equivalent market, adescription of those equity securities and equivalent information tothat contained in the schedule for share registration document inrespect of each issuer of those securities.

2.2.16. Where a material portion of the assets are secured on or backed by realproperty, a valuation report relating to the property setting out both thevaluation of the property and cash flow/income streams.

Compliance with this disclosure is not required if the issue is of secu-rities backed by mortgage loans with property as security, where therehas been no revaluation of the properties for the purpose of the issue,and it is clearly stated that the valuations quoted are as at the date ofthe original initial mortgage loan origination.

2.3. In respect of an actively managed pool of assets backing the issue:

2.3.1. equivalent information to that contained in items 2.1 and 2.2 to allowan assessment of the type, quality, sufficiency and liquidity of the assettypes in the portfolio which will secure the issue;

2.3.2. the parameters within which investments can be made, the name anddescription of the entity responsible for such management including adescription of that entity’s expertise and experience, a summary of theprovisions relating to the termination of the appointment of such entityand the appointment of an alternative management entity, and adescription of that entity’s relationship with any other parties to theissue.

2.4. Where an issuer proposes to issue further securities backed by the sameassets, a prominent statement to that effect and unless those furthersecurities are fungible with or are subordinated to those classes ofexisting debt, a description of how the holders of that class will beinformed.

3. STRUCTURE AND CASH FLOW

3.1. Description of the structure of the transaction, including, if necessary, astructure diagram.

3.2. Description of the entities participating in the issue and description ofthe functions to be performed by them.

3.3. Description of the method and date of the sale, transfer, novation orassignment of the assets or of any rights and/or obligations in the assetsto the issuer or, where applicable, the manner and time period in whichthe proceeds from the issue will be fully invested by the issuer.

3.4. An explanation of the flow of funds including:

3.4.1. how the cash flow from the assets will meet the issuer’s obligations toholders of the securities, including, if necessary, a financial servicetable and a description of the assumptions used in developing the table;

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3.4.2. information on any credit enhancements, an indication of wherematerial potential liquidity shortfalls may occur and the availabilityof any liquidity supports and indication of provisions designed tocover interest/principal shortfall risks;

3.4.3. without prejudice to item 3.4.2, details of any subordinated debtfinance;

3.4.4. an indication of any investment parameters for the investment oftemporary liquidity surpluses and description of the parties responsiblefor such investment;

3.4.5. how payments are collected in respect of the assets;

3.4.6. the order of priority of payments made by the issuer to the holders ofthe class of securities in question;

3.4.7. details of any other arrangements upon which payments of interest andprincipal to investors are dependent;

3.5. the name, address and significant business activities of the originatorsof the securitised assets.

3.6. Where the return on, and/or repayment of the security is linked to theperformance or credit of other assets which are not assets of the issuer,items 2.2 and 2.3 are necessary;

3.7. the name, address and significant business activities of the adminis-trator, calculation agent or equivalent, together with a summary of theadministrator’s/calculation agents responsibilities, their relationshipwith the originator or the creator of the assets and a summary of theprovisions relating to the termination of the appointment of the admin-istrator/calculation agent and the appointment of an alternative admin-istrator/calculation agent;

3.8. the names and addresses and brief description of:

(a) any swap counterparties and any providers of other material formsof credit/liquidity enhancement;

(b) the banks with which the main accounts relating to the transactionare held.

4. POST ISSUANCE REPORTING

4.1. Indication in the prospectus whether or not it intends to provide post-issuance transaction information regarding securities to be admitted totrading and the performance of the underlying collateral. Where theissuer has indicated that it intends to report such information, specifyin the prospectus what information will be reported, where such infor-mation can be obtained, and the frequency with which such informationwill be reported.

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ANNEX IX

Minimum disclosure requirements for the debt and derivative securitiesregistration document (schedule)

(Debt and derivative securities with a denomination per unit of at leastEUR 50 000)



1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case, theinformation contained in the registration document is, to the best oftheir knowledge, in accordance with the facts and contains no omissionlikely to affect its import. As the case may be, declaration by thoseresponsible for certain parts of the registration document that, havingtaken all reasonable care to ensure that such is the case, the informationcontained in the part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.



2.2. If auditors have resigned, been removed or not been re-appointedduring the period covered by the historical financial information,details if material.

3. RISK FACTORS

3.1. Prominent disclosure of risk factors that may affect the issuer’s abilityto fulfil its obligations under the securities to investors in a sectionheaded ‘Risk Factors’.






4.1.4. the domicile and legal form of the issuer, the legislation under whichthe issuer operates, its country of incorporation, and the address andtelephone number of its registered office (or principal place of businessif different from its registered office;

4.1.5. any recent events particular to the issuer and which are to a materialextent relevant to the evaluation of the issuer’s solvency.


5.1. Principal activities:

5.1.1. A brief description of the issuer’s principal activities stating the maincategories of products sold and/or services performed;

5.1.2. The basis for any statements in the registration document made by theissuer regarding its competitive position.



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If an issuer chooses to include a profit forecast or a profit estimate, theregistration document must contain the information items 8.1 and 8.2the following:


There must be a clear distinction between assumptions about factorswhich the members of the administrative, management or supervisorybodies can influence and assumptions about factors which are exclu-sively outside the influence of the members of the administrative,management or supervisory bodies; be readily understandable byinvestors; be specific and precise; and not relate to the generalaccuracy of the estimates underlying the forecast.

8.2. Any profit forecast set out in the registration document must be accom-panied by a statement confirming that the said forecast has beenproperly prepared on the basis stated and that the basis of accountingis consistent with the accounting policies of the issuer.






9.2. Administrative, Management, and Supervisory bodies' conflicts ofinterests

Potential conflicts of interests between any duties to the issuing entityof the persons referred to in item 9.1 and their private interests and orother duties must be clearly stated. In the event that there are no suchconflicts, a statement to that effect.


10.1. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom, and describe the nature ofsuch control, and describe the measures in place to ensure that suchcontrol is not abused.




Audited historical financial information covering the latest twofinancial years (or such shorter period that the issuer has been inoperation), and the audit report in respect of each year. ►M2 If theissuer has changed its accounting reference date during the period forwhich historical financial information is required, the audited historicalinformation shall cover at least 24 months, or the entire period for

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which the issuer has been in operation, whichever is the shorter. ◄Such financial information must be prepared according to Regulation(EC) No 1606/2002, or if not applicable to a Member’s State nationalaccounting standards for issuers from the Community. For third countryissuers, such financial information must be prepared according to theinternational accounting standards adopted pursuant to the procedure ofArticle 3 of Regulation (EC) No 1606/2002 or to a third country’snational accounting standards equivalent to these standards.Otherwise, the following information must be included in the regis-tration document:

(a) a prominent statement that the financial information included in theregistration document has not been prepared in accordance with theinternational accounting standards adopted pursuant to theprocedure of Article 3 of Regulation (EC) No 1606/2002 andthat there may be material differences in the financial informationhad Regulation (EC) No 1606/2002 been applied to the historicalfinancial information.


The most recent year's historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next published annual financial statementshaving regard to accounting standards and policies and legislationapplicable to such annual financial statements.





The historical annual financial information must be independentlyaudited or reported on as to whether or not, for the purposes of theregistration document, it gives a true and fair view, in accordance withauditing standards applicable in a Member State or an equivalentstandard. Otherwise, the following information must be included inthe registration document:


(b) an explanation of any significant departures from internationalstandards on auditing.






11.3.3. Where financial data in the registration document is not extracted fromthe issuer's audited financial statements, state the source of the data andstate that the data is unaudited.

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11.4.1. The last year of audited financial information may not be older than18 months from the date of the registration document.




A description of any significant change in the financial or tradingposition of the group which has occurred since the end of the lastfinancial period for which either audited financial information orinterim financial information have been published, or an appropriatenegative statement.





13.2. Third party information

Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced andthat as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading; inaddition, identify the source(s) of the information.




(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at theissuer's request any part of which is included or referred to in theregistration document;



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ANNEX X

Minimum disclosure requirements for the depository receipts issued overshares (schedule)

INFORMATION ABOUT THE ISSUER OF THE UNDERLYING SHARES



1.2. A declaration by those responsible for the prospectus that, having takenall reasonable care to ensure that such is the case, the informationcontained in the prospectus is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import. As the case may be, declaration by those responsible forcertain parts of the prospectus that, having taken all reasonable care toensure that such is the case, the information contained in the part of theprospectus for which they are responsible is, to the best of theirknowledge, in accordance with the facts and contains no omissionlikely to affect its import.



2.2. If auditors have resigned, been removed or not been re-appointedduring the period covered by the historical financial information,indicate details if material.


3.1. Selected historical financial information regarding the issuer, presentedfor each financial year for the period covered by the historical financialinformation, and any subsequent interim financial period, in the samecurrency as the financial information.

The selected historical financial information must provide the keyfigures that summarise the financial condition of the issuer.

3.2. If selected financial information for interim periods is provided,comparative data from the same period in the prior financial yearshall also be provided, except that the requirement for comparativebalance sheet information is satisfied by presenting the year endbalance sheet information.

4. RISK FACTORS

Prominent disclosure of risk factors that are specific to the issuer or itsindustry in a section headed ‘Risk Factors’.


5.1. History and development of the issuer





5.1.5. the important events in the development of the issuer's business.

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5.2. Investments

5.2.1. A description, (including the amount) of the issuer's principalinvestments for each financial year for the period covered by thehistorical financial information up to the date of the prospectus;

5.2.2. A description of the issuer’s principal investments that are currently inprogress, including the distribution of these investments geographically(home and abroad) and the method of financing (internal or external);

5.2.3. Information concerning the issuer's principal future investments onwhich its management bodies have already made firm commitments.


6.1. Principal Activities

6.1.1. A description of, and key factors relating to, the nature of the issuer'soperations and its principal activities, stating the main categories ofproducts sold and/or services performed for each financial year forthe period covered by the historical financial information.

6.1.2. An indication of any significant new products and/or services that havebeen introduced and, to the extent the development of new products orservices has been publicly disclosed, give the status of development.

6.2. Principal Markets

A description of the principal markets in which the issuer competes,including a breakdown of total revenues by category of activity andgeographic market for each financial year for the period covered by thehistorical financial information.

6.3. Where the information given pursuant to items 6.1 and 6.2 has beeninfluenced by exceptional factors, mention that fact.

6.4. If material to the issuer's business or profitability, disclose summaryinformation regarding the extent to which the issuer is dependent, onpatents or licences, industrial, commercial or financial contracts or newmanufacturing processes.



7.1. If the issuer is part of a group, a brief description of the group and theissuer's position within the group.

7.2. A list of the issuer's significant subsidiaries, including name, country ofincorporation or residence, proportion of ownership interest and, ifdifferent, proportion of voting power held.

8. PROPERTY, PLANTS AND EQUIPMENT

8.1. Information regarding any existing or planned material tangible fixedassets, including leased properties, and any major encumbrancesthereon.

8.2. A description of any environmental issues that may affect the issuer’sutilisation of the tangible fixed assets.

9. OPERATING AND FINANCIAL REVIEW

9.1. Financial condition

To the extent not covered elsewhere in the prospectus, provide adescription of the issuer’s financial condition, changes in financialcondition and results of operations for each year and interim period,for which historical financial information is required, including thecauses of material changes from year to year in the financial infor-mation to the extent necessary for an understanding of the issuer’sbusiness as a whole.

9.2. Operating results

9.2.1. Information regarding significant factors, including unusual orinfrequent events or new developments, materially affecting theissuer's income from operations, indicating the extent to whichincome was so affected.

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9.2.2. Where the financial statements disclose material changes in net sales orrevenues, provide a narrative discussion of the reasons for suchchanges.

9.2.3. Information regarding any governmental, economic, fiscal, monetary orpolitical policies or factors that have materially affected, or couldmaterially affect, directly or indirectly, the issuer's operations.

10. CAPITAL RESOURCES

10.1. Information concerning the issuer’s capital resources (both short andlong term).

10.2. An explanation of the sources and amounts of and a narrativedescription of the issuer's cash flows.

10.3. Information on the borrowing requirements and funding structure of theissuer.

10.4. Information regarding any restrictions on the use of capital resourcesthat have materially affected, or could materially affect, directly orindirectly, the issuer’s operations.

10.5. Information regarding the anticipated sources of funds needed to fulfilcommitments referred to in items 5.2.3 and 8.1.

11. RESEARCH AND DEVELOPMENT, PATENTS ANDLICENCES

Where material, provide a description of the issuer's research anddevelopment policies for each financial year for the period coveredby the historical financial information, including the amount spent onissuer-sponsored research and development activities.


12.1. The most significant recent trends in production, sales and inventory,and costs and selling prices since the end of the last financial year tothe date of the prospectus.



If an issuer chooses to include a profit forecast or a profit estimate theprospectus must contain the information items 13.1 and 13.2.




13.3. The profit forecast or estimate prepared on a basis comparable with thehistorical financial information.

13.4. If the issuer has published a profit forecast in a prospectus which is stilloutstanding, provide a statement setting out whether or not that forecastis still correct as at the time of the prospectus, and an explanation ofwhy such forecast is no longer valid if that is the case.

14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORYBODIES AND SENIOR MANAGEMENT

14.1. Names, business addresses and functions in the issuer of the followingpersons and an indication of the principal activities performed by them

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outside that issuer where these are significant with respect to thatissuer:


(b) partners with unlimited liability, in the case of a limited partnershipwith a share capital;

(c) founders, if the issuer has been established for fewer than fiveyears;

(d) any senior manager who is relevant to establishing that the issuerhas the appropriate expertise and experience for the management ofthe issuer's business.

The nature of any family relationship between any of those persons.

In the case of each member of the administrative, management orsupervisory bodies of the issuer and person described in points (b)and (d) of the first subparagraph, details of that person’s relevantmanagement expertise and experience and the following information:

(a) the names of all companies and partnerships of which such personhas been a member of the administrative, management or super-visory bodies or partner at any time in the previous five years,indicating whether or not the individual is still a member of theadministrative, management or supervisory bodies or partner. It isnot necessary to list all the subsidiaries of an issuer of which theperson is also a member of the administrative, management orsupervisory bodies;

(b) any convictions in relation to fraudulent offences for at least theprevious five years;

(c) details of any bankruptcies, receiverships or liquidations withwhich a person described in points (a) and (d) of the first subpar-agraph who was acting in the capacity of any of the positions setout in points (a) and (d) of the first subparagraph member of theadministrative, management or supervisory bodies was associatedfor at least the previous five years;

(d) details of any official public incrimination and/or sanctions of suchperson by statutory or regulatory authorities (including designatedprofessional bodies) and whether such person has ever been disqua-lified by a court from acting as a member of the administrative,management or supervisory bodies of an issuer or from acting inthe management or conduct of the affairs of any issuer for at leastthe previous five years.

If there is no such information to be disclosed, a statement to that effectmust be made.

14.2. Administrative, Management, and Supervisory bodies' and SeniorManagement conflicts of interests

Potential conflicts of interests between any duties to the issuer of thepersons referred to in the first subparagraph of item 14.1 and theirprivate interests and or other duties must be clearly stated. In theevent that there are no such conflicts, make a statement to that effect.

Any arrangement or understanding with major shareholders, customers,suppliers or others, pursuant to which any person referred to in the firstsubparagraph of item 14.1 was selected as a member of the adminis-trative, management or supervisory bodies or member of seniormanagement.

15. REMUNERATION AND BENEFITS

In relation to the last full financial year for those persons referred to inpoints (a) and (d) of the first subparagraph of item 14.1:

15.1. The amount of remuneration paid (including any contingent or deferredcompensation), and benefits in kind granted, to such persons by theissuer and its subsidiaries for services in all capacities to the issuer andits subsidiaries by any person.

This information must be provided on an individual basis unless indi-vidual disclosure is not required in the issuer’s home country and is nototherwise publicly disclosed by the issuer.

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15.2. The total amounts set aside or accrued by the issuer or its subsidiariesto provide pension, retirement or similar benefits.

16. BOARD PRACTICES

In relation to the issuer's last completed financial year, and unlessotherwise specified, with respect to those persons referred to inpoint (a) of the first subparagraph of item 14.1:

16.1. Date of expiration of the current term of office, if applicable, and theperiod during which the person has served in that office.

16.2. Information about members of the administrative, management orsupervisory bodies' service contracts with the issuer or any of itssubsidiaries providing for benefits upon termination of employment,or an appropriate negative statement.

16.3. Information about the issuer's audit committee and remunerationcommittee, including the names of committee members and asummary of the terms of reference under which the committee operates.

16.4. A statement as to whether or not the issuer complies with its country’sof incorporation corporate governance regime(s). In the event that theissuer does not comply with such a regime, a statement to that effecttogether with an explanation regarding why the issuer does not complywith such regime.

17. EMPLOYEES

17.1. Either the number of employees at the end of the period or the averagefor each financial year for the period covered by the historical financialinformation up to the date of the prospectus (and changes in suchnumbers, if material) and, if possible and material, a breakdown ofpersons employed by main category of activity and geographiclocation. If the issuer employs a significant number of temporaryemployees, include disclosure of the number of temporary employeeson average during the most recent financial year.

17.2. Shareholdings and stock options

With respect to each person referred to in points (a) and (b) of the firstsubparagraph of item 14.1, provide information as to their shareownership and any options over such shares in the issuer as of themost recent practicable date.

17.3. Description of any arrangements for involving the employees in thecapital of the issuer.


18.1. In so far as is known to the issuer, the name of any person other than amember of the administrative, management or supervisory bodies who,directly or indirectly, has an interest notifiable under the issuer'snational law in the issuer’s capital or voting rights, together with theamount of each such person’s interest or, if there are no such persons,an appropriate negative statement.

18.2. Whether the issuer's major shareholders have different voting rights, oran appropriate negative statement.

18.3. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom and describe the nature ofsuch control and describe the measures in place to ensure that suchcontrol is not abused.


19. RELATED PARTY TRANSACTIONS

Details of related party transactions (which for these purposes are thoseset out in the Standards adopted according to Regulation (EC)No 1606/2002), that the issuer has entered into during the periodcovered by the historical financial information and up to the date ofthe prospectus must be disclosed in accordance with the respectivestandard adopted according to Regulation (EC) No 1606/2002 ifapplicable.

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If such standards do not apply to the issuer the following informationmust be disclosed:

(a) the nature and extent of any transactions which are - as a singletransaction or in their entirety - material to the issuer. Where suchrelated party transactions are not concluded at arm's length providean explanation of why these transactions were not concluded atarms length. In the case of outstanding loans including guaranteesof any kind indicate the amount outstanding;

(b) the amount or the percentage to which related party transactionsform part of the turnover of the issuer.


20.1. Historical financial information

Audited historical financial information covering the latest 3 financialyears (or such shorter period that the issuer has been in operation), andthe audit report in respect of each year. ►M2 If the issuer haschanged its accounting reference date during the period for whichhistorical financial information is required, the audited historical infor-mation shall cover at least 36 months, or the entire period for which theissuer has been in operation, whichever is the shorter. ◄ Suchfinancial information must be prepared according to Regulation (EC)No 1606/2002, or if not applicable to a Member States nationalaccounting standards for issuers from the Community. For thirdcountry issuers, such financial information must be preparedaccording to the international accounting standards adopted pursuantto the procedure of Article 3 of Regulation (EC) No 1606/2002 or to athird country’s national accounting standards equivalent to thesestandards. If such financial information is not equivalent to thesestandards, it must be presented in the form of restated financialstatements.


If the issuer has been operating in its current sphere of economicactivity for less than one year, the audited historical financial infor-mation covering that period must be prepared in accordance with thestandards applicable to annual financial statements under Regulation(EC) No 1606/2002, or if not applicable to a Member States nationalaccounting standards where the issuer is an issuer from theCommunity. For third country issuers, the historical financial infor-mation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. This historical financial infor-mation must be audited.





(d) the cash flow statement;

(e) the accounting policies and explanatory notes.

The historical annual financial information must be independentlyaudited or reported on as to whether or not, for the purposes of theprospectus, it gives a true and fair view, in accordance with auditingstandards applicable in a Member State or an equivalent standard.

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20.1a This paragraph may be used only for issues of depository receiptshaving a denomination per unit of at least EUR 50 000.

Audited historical financial information covering the latest threefinancial years (or such shorter period that the issuer has been inoperation), and the audit report in respect of each year. ►M2 If theissuer has changed its accounting reference date during the period forwhich historical financial information is required, the audited historicalinformation shall cover at least 36 months, or the entire period forwhich the issuer has been in operation, whichever is the shorter. ◄Such financial information must be prepared according to Regulation(EC) No 1606/2002, or if not applicable to a Member State’s nationalaccounting standards for issuers from the Community. For third countryissuers, such financial information must be prepared according to theinternational accounting standards adopted pursuant to the procedure ofArticle 3 of Regulation (EC) No 1606/2002 or to a third country’snational accounting standards equivalent to these standards.Otherwise, the following information must be included in theprospectus:

(a) a prominent statement that the financial information included in theregistration document has not been prepared in accordance with theinternational accounting standards adopted pursuant to theprocedure of Article 3 of Regulation (EC) No 1606/2002 andthat there may be material differences in the financial informationhad Regulation (EC) No 1606/2002 been applied to the historicalfinancial information;







(d) the cash flow statement;

(e) the accounting policies and explanatory notes.

The historical annual financial information must be independentlyaudited or reported on as to whether or not, for the purposes of theprospectus, it gives a true and fair view, in accordance with auditingstandards applicable in a Member State or an equivalent standard.Otherwise, the following information must be included in theprospectus:


(b) an explanation of any significant departures from internationalstandards on auditing.


If the issuer prepares both own and consolidated annual financialstatements, include at least the consolidated annual financial statementsin the prospectus.

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20.3.2. Indication of other information in the prospectus which has beenaudited by the auditors.

20.3.3. Where financial data in the prospectus is not extracted from the issuer'saudited financial statements state the source of the data and state thatthe data is unaudited.


20.4.1. The last year of audited financial information may not be older than:

(a) 18 months from the date of the prospectus if the issuer includesaudited interim financial statements in the prospectus;

(b) 15 months from the date of the prospectus if the issuer includesunaudited interim financial statements in the prospectus.


20.5.1. If the issuer has published quarterly or half yearly financial informationsince the date of its last audited financial statements, these must beincluded in the prospectus. If the quarterly or half yearly financialinformation has been reviewed or audited the audit or review reportmust also be included. If the quarterly or half yearly financial infor-mation is unaudited or has not been reviewed, state that fact.

20.5.2. If the prospectus is dated more than nine months after the end of thelast audited financial year, it must contain interim financial information,which may be unaudited (in which case that fact shall be stated)covering at least the first six months of the financial year.


20.6. Dividend policy

A description of the issuer’s policy on dividend distributions and anyrestrictions thereon.

20.6.1. The amount of the dividend per share for each financial year for theperiod covered by the historical financial information adjusted, wherethe number of shares in the issuer has changed, to make it comparable.


Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the issuer is aware), during a period covering at least theprevious 12 months which may have, or have had in the recent pastsignificant effects on the issuer and/or group's financial position orprofitability, or provide an appropriate negative statement.


A description of any significant change in the financial or tradingposition of the group which has occurred since the end of the lastfinancial period for which either audited financial information orinterim financial information have been published, or provide an appro-priate negative statement.


21.1. Share capital

The following information as of the date of the most recent balancesheet included in the historical financial information:

21.1.1. The amount of issued capital, and for each class of share capital:

(a) the number of shares authorised;

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(b) the number of shares issued and fully paid and issued but not fullypaid;

(c) the par value per share, or that the shares have no par value;

(d) a reconciliation of the number of shares outstanding at thebeginning and end of the year. If more than 10 % of capital hasbeen paid for with assets other than cash within the period coveredby the historical financial information, state that fact.

21.1.2. If there are shares not representing capital, state the number and maincharacteristics of such shares.

21.1.3. The number, book value and face value of shares in the issuer held byor on behalf of the issuer itself or by subsidiaries of the issuer.

21.1.4. The amount of any convertible securities, exchangeable securities orsecurities with warrants, with an indication of the conditions governingand the procedures for conversion, exchange or subscription.

21.1.5. Information about and terms of any acquisition rights and or obli-gations over authorised but unissued capital or an undertaking toincrease the capital.

21.1.6. Information about any capital of any member of the group which isunder option or agreed conditionally or unconditionally to be put underoption and details of such options including those persons to whomsuch options relate.

21.1.7. A history of share capital, highlighting information about any changes,for the period covered by the historical financial information.


21.2.1. A description of the issuer’s objects and purposes and where they canbe found in the memorandum and articles of association.

21.2.2. A summary of any provisions of the issuer's articles of association,statutes or charter and bylaws with respect to the members of theadministrative, management and supervisory bodies.

21.2.3. A description of the rights, preferences and restrictions attaching toeach class of the existing shares.

21.2.4. A description of what action is necessary to change the rights ofholders of the shares, indicating where the conditions are moresignificant than is required by law.

21.2.5. A description of the conditions governing the manner in which annualgeneral meetings and extraordinary general meetings of shareholdersare called including the conditions of admission.

21.2.6. A brief description of any provision of the issuer's articles of asso-ciation, statutes, charter or bylaws that would have an effect ofdelaying, deferring or preventing a change in control of the issuer.

21.2.7. An indication of the articles of association, statutes, charter or bylawsprovisions, if any, governing the ownership threshold above whichshareholder ownership must be disclosed.

21.2.8. A description of the conditions imposed by the memorandum andarticles of association statutes, charter or bylaws governing changesin the capital, where such conditions are more stringent than isrequired by law.


A summary of each material contract, other than contracts entered intoin the ordinary course of business, to which the issuer or any memberof the group is a party, for the two years immediately preceding publi-cation of the prospectus.

A summary of any other contract (not being a contract entered into inthe ordinary course of business) entered into by any member of thegroup which contains any provision under which any member of thegroup has any obligation or entitlement which is material to the groupas at the date of the prospectus.

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23. THIRD PARTY INFORMATION, STATEMENT BY EXPERTSAND DECLARATIONS OF ANY INTEREST

23.1. Where a statement or report attributed to a person as an expert isincluded in the prospectus provide such person’s name, businessaddress, qualifications and material interest if any in the issuer. If thereport has been produced at the issuer’s request a statement to thateffect that such statement or report is included, in the form andcontext in which it is included, with the consent of that person whohas authorised the contents of that part of the prospectus.



A statement that for the life of the prospectus the following documents(or copies thereof), where applicable, may be inspected:


(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at theissuer’s request any part of which is included or referred to in theprospectus;

(c) the historical financial information of the issuer or, in the case of agroup, the historical financial information for the issuer and itssubsidiary undertakings for each of the two financial yearspreceding the publication of the prospectus.

An indication of where the documents on display may beinspected, by physical or electronic means.

25. INFORMATION ON HOLDINGS

25.1. Information relating to the undertakings in which the issuer holds aproportion of the capital likely to have a significant effect on theassessment of its own assets and liabilities, financial position orprofits and losses.

26. INFORMATION ABOUT THE ISSUER OF THE DEPOSITORYRECEIPTS

26.1. Name, registered office and principal administrative establishment ifdifferent from the registered office.

26.2. Date of incorporation and length of life of the issuer, except whereindefinite.

26.3. Legislation under which the issuer operates and legal form which it hasadopted under that legislation.

27. INFORMATION ABOUT THE UNDERLYING SHARES

27.1. A description of the type and the class of the underlying shares,including the ISIN (International Security Identification Number) orother such security identification code.

27.2. Legislation under which the underlying shares have been created.

27.3. An indication whether the underlying shares are in registered form orbearer form and whether the underlying shares are in certificated formor book-entry form. In the latter case, name and address of the entity incharge of keeping the records.

27.4. Currency of the underlying shares.

27.5. A description of the rights, including any limitations of these, attachedto the underlying shares and procedure for the exercise of said rights.

27.6. Dividend rights:

(a) fixed date(s) on which the entitlement arises;

(b) time limit after which entitlement to dividend lapses and an indi-cation of the person in whose favour the lapse operates;

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(c) dividend restrictions and procedures for non-resident holders;

(d) rate of dividend or method of its calculation, periodicity and cumu-lative or non-cumulative nature of payments.

27.7. Voting rights

Pre-emption rights in offers for subscription of securities of the sameclass

Right to share in the issuer’s profits

Rights to share in any surplus in the event of liquidation

Redemption provisions

Conversion provisions.

27.8. The issue date of the underlying shares if new underlying shares arebeing created for the issue of the depository receipts and they are not inexistence at the time of issue of the depository receipts.

27.9. If new underlying shares are being created for the issue of thedepository receipts, state the resolutions, authorisations and approvalsby virtue of which the new underlying shares have been or will becreated and/or issued.

27.10. A description of any restrictions on the free transferability of theunderlying shares.


(a) information on taxes on the income from the underlying shareswithheld at source;

(b) indication as to whether the issuer assumes responsibility for thewithholding of taxes at the source.

27.12. An indication of the existence of any mandatory takeover bids and/orsqueeze-out and sell-out rules in relation to the underlying shares.

27.13. An indication of public takeover bids by third parties in respect of theissuer’s equity, which have occurred during the last financial year andthe current financial year. The price or exchange terms attaching tosuch offers and the outcome thereof must be stated.

27.14. Lock up agreements:

— the parties involved,

— content and exceptions of the agreement,

— indication of the period of the lock up.

27.15. Information about selling share holders if any

27.15.1. Name and business address of the person or entity offering to sell theunderlying shares, the nature of any position office or other materialrelationship that the selling persons has had within the past three yearswith the issuer of the underlying shares or any of its predecessors oraffiliates.

27.16. Dilution

27.16.1. Amount and percentage of immediate dilution resulting from the offerof the depository receipts.

27.16.2. In the case of a subscription offer of the depository receipts to existingshareholders, disclose the amount and percentage of immediatedilutions if they do not subscribe to the offer of depository receipts.

27.17. Additional information where there is a simultaneous or almost simul-taneous offer or admission to trading of the same class of underlyingshares as those underlying shares over which the depository receiptsare being issued.

27.17.1. If simultaneously or almost simultaneously with the creation of thedepository receipts for which admission to a regulated market isbeing sought underlying shares of the same class as those overwhich the depository receipts are being issued are subscribed for or

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placed privately, details are to be given of the nature of such operationsand of the number and characteristics of the underlying shares to whichthey relate.

27.17.2. Disclose all regulated markets or equivalent markets on which, to theknowledge of the issuer of the depository receipts, underlying shares ofthe same class of those over which the depository receipts are beingissued are offered or admitted to trading.

27.17.3. To the extent known to the issuer of the depository receipts, indicatewhether major shareholders, members of the administrative,management or supervisory bodies intended to subscribe in the offer,or whether any person intends to subscribe for more than five per centof the offer.

28. INFORMATION REGARDING THE DEPOSITORY RECEIPTS

28.1. A description of the type and class of depository receipts being offeredand/or admitted to trading.

28.2. Legislation under which the depository receipts have been created.

28.3. An indication whether the depository receipts are in registered or bearerform and whether the depository receipts are in certificated or book-entry form. In the latter case, include the name and address of theentity in charge of keeping the records.

28.4. Currency of the depository receipts.

28.5. Describe the rights attaching to the depository receipts, including anylimitations of these attached to the depository receipts and theprocedure if any for the exercise of these rights.

28.6. If the dividend rights attaching to depository receipts are different fromthe dividend rights disclosed in relation to the underlying disclose thefollowing about the dividend rights:

(a) fixed date(s) on which the entitlement arises;

(b) time limit after which entitlement to dividend lapses and an indi-cation of the person in whose favour the lapse operates;

(c) dividend restrictions and procedures for non-resident holders;

(d) rate of dividend or method of its calculation, periodicity and cumu-lative or non-cumulative nature of payments.

28.7. If the voting rights attaching to the depository receipts are differentfrom the voting rights disclosed in relation to the underlying sharesdisclose the following about those rights:

— Voting rights.






28.8. Describe the exercise of and benefit from the rights attaching to theunderlying shares, in particular voting rights, the conditions on whichthe issuer of the depository receipts may exercise such rights, andmeasures envisaged to obtain the instructions of the depositoryreceipt holders - and the right to share in profits and any liquidationsurplus which are not passed on to the holder of the depository receipt.

28.9. The expected issue date of the depository receipts.

28.10. A description of any restrictions on the free transferability of thedepository receipts.


(a) information on taxes on the income from the depository receiptswithheld at source;

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28.12. Bank or other guarantees attached to the depository receipts andintended to underwrite the issuer's obligations.

28.13. Possibility of obtaining the delivery of the depository receipts intooriginal shares and procedure for such delivery.

29. INFORMATION ABOUT THE TERMS AND CONDITIONS OFTHE OFFER OF THE DEPOSITORY RECEIPTS


29.1.1. Total amount of the issue/offer, distinguishing the securities offered forsale and those offered for subscription; if the amount is not fixed,description of the arrangements and time for announcing to thepublic the definitive amount of the offer.


29.1.3. An indication of when, and under what circumstances, the offer may berevoked or suspended and whether revocation can occur after dealinghas begun.


29.1.5. Details of the minimum and/or maximum amount of application(whether in number of securities or aggregate amount to invest).

29.1.6. An indication of the period during which an application may bewithdrawn, provided that investors are allowed to withdraw theirsubscription.






29.2.2. To the extent known to the issuer, indicate whether major shareholdersor members of the issuer's management, supervisory or administrativebodies intended to subscribe in the offer, or whether any person intendsto subscribe for more than five per cent of the offer.

29.2.3. Pre-allotment Disclosure:

29.2.3.1. The division into tranches of the offer including the institutional, retailand issuer’s employee tranches and any other tranches.

29.2.3.2. The conditions under which the claw-back may be used, the maximumsize of such claw back and any applicable minimum percentages forindividual tranches.

29.2.3.3. The allotment method or methods to be used for the retail and issuer’semployee tranche in the event of an over-subscription of these tranches.

29.2.3.4. A description of any pre-determined preferential treatment to beaccorded to certain classes of investors or certain affinity groups(including friends and family programmes) in the allotment, thepercentage of the offer reserved for such preferential treatment andthe criteria for inclusion in such classes or groups.

29.2.3.5. Whether the treatment of subscriptions or bids to subscribe in theallotment may be determined on the basis of which firm they aremade through or by.

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29.2.3.6. A target minimum individual allotment if any within the retail tranche.

29.2.3.7. The conditions for the closing of the offer as well as the date on whichthe offer may be closed at the earliest;

29.2.3.8. Whether or not multiple subscriptions are admitted, and where they arenot, how any multiple subscriptions will be handled.

29.2.3.9. Process for notification to applicants of the amount allotted and indi-cation whether dealing may begin before notification is made.

29.2.4. Over-allotment and ‘green shoe’:

29.2.4.1. The existence and size of any over-allotment facility and/or ‘greenshoe’.

29.2.4.2. The existence period of the over-allotment facility and/or ‘green shoe’.

29.2.4.3. Any conditions for the use of the over-allotment facility or exercise ofthe ‘green shoe’.

29.3. Pricing

29.3.1. An indication of the price at which the securities will be offered. Whenthe price is not known or when there is not an established and/or liquidmarket for the securities, indicate the method for determination of theoffer price, including who has set the criteria or is formally responsiblefor its determination. Indication of the amount of any expenses andtaxes specifically charged to the subscriber or purchaser.

29.3.2. Process for the disclosure of the offer price.

29.3.3. Where there is or could be a material disparity between the public offerprice and the effective cash cost to members of the administrative,management or supervisory bodies or senior management, or affiliatedpersons, of securities acquired by them in transactions during the pastyear, or which they have the right to acquire, include a comparison ofthe public contribution in the proposed public offer and the effectivecash contributions of such persons.

29.4. Placing and underwriting

29.4.1. Name and address of the co-coordinator(s) of the global offer and ofsingle parts of the offer and, to the extend known to the issuer, of theplacers in the various countries where the offer takes place.




30. ADMISSION TO TRADING AND DEALING ARRANGEMENTSIN THE DEPOSITORY RECEIPTS

30.1. An indication as to whether the securities offered are or will be theobject of an application for admission to trading, with a view to theirdistribution in a regulated market or other equivalent markets withindication of the markets in question. This circumstance must bementioned, without creating the impression that the admission totrading necessarily will be approved. If known, the earliest dates onwhich the securities will be admitted to trading must be given.


30.3. If simultaneously or almost simultaneously with the creation of thesecurities for which admission to a regulated market is being soughtsecurities of the same class are subscribed for or placed privately or ifsecurities of other classes are created for public or private placing,

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details must be given of the nature of such operations and of thenumber and characteristics of the securities to which they relate.


30.5. Stabilisation: where an issuer or a selling shareholder has granted anover-allotment option or it is otherwise proposed that price stabilisingactivities may be entered into in connection with an offer:

30.6. The fact that stabilisation may be undertaken, that there is no assurancethat it will be undertaken and that it may be stopped at any time.

30.7. The beginning and the end of the period during which stabilisation mayoccur.

30.8. The identity of the stabilisation manager for each relevant jurisdictionunless this is not known at the time of publication.

30.9. The fact that stabilisation transactions may result in a market price thatis higher than would otherwise prevail.

31. KEY INFORMATION ABOUT THE ISSUE OF THEDEPOSITORY RECEIPTS


31.1.1. Reasons for the offer and, where applicable, the estimated net amountof the proceeds broken into each principal intended use and presentedby order of priority of such uses. If the issuer is aware that theanticipated proceeds will not be sufficient to fund all the proposeduses, state the amount and sources of other funds needed. Detailsmust be given with regard to the use of the proceeds, in particularwhen they are being used to acquire assets, other than in theordinary course of business, to finance announced acquisitions ofother business, or to discharge, reduce or retire indebtedness.


31.2.1. A description of any interest, including conflicting ones, that is materialto the issue/offer, detailing the persons involved and the nature of theinterest.

31.3. Risk factors

31.3.1. Prominent disclosure of risk factors that are material to the securitiesbeing offered and/or admitted to trading in order to assess the marketrisk associated with these securities in a section headed ‘Risk factors’.

32. EXPENSE OF THE ISSUE/OFFER OF THE DEPOSITORYRECEIPTS

32.1. The total net proceeds and an estimate of the total expenses of theissue/offer.

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ANNEX XI

Minimum Disclosure Requirements for the Banks Registration Document(schedule)



1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case, theinformation contained in the registration document is, to the best oftheir knowledge, in accordance with the facts and contains no omissionlikely to affect its import. As the case may be, declaration by thoseresponsible for certain parts of the registration document that, havingtaken all reasonable care to ensure that such is the case, the informationcontained in the part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.



2.2. If auditors have resigned, been removed or not been reappointed duringthe period covered by the historical financial information, details ifmaterial.

3. RISK FACTORS

3.1. Prominent disclosure of risk factors that may affect the issuer’s abilityto fulfil its obligations under the securities to investors in a sectionheaded ‘Risk factors’.







4.1.5. any recent events particular to the issuer which are to a material extentrelevant to the evaluation of the issuer’s solvency.


5.1. Principal activities:

5.1.1. A brief description of the issuer’s principal activities stating the maincategories of products sold and/or services performed;

5.1.2. An indication of any significant new products and/or activities.

5.1.3. Principal markets

A brief description of the principal markets in which the issuercompetes.

5.1.4. The basis for any statements in the registration document made by theissuer regarding its competitive position.

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If an issuer chooses to include a profit forecast or a profit estimate theregistration document must contain the information items 8.1 and 8.2.


There must be a clear distinction between assumptions about factorswhich the members of the administrative, management or supervisorybodies can influence and assumptions about factors which are exclu-sively outside the influence of the members of the administrative,management or supervisory bodies; be readily understandable byinvestors; be specific and precise; and not relate to the generalaccuracy of the estimates underlying the forecast.







9.2. Administrative, Management, and Supervisory bodies conflicts ofinterests

Potential conflicts of interests between any duties to the issuing entityof the persons referred to in item 9.1 and their private interests and orother duties must be clearly stated. In the event that there are no suchconflicts, make a statement to that effect.


10.1. To the extent known to the issuer, state whether the issuer is directly orindirectly owned or controlled and by whom, and describe the nature ofsuch control, and describe the measures in place to ensure that suchcontrol is not abused.


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Audited historical financial information covering the latest twofinancial years (or such shorter period that the issuer has been inoperation), and the audit report in respect of each year. ►M2 If theissuer has changed its accounting reference date during the period forwhich historical financial information is required, the audited historicalinformation shall cover at least 24 months, or the entire period forwhich the issuer has been in operation, whichever is the shorter. ◄Such financial information must be prepared according to Regulation(EC) No 1606/2002, or if not applicable to a Member State nationalaccounting standards for issuers from the Community. For third countryissuers, such financial information must be prepared according to theinternational accounting standards adopted pursuant to the procedure ofArticle 3 of Regulation (EC) No 1606/2002 or to a third country’snational accounting standards equivalent to these standards. If suchfinancial information is not equivalent to these standards, it must bepresented in the form of restated financial statements.

The most recent year's audited historical financial information must bepresented and prepared in a form consistent with that which will beadopted in the issuer’s next published annual financial statementshaving regard to accounting standards and policies and legislationapplicable to such annual financial statements.

If the issuer has been operating in its current sphere of economicactivity for less than one year, the audited historical financial infor-mation covering that period must be prepared in accordance with thestandards applicable to annual financial statements under Regulation(EC) No 1606/2002, or if not applicable to a Member State nationalaccounting standards where the issuer is an issuer from theCommunity. For third country issuers, the historical financial infor-mation must be prepared according to the international accountingstandards adopted pursuant to the procedure of Article 3 of Regulation(EC) No 1606/2002 or to a third country’s national accountingstandards equivalent to these standards. This historical financial infor-mation must be audited.




(c) in the case of an admission of securities to trading on a regulatedmarket only, a cash flow statement;

(d) the accounting policies and explanatory notes.







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11.3.3. Where financial data in the registration document is not extracted fromthe issuer's audited financial statements state the source of the data andstate that the data is un-audited.


11.4.1. The last year of audited financial information may not be older than 18months from the date of the registration document.


11.5.1 If the issuer has published quarterly or half yearly financial informationsince the date of its last audited financial statements, these must beincluded in the registration document. If the quarterly or half yearlyfinancial information has been reviewed or audited the audit or reviewreport must also be included. If the quarterly or half yearly financialinformation is unaudited or has not been reviewed state that fact.

11.5.2. If the registration document is dated more than nine months after theend of the last audited financial year, it must contain interim financialinformation, covering at least the first six months of the financial year.If the interim financial information is un-audited state that fact.




11.7. Significant change in the issuer’s financial position

A description of any significant change in the financial position of thegroup which has occurred since the end of the last financial period forwhich either audited financial information or interim financial infor-mation have been published, or an appropriate negative statement.





13.2. Where information has been sourced from a third party, provide aconfirmation that this information has been accurately reproduced andthat as far as the issuer is aware and is able to ascertain from infor-mation published by that third party, no facts have been omitted whichwould render the reproduced information inaccurate or misleading Inaddition, the issuer shall identify the source(s) of the information.




(b) all reports, letters, and other documents, historical financial infor-mation, valuations and statements prepared by any expert at the

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issuer's request any part of which is included or referred to in theregistration document;



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ANNEX XII

Minimum Disclosure Requirements for the Securities Note for derivativesecurities (schedule)


1.1. All persons responsible for the information given in the prospectus and,as the case may be, for certain parts of it, with, in the latter case, anindication of such parts. In the case of natural persons includingmembers of the issuer’s administrative, management or supervisorybodies indicate the name and function of the person; in case of legalpersons indicate the name and registered office.

1.2. A declaration by those responsible for the prospectus that, having takenall reasonable care to ensure that such is the case, the informationcontained in the prospectus is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import. As the case may be, declaration by those responsible forcertain parts of the prospectus that, having taken all reasonable care toensure that such is the case, the information contained in the part of theprospectus for which they are responsible is, to the best of theirknowledge, in accordance with the facts and contains no omissionlikely to affect its import.

2. RISK FACTORS

Prominent disclosure of risk factors that are material to the securitiesbeing offered and/or admitted to trading in order to assess the marketrisk associated with these securities in a section headed ‘risk factors’.This must include a risk warning to the effect that investors may losethe value of their entire investment or part of it, as the case may be,and/or, if the investor’s liability is not limited to the value of hisinvestment, a statement of that fact, together with a description ofthe circumstances in which such additional liability arises and thelikely financial effect.

3. KEY INFORMATION


A description of any interest, including conflicting ones that is materialto the issue/offer, detailing the persons involved and the nature of theinterest.

3.2. Reasons for the offer and use of proceeds when different from makingprofit and/or hedging certain risks

If reasons for the offer and use of proceeds are disclosed provide thetotal net proceeds and an estimate of the total expenses of the issue/offer.


4.1. Information concerning the securities

4.1.1. A description of the type and the class of the securities being offeredand/or admitted to trading, including the ISIN (International SecurityIdentification Number) or other such security identification code.

4.1.2. A clear and comprehensive explanation to help investors understandhow the value of their investment is affected by the value of theunderlying instrument (s), especially under the circumstances whenthe risks are most evident unless the securities have a denominationper unit of at least EUR 50 000 or can only be acquired for at leastEUR 50 000 per security.

4.1.3. Legislation under which the securities have been created.

4.1.4. An indication whether the securities are in registered form or bearerform and whether the securities are in certificated form or book-entryform. In the latter case, name and address of the entity in charge ofkeeping the records.

4.1.5. Currency of the securities issue.

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4.1.6. Ranking of the securities being offered and/or admitted to trading,including summaries of any clauses that are intended to affectranking or subordinate the security to any present or future liabilitiesof the issuer.

4.1.7. A description of the rights, including any limitations of these, attachedto the securities and procedure for the exercise of said rights.

4.1.8. In the case of new issues, a statement of the resolutions, authorisationsand approvals by virtue of which the securities have been or will becreated and/or issued.

4.1.9. The issue date of the securities.

4.1.10. A description of any restrictions on the free transferability of the secu-rities.

4.1.11. — The expiration or maturity date of the derivative securities.

— The exercise date or final reference date.

4.1.12. A description of the settlement procedure of the derivative securities.

4.1.13. A description of how any return on derivative securities takes place, thepayment or delivery date, and the way it is calculated.

4.1.14. In respect of the country of registered office of the issuer and thecountry(ies) where the offer is being made or admission to trading isbeing sought:

(a) information on taxes on the income from the securities withheld atsource;


4.2. Information concerning the underlying

4.2.1. The exercise price or the final reference price of the underlying.

4.2.2. A statement setting out the type of the underlying and details of whereinformation on the underlying can be obtained:

— an indication where information about the past and the furtherperformance of the underlying and its volatility can be obtained,

— where the underlying is a security,

— the name of the issuer of the security,

— the ISIN (international security identification number) or othersuch security identification code,

— where the underlying is an index,

— the name of the index and a description of the index if it iscomposed by the issuer. If the index is not composed by theissuer, where information about the index can be obtained,

— where the underlying is an interest rate,

— a description of the interest rate,

— others:

— Where the underlying does not fall within the categoriesspecified above the securities note shall contain equivalentinformation.

— where the underlying is a basket of underlyings,

— disclosure of the relevant weightings of each underlying in thebasket.

4.2.3. A description of any market disruption or settlement disruption eventsthat affect the underlying.

4.2.4. Adjustment rules with relation to events concerning the underlying.

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5.1.2. Total amount of the issue/offer; if the amount is not fixed, descriptionof the arrangements and time for announcing to the public the amountof the offer.


5.1.4. Details of the minimum and/or maximum amount of application,(whether in number of securities or aggregate amount to invest).






5.3. Pricing

Indication of the expected price at which the securities will be offeredor the method of determining the price and the process for itsdisclosure. Indicate the amount of any expenses and taxes specificallycharged to the subscriber or purchaser.

5.4. Placing and underwriting

5.4.1. Name and address of the coordinator(s) of the global offer and ofsingle parts of the offer and, to the extend known to the issuer or tothe offeror, of the placers in the various countries where the offer takesplace.


5.4.3. Entities agreeing to underwrite the issue on a firm commitment basis,and entities agreeing to place the issue without a firm commitment orunder ‘best efforts’ arrangements. Where not all of the issue is under-written, a statement of the portion not covered.


5.4.5. Name and address of a calculation agent.


6.1. An indication as to whether the securities offered are or will be theobject of an application for admission to trading, with a view to theirdistribution in a regulated market or other equivalent markets withindication of the markets in question. This circumstance shall bementioned, without creating the impression that the admission totrading necessarily will be approved. If known, the earliest dates onwhich the securities will be admitted to trading shall be given.





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7.3. Where a statement or report attributed to a person as an expert isincluded in the Securities Note, provide such person’s name,business address, qualifications and material interest, if any, in theissuer. If the report has been produced at the issuer’s request astatement to that effect that such statement or report is included, inthe form and context in which it is included, with the consent of thatperson who has authorised the contents of that part of the SecuritiesNote.


7.5. An indication in the prospectus whether or not the issuer intends toprovide post-issuance information. Where the issuer has indicated thatit intends to report such information, the issuer shall specify in theprospectus what information will be reported and where such infor-mation can be obtained.

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ANNEX XIII

Minimum Disclosure Requirements for the Securities Note for debt securitieswith a denomination per unit of at least EUR 50 000 (Schedule)


1.1. All persons responsible for the information given in the prospectus and,as the case may be, for certain parts of it, with, in the latter case, anindication of such parts. In case of natural persons including membersof the issuer’s administrative, management or supervisory bodiesindicate the name and function of the person; in case of legalpersons indicate the name and registered office.

1.2. A declaration by those responsible for the prospectus that, having takenall reasonable care to ensure that such is the case, the informationcontained in the prospectus is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import. As the case may be, declaration by those responsible forcertain parts of the prospectus that the information contained in the partof the prospectus for which they are responsible is, to the best of theirknowledge, in accordance with the facts and contains no omissionlikely to affect its import.

2. RISK FACTORS

Prominent disclosure of risk factors that are material to the securitiesadmitted to trading in order to assess the market risk associated withthese securities in a section headed ‘Risk factors’.

3. KEY INFORMATION

Interest of natural and legal persons involved in the issue

A description of any interest, including conflicting ones, that is materialto the issue, detailing the persons involved and the nature of theinterest.

4. INFORMATION CONCERNING THE SECURITIES TO BEADMITTED TO TRADING

4.1. Total amount of securities being admitted to trading.

4.2. A description of the type and the class of the securities being admittedto trading, including the ISIN (international security identificationnumber) or other such security identification code.


4.4. An indication of whether the securities are in registered or bearer formand whether the securities are in certificated or book-entry form. In thelatter case, name and address of the entity in charge of keeping therecords.


4.6. Ranking of the securities being admitted to trading, includingsummaries of any clauses that are intended to affect ranking or subor-dinate the security to any present or future liabilities of the issuer.

4.7. A description of the rights, including any limitations of these, attachedto the securities and procedure for the exercise of said rights.

4.8. The nominal interest rate and provisions relating to interest payable:

— The date from which interest becomes payable and the due datesfor interest.

— The time limit on the validity of claims to interest and repayment ofprincipal.

Where the rate is not fixed, description of the underlying on which it isbased and of the method used to relate the two:

— A description of any market disruption or settlement disruptionevents that affect the underlying.

— Adjustment rules with relation to events concerning the underlying.

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— Name of the calculation agent.

4.9. Maturity date and arrangements for the amortisation of the loan,including the repayment procedures. Where advance amortisation iscontemplated, on the initiative of the issuer or of the holder, it mustbe described, stipulating amortisation terms and conditions.

4.10. An indication of yield.

4.11. Representation of debt security holders including an identification ofthe organisation representing the investors and provisions applying tosuch representation. Indication of where investors may have access tothe contracts relating to these forms of representation.

4.12. A statement of the resolutions, authorisations and approvals by virtueof which the securities have been created and/or issued.

4.13. The issue date of the securities.



5.1. Indication of the market where the securities will be traded and forwhich prospectus has been published. If known, give the earliest dateson which the securities will be admitted to trading.

5.2. Name and address of any paying agents and depository agents in eachcountry.

6. EXPENSE OF THE ADMISSION TO TRADING

An estimate of the total expenses related to the admission to trading.


7.1. If advisors are mentioned in the Securities Note, a statement of thecapacity in which the advisors have acted.

7.2. An indication of other information in the Securities Note which hasbeen audited or reviewed by auditors and where auditors haveproduced a report. Reproduction of the report or, with permission ofthe competent authority, a summary of the report.

7.3. Where a statement or report attributed to a person as an expert isincluded in the Securities Note, provide such person’s name,business address, qualifications and material interest if any in theissuer. If the report has been produced at the issuer’s request astatement to that effect that such statement or report is included, inthe form and context in which it is included, with the consent of thatperson who has authorised the contents of that part of the SecuritiesNote.


7.5. Credit ratings assigned to an issuer or its debt securities at the requestor with the co-operation of the issuer in the rating process.

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ANNEX XIV

Additional information building block on underlying share for some equitysecurities

1. Description of the underlying share

1.1. Describe the type and the class of the shares

1.2. Legislation under which the shares have been or will be created

1.3. Indication whether the securities are in registered form or bearer formand whether the securities are in certificated form or book-entry form.In the latter case, name and address of the entity in charge of keepingthe records

1.4. Indication of the currency of the shares issue

1.5. A description of the rights, including any limitations of these, attachedto the securities and procedure for the exercise of those rights:

— Dividend rights:

— fixed date(s) on which the entitlement arises,

— time limit after which entitlement to dividend lapses and anindication of the person in whose favour the lapse operates,

— dividend restrictions and procedures for non resident holders,

— rate of dividend or method of its calculation, periodicity andcumulative or non-cumulative nature of payments.

— Voting rights.






1.6. In the case of new issues, a statement of the resolutions, authorisationsand approvals by virtue of which the shares have been or will becreated and/or issued and indication of the issue date.

1.7. Where and when the shares will be or have been admitted to trading.

1.8. Description of any restrictions on the free transferability of the shares.

1.9. Indication of the existence of any mandatory takeover bids/or squeeze-out and sell-out rules in relation to the shares.

1.10. Indication of public takeover bids by third parties in respect of theissuer’s equity, which have occurred during the last financial yearand the current financial year. The price or exchange terms attachingto such offers and the outcome thereof must be stated.

1.11. Impact on the issuer of the underlying share of the exercise of the rightand potential dilution effect for the shareholders.

2. When the issuer of the underlying is an entity belonging to the samegroup, the information to provide on this issuer is the one required bythe share registration document schedule.

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ANNEX XV

Minimum disclosure requirements for the registration document forsecurities issued by collective investment undertakings of the closed-end

type (schedule)

In addition to the information required in this schedule, the collective investmentundertaking must provide the following information as required under paragraphsand items 1, 2, 3, 4, 5.1, 7, 9.1, 9.2.1, 9.2.3, 10.4, 13, 14, 15, 16, 17.2, 18, 19,20, 21, 22, 23, 24, 25 in Annex I (minimum disclosure requirements for the shareregistration document schedule).

1. Investment objective and policy

1.1. A detailed description of the investment objective and policy which thecollective investment undertaking will pursue and a description of howthat investment objectives and policy may be varied including anycircumstances in which such variation requires the approval ofinvestors. A description of any techniques and instruments that maybe used in the management of the collective investment undertaking.

1.2. The borrowing and/or leverage limits of the collective investmentundertaking. If there are no such limits, include a statement to thateffect.

1.3. The regulatory status of the collective investment undertaking togetherwith the name of any regulator in its country of incorporation.

1.4. The profile of a typical investor for whom the collective investmentundertaking is designed.

2. Investment Restrictions

2.1. A statement of the investment restrictions which apply to the collectiveinvestment undertaking, if any, and an indication of how the holders ofsecurities will be informed of the actions that the investment managerwill take in the event of a breach.

2.2. Where more than 20 % of the gross assets of any collective investmentundertaking (except where items 2.3 or 2.5 apply) may be:

(a) invested in, either directly or indirectly, or lent to any singleunderlying issuer (including the underlying issuer’s subsidiariesor affiliates);

or

(b) invested in one or more collective investment undertakings whichmay invest in excess of 20 % of its gross assets in other collectiveinvestment undertakings (open-end and/or closed-end type);

or

(c) exposed to the creditworthiness or solvency of any one coun-terparty (including its subsidiaries or affiliates);

the following information must be disclosed:

(i) information relating to each underlying issuer/collective investmentundertaking/counterparty as if it were an issuer for the purposes ofthe minimum disclosure requirements for the share registrationdocument schedule (in the case of (a)) or minimum disclosurerequirements for the registration document schedule for securitiesissued by collective investment undertaking of the closed-end type(in the case of (b)) or the minimum disclosure requirements for thedebt and derivative securities with an individual denomination perunit of at least EUR 50 000 registration document schedule (in thecase of (c));

or

(ii) if the securities issued by the underlying issuer/collectiveinvestment undertaking/counterparty have already been admittedto trading on a regulated or equivalent market or the obligationsare guaranteed by an entity admitted to trading on a regulated orequivalent market, the name, address, country of incorporation,nature of business and name of the market in which its securitiesare admitted.

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This requirement shall not apply where the 20 % is exceeded due toappreciations or depreciations, changes in exchange rates, or by reasonof the receipt of rights, bonuses, benefits in the nature of capital or byreason of any other action affecting every holder of that investment,provided the investment manager has regard to the threshold whenconsidering changes in the investment portfolio.

2.3. Where a collective investment undertaking may invest in excess of20 % of its gross assets in other collective investment undertakings(open ended and/or closed ended), a description of if and how risk isspread in relation to those investments. In addition, item 2.2 shallapply, in aggregate, to its underlying investments as if thoseinvestments had been made directly.

2.4. With reference to point (c) of item 2.2, if collateral is advanced tocover that portion of the exposure to any one counterparty in excess of20 % of the gross assets of the collective investment undertaking,details of such collateral arrangements.

2.5. Where a collective investment undertaking may invest in excess of40 % of its gross assets in another collective investment undertakingeither of the following must be disclosed:

(a) information relating to each underlying collective investmentundertaking as if it were an issuer under minimum disclosurerequirements for the registration document schedule for securitiesissued by collective investment undertaking of the closed-end type;

(b) if securities issued by an underlying collective investment under-taking have already been admitted to trading on a regulated orequivalent market or the obligations are guaranteed by an entityadmitted to trading on a regulated or equivalent market, the name,address, country of incorporation, nature of business and name ofthe market in which its securities are admitted.

2.6. Physical Commodities

Where a collective investment undertaking invests directly in physicalcommodities a disclosure of that fact and the percentage that will be soinvested.

2.7. Property Collective investment undertakings

Where a collective investment undertaking is a property collectiveinvestment undertaking, disclosure of that fact, the percentage of theportfolio that is to be invested in the property, as well as a descriptionof the property and any material costs relating to the acquisition andholding of such property. In addition, a valuation report relating to theproperties must be included.

Disclosure of item 4.1. applies to:

(a) the valuation entity;

(b) any other entity responsible for the administration of the property.

2.8. Derivatives Financial instruments/Money Market Instruments/Currencies

Where a collective investment undertaking invests in derivativesfinancial instruments, money market instruments or currencies otherthan for the purposes of efficient portfolio management (i.e. solelyfor the purpose of reducing, transferring or eliminating investmentrisk in the underlying investments of a collective investment under-taking, including any technique or instrument used to provideprotection against exchange and credit risks), a statement whetherthose investments are used for hedging or for investment purposes,and a description of if and how risk is spread in relation to thoseinvestments.

2.9. Item 2.2 does not apply to investment in securities issued or guaranteedby a government, government agency or instrumentality of anyMember State, its regional or local authorities, or OECD Member State.

2.10. Point (a) of item 2.2 does not apply to a collective investment under-taking whose investment objective is to track, without material modi-fication, that of a broadly based and recognised published index. Adescription of the composition of the index must be provided.

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3. The applicant’s service providers

3.1. The actual or estimated maximum amount of all material fees payabledirectly or indirectly by the collective investment undertaking for anyservices under arrangements entered into on or prior to the date of theregistration document and a description of how these fees arecalculated.

3.2. A description of any fee payable directly or indirectly by the collectiveinvestment undertaking which cannot be quantified under item 3.1 andwhich is or may be material.

3.3. If any service provider to the collective investment undertaking is inreceipt of any benefits from third parties (other than the collectiveinvestment undertaking) by virtue of providing any services to thecollective investment undertaking, and those benefits may not accrueto the collective investment undertaking, a statement of that fact, thename of that third party, if available, and a description of the nature ofthe benefits.

3.4. The name of the service provider which is responsible for the determi-nation and calculation of the net asset value of the collectiveinvestment undertaking.

3.5. A description of any material potential conflicts of interest which anyof the service providers to the collective investment undertaking mayhave as between their duty to the collective investment undertaking andduties owed by them to third parties and their other interests. Adescription of any arrangements which are in place to address suchpotential conflicts.

4. Investment Manager/Advisers

4.1. In respect of any Investment Manager such information as is requiredto be disclosed under items 5.1.1 to 5.1.4 and, if material, underitem 5.1.5 of Annex I together with a description of its regulatorystatus and experience.

4.2. In respect of any entity providing investment advice in relation to theassets of the collective investment undertaking, the name and a briefdescription of such entity.

5. Custody

5.1. A full description of how the assets of the collective investment under-taking will be held and by whom and any fiduciary or similar rela-tionship between the collective investment undertaking and any thirdparty in relation to custody:

Where a custodian, trustee, or other fiduciary is appointed:

(a) such information as is required to be disclosed under items 5.1.1to 5.1.4 and, if material, under item 5.1.5 of Annex I;

(b) a description of the obligations of such party under the custody orsimilar agreement;

(c) any delegated custody arrangements;

(d) the regulatory status of such party and delegates.

5.2. Where any entity other than those entities mentioned in item 5.1, holdsany assets of the collective investment undertaking, a description ofhow these assets are held together with a description of any additionalrisks.

6. Valuation

6.1. A description of how often, and the valuation principles and themethod by which, the net asset value of the collective investmentundertaking will be determined, distinguishing between categories ofinvestments and a statement of how such net asset value will becommunicated to investors.

6.2. Details of all circumstances in which valuations may be suspended anda statement of how such suspension will be communicated or madeavailable to investors.

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2004R0809 — EN — 01.03.2007 — 002.001— 92

353

7. Cross Liabilities

7.1. In the case of an umbrella collective investment undertaking, astatement of any cross liability that may occur between classes orinvestments in other collective investment undertakings and anyaction taken to limit such liability.

8. Financial Information

8.1. Where, since the date of incorporation or establishment, a collectiveinvestment undertaking has not commenced operations and no financialstatements have been made up as at the date of the registrationdocument, a statement to that effect.

Where a collective investment undertaking has commenced operations,the provisions of item 20 of Annex I on the Minimum DisclosureRequirements for the share registration document apply.

8.2. A comprehensive and meaningful analysis of the collective investmentundertaking’s portfolio (if un-audited, clearly marked as such).

8.3. An indication of the most recent net asset value per security must beincluded in the securities note schedule (and, if un-audited, clearlymarked as such).

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2004R0809 — EN — 01.03.2007— 002.001— 93

354

ANNEX XVI

Minimum disclosure requirements for the registration document forsecurities issued by Member States, third countries and their regional and

local authorities (schedule)



1.2. A declaration by those responsible for the registration document that,having taken all reasonable care to ensure that such is the case, theinformation contained in the registration document is, to the best oftheir knowledge in accordance with the facts and contains no omissionlikely to affect its import. As the case may be, declaration by thoseresponsible for certain parts of the registration document that, havingtaken all reasonable care to ensure that such is the case the informationcontained in the part of the registration document for which they areresponsible is, to the best of their knowledge, in accordance with thefacts and contains no omission likely to affect its import.

2. RISK FACTORS

Prominent disclosure of risk factors that may affect the issuer’s abilityto fulfil its obligations under the securities to investors in a sectionheaded ‘Risk factors’.


3.1. The legal name of the issuer and a brief description of the issuer’sposition within the national governmental framework.

3.2. The domicile or geographical location and legal form of the issuer andits contact address and telephone number.

3.3. Any recent events relevant to the evaluation of the issuer’s solvency.

3.4. A description of the issuer’s economy including:

(a) the structure of the economy with details of the main sectors of theeconomy;

(b) gross domestic product with a breakdown by the issuer’s economicsectors over for the previous two fiscal years.

3.5. A general description of the issuer’s political system and governmentincluding details of the governing body of the issuer.

4. PUBLIC FINANCE AND TRADE

Information on the following for the two fiscal years prior to the dateof the registration document:

(a) the tax and budgetary systems;

(b) gross public debt including a summary of the debt, the maturitystructure of outstanding debt (particularly noting debt with aresidual maturity of less than one year) and debt payment record,and of the parts of debt denominated in the domestic currency ofthe issuer and in foreign currencies;

(c) foreign trade and balance of payment figures;

(d) foreign exchange reserves including any potential encumbrances tosuch foreign exchange reserves as forward contracts or derivatives;

(e) financial position and resources including liquid deposits availablein domestic currency;

(f) income and expenditure figures.

Description of any auditing or independent review procedures on theaccounts of the issuer.

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2004R0809 — EN — 01.03.2007 — 002.001— 94

355

5. SIGNIFICANT CHANGE

5.1. Details of any significant changes to the information provided pursuantto item 4 which have occurred since the end of the last fiscal year, oran appropriate negative statement.

6. LEGAL AND ARBITRATION PROCEEDINGS

Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the issuer is aware), during a period covering at least theprevious 12 months which may have, or have had in the recent past,significant effects on the issuer financial position, or provide an appro-priate negative statement.

6.2. Information on any immunity the issuer may have from legalproceedings.

7. STATEMENT BY EXPERTS AND DECLARATIONS OF ANYINTEREST

Where a statement or report attributed to a person as an expert isincluded in the registration document, provide such person’s name,business address and qualifications. If the report has been producedat the issuer’s request a statement to that effect, that such statementor report is included, in the form and context in which it is included,with the consent of that person, who has authorised the contents of thatpart of the registration document.

To the extent known to the issuer, provide information in respect ofany interest relating to such expert which may have an effect on theindependence of the expert in the preparation of the report.



(a) financial and audit reports for the issuer covering the last two fiscalyears and the budget for the current fiscal year;

(b) all reports, letters, and other documents, valuations and statementsprepared by any expert at the issuer's request any part of which isincluded or referred to in the registration document.


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2004R0809 — EN — 01.03.2007— 002.001— 95

356

ANNEX XVII

Minimum disclosure requirements for the registration document forsecurities issued by public international bodies and for debt securities

guaranteed by a Member State of the OECD (schedule)


1.1. All persons responsible for the information given in the registrationdocument and, as the case may be, for certain parts of it, with, inthe latter case, an indication of such parts. In the case of naturalpersons including members of the issuer’s administrative, managementor supervisory bodies indicate the name and function of the person; incase of legal persons indicate the name and registered office.

1.2. A declaration by those responsible for the registration document, that,having taken all reasonable care to ensure that such is the case, theinformation contained in the registration document is, to the best oftheir knowledge, in accordance with the facts and contains no omissionlikely to materially affect its import. As the case may be, declaration bythose responsible for certain parts of the registration document that,having taken all reasonable care to ensure that such is the case theinformation contained in the part of the registration document forwhich they are responsible is, to the best of their knowledge, inaccordance with the facts and contains no omission likely to affectits import.

2. RISK FACTORS

Prominent disclosure of risk factors that may affect the issuer’s abilityto fulfil its obligations under the securities to investors in a sectionheaded ‘Risk factors’.


3.1. The legal name of the issuer and a brief description of the issuer’s legalstatus.

3.2. The location of the principal office and the legal form of the issuer andits contact address and telephone number.

3.3. Details of the governing body of the issuer and a description of itsgovernance arrangements, if any.

3.4. A brief description of the issuer’s purpose and functions.

3.5. The sources of funding, guarantees and other obligations owed to theissuer by its members.

3.6. Any recent events relevant to the evaluation of the issuer’s solvency.

3.7. A list of the issuer’s members.

4. FINANCIAL INFORMATION

4.1. The two most recently published audited annual financial statementsprepared in accordance with the accounting and auditing principlesadopted by the issuer, and a brief description of those accountingand auditing principles.

Details of any significant changes to the issuer’s financial positionwhich has occurred since the end of the latest published auditedannual financial statement, or an appropriate negative statement.

5. LEGAL AND ARBITRATION PROCEEDINGS

5.1. Information on any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened ofwhich the issuer is aware), during a period covering at least theprevious 12 months which are likely to have, or have had in therecent past, significant effects on the issuer’s financial position, orprovide an appropriate negative statement.

5.2. Information on any immunity the issuer may have from legalproceedings pursuant to its constituent document.

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2004R0809 — EN — 01.03.2007 — 002.001— 96

357

6. STATEMENT BY EXPERTS AND DECLARATION OF ANYINTERESTS

Where a statement or report attributed to a person as an expert isincluded in the registration document, provide such person’s name,business address and qualifications. If the report has been producedat the issuer’s request a statement to that effect, that such statementor report is included, in the form and context in which it is included,with the consent of that person.

To the extent known to the issuer, provide information in respect ofany conflict of interests relating to such expert which may have aneffect on the independence of the expert in the preparation of thereport.

7. DOCUMENT ON DISPLAY

A statement that for the life of the registration document the followingdocuments (or copies thereof), where applicable, will be made availableon request:

(a) annual and audit reports of the issuer for each of the last twofinancial years prepared in accordance with the accounting andauditing principles adopted by the issuer;

(b) all reports, letters, and other documents, valuations and statementsprepared by any expert at the issuer’s request any part of which isincluded or referred to in the registration document;

(c) the issuer’s constituent document.


▼B

2004R0809 — EN — 01.03.2007— 002.001— 97

2004R0809 — EN — 01.03.2007 — 002.001— 98ANNEX

XVIII

Tableof

combinatio

ns

REGISTRATIO

NDOCUMENT

SCHEDULES

BUILDIN

GBLOCK

TYPE

SOFSE

CURITIES

Share

Debtandderivativ

e(<

EUR

50000)

Debtandderivativ

e(>

or=EUR

50000)

Asset

-backedsecu-

rities

Banks

debt

andderi-

vativ

eProform

ainform

ation

Shares

(preference

shares,redeem

able

shares,shares

with

preferentialsubscriptio

nrights;etc.)

Bonds

(vanillabonds,

incomebonds,

structured

bonds,

etc.)

with

adenominationof

less

than

EUR

50000

oror

Bonds

(vanillabonds,

incomebonds,

structured

bonds,

etc.)

with

adenominationof

atleastEUR

50000

oror

Debtsecuritiesguaranteed

byathirdparty

oror

or

Derivativesecuritiesguaranteed

byathirdparty

oror

or

Asset-backedsecurities

Bonds

exchangeable

orconvertib

leinto

third-partyshares

orissuers'

orgroupshares

which

areadmitted

onaregulated

market

oror

or

Bonds

exchangeable

orconvertib

leinto

theissuer's

shares

notadmitted

onaregulatedmarket

▼B

2004R0809— EN — 01.03.2007 — 002.001— 99REGISTRATIO

NDOCUMENT

SCHEDULES

BUILDIN

GBLOCK

TYPE

SOFSE

CURITIES

Share

Debtandderivativ

e(<

EUR

50000)

Debtandderivativ

e(>

or=EUR

50000)

Asset

-backedsecu-

rities

Banks

debt

andderi-

vativ

eProform

ainform

ation

Bonds

exchangeable

orconvertib

leinto

group'sshares

not

admitted

onaregulatedmarket

oror

or

Bonds

with

warrants

toacquire

the

issuer's

shares

not

admitted

totradingon

aregulatedmarket

Shares

with

warrants

toacquire

the

issuer's

shares

not

admitted

totradingon

aregulatedmarket

Derivatives

securitiesgiving

the

rightto

subscribe

orto

acquiretheissuer'sshares

notadmitted

onaregulatedmarket

Derivatives

securities

giving

the

rightto

acquire

group's

shares

notadmitted

onaregulatedmarket

oror

or

Derivatives

securitiesgiving

the

rightto

subscribe

orto

acquireissuer's

orgroup

shares

which

areadmitted

ona

regulated

marketand

derivativ

essec.

linked

toany

other

underlying

than

issuer's

orgroup

shares

which

are

not

admitted

onaregulated

market(including

any

derivativ

essec.

entitlin

gto

cash

settlem

ent)

oror

or

▼B

2004R0809— EN— 01.03.2007— 002.001 — 100REGISTRATIO

NDOCUMENT

SCHEDULES

TYPE

SOFSE

CURITIES

Collectiveinvestmentundertakingof

the

closed-end

type

States

andtheirregional

andlocalauthorities

Public

internationalbodies/DebtSecurities

guaranteed

byaMem

berStateof

theOECD

Shares

(preferenceshares,redeem

able

shares,shares

with

prefer-

entialsubscriptio

nrights;etc.)

Bonds

(vanillabonds,incomebonds,structured

bonds,etcwith

adenominationof

less

than

EUR

50000

Bonds

(vanillabonds,incomebonds,structured

bonds,etc.)with

adenominationof

atleastEUR

50000


byathirdparty


byathirdparty


Bonds

exchangeable

orconvertib

leinto

third

party

shares

orissuers'

orgroup

shares

which

are

admitted

ona

regulated

market

Bonds

exchangeable

orconvertib

leinto

theissuer's

shares

not

admitted

onaregulatedmarket

Bonds

exchangeable

orconvertib

leinto

group's

shares

not

admitted

onaregulatedmarket

▼B

2004R0809— EN— 01.03.2007— 002.001 — 101REGISTRATIO

NDOCUMENT

SCHEDULES

TYPE

SOFSE

CURITIES

Collectiveinvestmentundertakingof

the

closed-end

type

States

andtheirregional

andlocalauthorities

Public

internationalbodies/DebtSecurities

guaranteed

byaMem

berStateof

theOECD

Bonds

with

warrantsto


notadmitted

totradingon

aregulatedmarket

Shares

with

warrantsto


notadmitted

totradingon

aregulatedmarket

Derivatives

securitiesgiving

therightto

subscribeor

toacquire

theissuer'sshares

notadmitted

onaregulatedmarket

Derivatives

securitiesgiving

therightto

acquiregroup'sshares

notadmitted

onaregulatedmarket

Derivatives

securitiesgiving

therightto

subscribeor

toacquire

issuer's

orgroup

shares

which

are

admitted

ona

regulated

marketandderivativ

essec.

linkedto

anyotherunderlying

than

issuer's

orgroupshares

which

arenotadmitted

onaregulated

market(including

any

derivativ

essecuritiesentitlin

gto

cash

settlem

ent)

▼B

2004R0809— EN— 01.03.2007— 002.001 — 102SE

CURITIESNOTE

SCHEDULES

ADDITIO

NAL

BUILDIN

GBLOCKS

TYPE

SOFSE

CURITIES

Share

Debt

(<EUR

50000)

Debt(>

or=

EUR

50000)

Derivatives

secu-

rities

Guarantees

Asset-backedsecu-

rities

Underlyingshare

Shares

(preference

shares,redeem

able

shares,shares

with

preferentialsubscriptio

nrights;etc.)

Bonds

(vanillabonds,

incomebonds,

structured

bonds,

etc

with

adenominationof

less

than

EUR

50000

Bonds

(vanillabonds,

incomebonds,

structured

bonds,

etc)

with

adenominationof

atleastEUR

50000


byathirdparty

oror


byathirdparty


oror

Bonds

exchangeable

orconvertib

leinto

thirdpartyshares

orissuers'

orgroupshares

which

areadmitted

onaregulated

market

oror

Only

point4.2.2

Bonds

exchangeable

orconvertib

leinto

theissuer's

shares

notadmitted

onaregulatedmarket

oror

Bonds

exchangeable

orconvertib

leinto

group'sshares

not

admitted

onaregulatedmarket

oror

▼B

2004R0809— EN— 01.03.2007— 002.001 — 103SE

CURITIESNOTE

SCHEDULES

ADDITIO

NAL

BUILDIN

GBLOCKS

TYPE

SOFSE

CURITIES

Share

Debt

(<EUR

50000)

Debt(>

or=

EUR

50000)

Derivatives

secu-

rities

Guarantees

Asset-backedsecu-

rities

Underlyingshare

Bonds

with

warrants

toacquire

the

issuer's

shares

not

admitted

totradingon

aregulatedmarket

oror

andexcept

point4.2.2

Shares

with

warrants

toacquire

the

issuer's

shares

not

admitted

totradingon

aregulatedmarket

andexcept

point4.2.2

Derivatives

securitiesgiving

the

rightto

subscribe

orto


notadmitted

onaregulatedmarket

except

point4.2.2

Derivatives

securities

giving

the

rightto

acquire

group's

shares

notadmitted

onaregulatedmarket

except

point4.2.2

Derivatives

securitiesgiving

the

rightto

subscribe

orto

acquireissuer's

orgroup

shares

which

areadmitted

ona

regulated

marketand

derivativ

essecuritieslin

ked

toany

otherunderlying

than

issuer's

orgroup

shares

which

are

notadmitted

ona

regulated

market(including

any

deri-

vativ

essecuritiesentitlin

gto

cash

settlem

ent)

▼B

364

2004R0809— EN— 01.03.2007— 002.001 — 104

Annex XIX

List of specialist issuers

— Property companies

— Mineral companies

— Investment companies

— Scientific research based companies

— Companies with less than three years of existence (start-up companies)

— Shipping companies.

▼B

365

List of national laws implementing the Prospectus Directive

This Annex contains a list of the current national legislation implementing the Directive.

Austria

Bundesgesetz, mit dem das Kapitalmarktgesetz, das Börsegesetz, das Invest-mentfondsgesetz, das Wertpapieraufsichtsgesetz und das Finanzmarktaufsi-chtsbehördengesetz geändert werden, Bundesgesetzblatt (BGBl) I Nr. 78/2005 of 28 June 2005

Belgium

Wet van 16 juni 2006 op de openbare aanbieding van beleggingsinstrumenten en de toelating van beleggingsinstrumenten tot de verhandeling op een gereglemen-teerde markt, Belgisch Staatsblad of 21 June 2006

Loi du 16 juin 2006 relative aux offres publiques d’instruments de placement et aux admissions d’instruments de placement à la négociation sur des marchés réglementés, Moniteur belge of 21 June 2006

Bulgaria

Закон за публичното предлагане на ценни книжаЗакон; Държавен вестник, no.: 86, date pub: 24/10/2006; date into force/en

vigueur: 01/01/2007Наредба № 2 от 17.09.2003 г. за проспектите при публично предлагане на

ценни книжа и за разкриването на информация от публичните дружества и другите емитенти на ценни книжa

Наредба на министър/ръководител на ведомство; Държавен вестник, no.: 101, date pub: 15/12/2006; date into force/en vigueur: 01/01/2007; ref.: (MNE(2006)58792)

Закон за Комисията за финансов надзор

Annex III

366

Annex III

Закон; Държавен вестник, no.: 84, date pub: 17/10/2006; date into force/en vigueur: 01/01/2007; ref.: (MNE(2006)58793)

Закон за кредитните институцииЗакон; Държавен вестник , no.: 59, date pub: 21/07/2006; date into force/en

vigueur: 01/01/2007; ref.: (MNE(2006)58794)Административно-процесуален кодексКодекс; Държавен вестник, no.: 30, date pub: 11/04/2006; date into force/en

vigueur: 17/07/2006; ref.: (MNE(2006)58796)Закон за пазарите на финансови инструментиЗакон; Държавен вестник, no.: 52, date pub: 29/06/2007; date into force/en

vigueur: 01/11/2007; ref.: (MNE(2006)58797)Наредба № 38 от 25.07.2007 г. за изискванията към дейността на

инвестиционните посреднициНаредба на министър/ръководител на ведомство ; Държавен вестник,

no.: 67 , date pub: 17/08/2007 ; date into force/en vigueur: 01/11/2007 ; ref.: (MNE(2006)58798)

Cyprus

Νομος 114(Ι)/2005 που προνοεί για τις προϋποθέσεις διενέργειασ δημόσιας προσφοράς κινητών αξιών, για το ενημερωτικό δελτιό που πρέπει να δημοσιευέται κατά τη δημόσια προσφορά κινητών αξιών ή την εισαγωγή τους προς διαπραγμάτευση σε οργανωμένη αγορά και άλλα συναφή θέματα, Επίσημη Εφημερίδα της υπριακής Δημοκρατίας Αρ. 4031, παράρτημα πρώτο, μέρος Ι, σελ. 783 of 9 September 2005

Czech Republic

Zákon č. 56/2006 Sb., kterým se mění zákon č. 256/2004 Sb., o podnikání na kapitálovém trhu, ve znění pozdějších předpisů, a další související zákony

Denmark

Lov nr. 1460 af 22 December 2004 om værdipapirhandel m.v.Bekendtgørelse nr. 306/2005 om prospekter for værdipapirer, der optages til

notering eller handel på et reguleret marked, og ved første offentlige udbud af værdipapirer over 2.500.000 euro

Estonia

Väärtpaberituru seaduse, Investeerimisfondide seaduse, Tagatisfondi seaduse ja asjaoigusseaduse muutmise seadus

367

Annex III

Finland

Laki arvopaperimarkkinalain muuttamisesta, 23.6.2005/448Laki Rahoitustarkastuksesta annetun lain muuttamisesta, 23.6.2005/449Laki velkakirjalain muuttamisesta, 23.6.2005/450Laki korkotulon lähdeverosta annetun lain 3 §:n muuttamisesta,

23.6.2005/451Valtiovarainministeriön asetus arvopaperimarkkinalain 2 luvussa tarkoite-

tusta esitteestä, 23.6.2005/452

France

Loi N° 2005-842 du 26 juillet 2005 pour la confiance et la modernisation de l’économie

Germany

Gesetz zur Umsetzung der Richtlinie 2003/71/EG des Europäischen Parlaments und des Rates vom 4. November 2003 betreffend den Prospekt, der beim öffentlichen Angebot von Wertpapieren oder bei deren Zulassung zum Handel zu veröffentli-chen ist, und zur Änderung der Richtlinie 2001/34/EG (Prospektrichtlinie-Umsetzungsgesetz), Bundesgesetzblatt Teil I of 22 June 2005, page 1698

Greece

Ενημερωτικό δελτίο δημόσιας προσφοράς κινητών αξιών και εισαγωγής τους για διαπραγμάτευση (NOMOΣ ΥΠ’ ΑΡΙΘ. 3401)

Hungary

2005. évi LXII.törvénya tõkepiacról szóló 2001. évi CXX. Törvénymódosításáról2004. évi CXL.törvénya közigazgatási hatósági eljárás és szolgáltatásáltalános

szabályairól2001. évi CXX. törvény a tőkepiacról1999. évi CXXIV.törvénya Pénzügyi Szervezetek Állami Felügyeletéről1995. évi LXVI. törvény a köziratokról, a közlevéltárakról és a magánlevéltári

anyag védelméről6. – 1957. évi IV. törvény az államigazgatási eljárás általános szabályairól

Ireland

Prospectus (Directive 2003/71/EC) Regulations 2005 (SI n° 324 of 2005)

368

Annex III

Italy

Decreto legislativo 28 marzo 2007, n. 51 – “Attuazione della direttiva 2003/71/CE relativa al prospetto da pubblicare per l’offerta pubblica o l’ammissione alla negoziazione di strumenti finanziari, che modifica la direttiva 2001/34/CE”, pub-blicato sulla Gazzetta Ufficiale n. 94 del 23 Aprile 2007

Latvia

Grozījumi Finanšu instrumentu tirgus likumā July 12, 2005Publicēts: Vēstnesis 28.06.2005 Nr.99 (ZIŇOTĀJS 28.07.2005 Nr.14)

Lithuania

Lietuvos Respublikos vertybinių popierių komisijos 2005 m. liepos 15 d. nutari-mas Nr. 1K-21 dėl Vertybinių popierių prospekto rengimo ir tvirtinimo bei infor-macijos atskleidimo taisyklių patvirtinimo

Lietuvos Respublikos vertybinių popierių rinkos įstatymo pakeitimo ir papildymo įstatymas Nr. X-270

Lietuvos Respublikos akcinių bendrovių ıstatymo 13, 44, 46, 48, 55, 72 ir 74 straipsnių pakeitimo įstatymas Nr. X-271

Luxembourg

Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières et portant transposition de la directive 2003/71/CE du Parlement Européen et du Conseil du 4 novembre 2003 concernant le prospectus à publier en cas d’offre au public de valeurs mobilières ou en vue de l’admission de valeurs mobilières à la négociation, et modifiant la directive 2001/34

Malta

Financial Markets Act (CAP. 345) Recognition of Approved Listing Particulars Regulations, 2004

The Netherlands

Wet van 23 juni 2005 tot wijziging van de Wettoezicht effectenverkeer 1995 ter implementatie van richtlijn nr. 2003/71/EG van het Europees Parlement en de Raad van de Europese Unie van 4 november 2003 betreffende het prospectus dat gepubliceerd moet worden wanneer effecten aan het publiek worden aangeboden of tot de handel worden toegelaten en tot wijziging van Richtlijn 2001/34/EG (PbEU L 345) en tot uitvoering van verordening nr. 809/2004 van de Commissie van de Europese Gemeenschappen van 29 april 2004 tot uitvoering van Richtlijn 2003/71/EG van het Europees Parlement en de Raad wat de in het prospectus

369

Annex III

te verstrekken informatie, de vormgeving van het prospectus, de opneming van informatie door middel van verwijzing, de publicatie van het prospectus en de verspreiding van advertenties betreft (PbEUL 149)

Besluit van 23 juni 2005, houdende wijziging van het Besluit toezicht effect-enverkeer 1995 in verband met de implementatie van richtlijn nr. 2003/71/EG van het Europees Parlement en de Raad van de Europese Unie van 4 november 2003 betreffende het prospectus dat gepubliceerd moet worden wanneer effecten aan het publiek worden aangeboden of tot de handel worden toegelaten en tot wijzig-ing van richtlijn 2001/34/EG en tot uitvoering van de verordening tot uitvoering van die richtlijn wat de in het prospectus te verstrekken informatie, de vormgeving van het prospectus, de opneming van informatie door middel van verwijzing, de publicatie van het prospectus en de verspreiding van advertenties betreft

Poland

Ustawa z dnia 29 lipca 2005 r. o obrocie instrumentami finansowymiUstawa z dnia 29 lipca 2005 r. o nadzorze nad rynkiem kapitałowymUstawa z dnia 29 lipca 2005 r. o ofercie publicznej i warunkach wprowadzania

instrumentów finansowych do zorganizowanego systemu obrotu oraz o spółkach publicznych

Ustawa z dnia 27 maja 2004 r. o funduszach inwestycyjnych

Portugal

Presidência do Conselho de Ministros-De ter sido rectificado o Decreto-Lei N.°52/2006, do Ministério das Finanças e da Aministração Pùblica, que, no usa das autorizações legislativas concedidas pelas Leis n. os 55/2005, de 18 de Novembro, e 56/2005, de 25 de Novembro, transpõe para a ordem juridica nacional a Directiva n.° 2003/6/CE, do Parlamento e do Conselho, de 28 de Janeiro, relativa ao abuso de informaçaõ privilegiada e à manipulação de mercado, e a Directiva n.° 2003/71/CE, do Parlamento Europeu e do Conselho, de 4 de Novembro, relativa ao prospecto a publicar em caso de oferta pùblica de valores mobiliàrios ou da sua admissão à negociação

Romania

Lege nr. 297/2004 din 28/06/2004 privind piaţa de capital – Monitorul Oficial, Partea I nr. 571 din 29/06/2004

Regulamentul Comisiei Nationale a Valorilor Mobiliare nr. 1/2006 din 09/03/2006 privind emitenţii şi operaţiunile cu valori mobiliare – Monitorul Oficial, Partea I nr. 312bis din 06/04/2006

Regulament Comisiei Nationale a Valorilor Mobiliare nr. 31/2006 din 14/12/2006 privind completarea unor reglementări ale Comisiei Naţionale a Valorilor Mobiliare, în vederea implementării unor prevederi ale directivelor europene – Monitorul Oficial, Partea I nr. 5 din 04/01/2007

370

Annex III

Slovakia

Zákon z 23. júna 2005 č. 336/2005 Z. z., ktorým sa mení a dopĺňa zákon č. 566/2001 Z. z. o cenných papieroch a investičných službách a o zmene a doplnení niektorých zákonov (zákon o cenných papieroch) v znení neskorších predpisov a o zmene a doplnení niektorých zákonov (Čiastka 141/2005 Zbierky zákonov Slovenskej republiky, dátum vydania 27.7.2005)

Slovenia

Zakon o trgu finančnih instrumentov (ZTFI), published in Uradni list Republike Slovenije (www.uradni-list.si) no. 67/2007 (Official Journal of Republic of Slovenia No. 67/2007) of 27 July 2007.

Spain

Real Decreto-ley 5/2005, de 11 de marzo de 2005, de reformas urgentes para el impulso a la productividad y para la mejora de la contratación pública

Real Decreto 1.310/2005, de 4 de noviembre, por el que se desarrolla par-cialmente la Ley 24/1988, de 28 de julio, del Mercado de Valores, en materia de admisión a negociación de valores en mercados secundarios oficiales, de ofertas públicas de venta o suscripción y del folleto exigible a tales efectos

Orden EHA/3537/2005, de 10 de noviembre, por la que se desarrolla el artículo 27.4 de la Ley 24/1988, de 28 de julio, del Mercado de Valores

Sweden

Lag (2005:833) om ändring i lagen (1991:980) om handel med finansiella instrument

Lag (2005:834) om ändring i lagen (1992:543) om börs- och clearingverksamhet

Lag (2004:46) om investeringsfonderLag (2005:380) om ändring i lagen (1992:543) om börs- och

clearingverksamhet

United Kingdom

Financial Services and Markets. The Prospectus Regulations 2005Financial Services and Markets. The Prospectus Regulations 2005Financial Services and Markets. The Prospectus Regulations 2005Concordance tableProspectuses Ordinance 2005

www.uradni-list.si

371

Annex III

Iceland

Reglurerî um gildistöku reglugerðar framkvæmdastjórnarinnar nr. 809/2004 um framkvæmd tilskipunar Evrópuingsins og ráðsins 2003/71/EB að ví er varðar upplýsingar í lýsingum, svo og framsetningu eirra, upplýsingar felldar inn með tilvísun, og birtingu lýsinganna, svo og dreifingu auglýsinga

gr.Reglugerð essi er sett í samræmi við ákvörðun sameiginlegu EES-nefndarinnar nr. 64/2005, frá 29. apríl 2005 um að fella inn í EES-samninginn og taka upp í innlendan rétt ákvæði reglugerðar framkvæmdastjórnarinnar (EB) nr. 809/2004 um framkvæmd tilskipunar Evrópuingsins og ráðsins 2003/71/EB að ví er varðar upplýsingar í lýsingum, svo og framsetningu eirra, upplýsingar felldar inn með tilvísun, og birtingu lýsinganna, svo og dreifingu auglýsinga

gr.Með reglugerð essari öðlast gildi hér á landi reglugerð framkvæmdastjór-narinnar (EB) nr. 809/2004 um framkvæmd tilskipunar Evrópuingsins og ráðsins 2003/71/EB að ví er varðar upplýsingar í lýsingum, svo og framsetningu eirra, upplýsingar felldar inn með tilvísun, og birtingu lýsinganna, svo og drei-fingu auglýsinga, merkt fylgiskjal I, samkvæmt ákvörðun sameiginlegu EES-nefndarinnar um breytingu á IX. viðauka við EES-samninginn, nr. 64/2005, frá 29. apríl 2005, merkt fylgiskjal II. Ef ósamræmi er á milli íslensks og ensks

texta reglugerðar framkvæmdastjórnarinnar nr. 809/2004 skal skýra íslenska textann með hliðsjón af enska textanum

gr.Reglugerð essi, sem sett er með heimild í 73. gr. laga um verðbréfaviðskipti nr. 33/2003, með síðari breytingum, öðlast egar gildi

Norway

Verdipapirhandelloven

Liechtenstein

Wertpapierprospektgesetz, Liechtensteinisches Landesgesetzblatt (LGBl.) 2007/Nr. 196 of 23 May 2007

Index

372

Index

Austriaadmissions to trading on a regulated

market, approval and appeal procedures 9

advance notice of publication 12advertisements 13appeals, offers of securities to the

public 8approval and appeal procedures

admissions to trading on a regulated market 9

offers of securities to the publicappeals 8procedure 6–7

auditor of prospectusliability of 15requirement for indemnity

insurance 17n21sanctions against 14

base prospectus 10businesses as qualified investors 8competent authority 4competent notification office 5content of prospectus 9directors’ shares, exemption from

prospectus requirement for 13

electronic filing of documents 5electronic format, publication

in 11exemption from requirement

for 12notice of availability of

prospectus 12

employee share offers, exemption from prospectus requirement for 13

exemptions from prospectus requirement for offers of securities to the public 7–8

format of prospectus 10impact of Directive 16implementing the Directive

impact 16legislation 3–4

indemnity insurance, auditor required to have 17n21

investment fundsexemption from notification of

information about 13regulation of 16

investments not covered by the Directive 15

definition of ‘other investments’ 18n22

investors’ right to claim damages 14–15

issuer/offerorliability of 15responsibility to publish

supplement 10–11sanctions against 14

language requirements 11, 17n14summary of prospectus 10

legal entitiesnot small- and medium-sized

enterprises (SMEs), as qualified investors 8

373

Index

operating in financial markets as qualified investors 8

legislationimplementing the Directive 3–4for securities regulation 4

investment funds 16liability 14–15multiple documents, prospectus

consisting of 10natural persons as qualified

investors 8newspapers, publication in 11, 17n15

notice of availability of prospectus 12

non-public offers, exemption from prospectus requirement for published information about 7–8


notification of regulated securities information

exemption from requirement 13offers of securities to the public

appeals procedure 8approvals procedure 6–7

official gazette, publication in 11other investments, definition

of 18n22participation certificates

exemption from notification of information about 13, 17n20

passported prospectuses 13advance notice of publication 12

printed format, publication in 11, 17n16

private placements, approval procedure for 7

prospectus liability 14–15public sector bodies as qualified

investors 8publication of prospectus 11–13,

17n15, n16qualified investors

definition of 8exemption for offers

excluding 7including 7

register of securities documentation 5, 12

sanctions 13–14size of offer or value of securities,

exemptions from prospectus requirement relating to 7

small- and medium-sized enterprises (SMEs), definition of 17n11

status as/as not home Member State 6

summary of prospectus 9exemption from requirement

for 17n12supplement to prospectus 10–11time limits for appeals 8valid publication, criteria

for 11–12value of securities see size of offer

or value of securities, rules relating to

websites, publication on 11register of securities

documentation 12

Belgium, legislation implementing the Directive 1802

Bulgariaactivity report in annual financial

report 39, 40three-monthly report 40

admissions to trading on a regulated market

exemptions 24–6final price and amount of securities

offered, issuer/offeror’s responsibility to disclose and publish 29

in other Member States, language requirements 30

suspension of 37updated information on traded

securities 29advertisements 36

374

Index

Bulgaria (cont.)amendments to prospectus

29annual report see financial reportapplication for approval of

prospectus 32–3approval of prospectus 31–5auditor of prospectus

liability for financial statements 39

prospectus liability 31responsibility to provide

information 37banks, exemption from prospectus

requirement for securities issued by 41

non-equity securities 22–3base prospectus 27

validity of 34central banks of Member States,

exemption for shares in 22charges for information 41collective investment undertakings

(non-closed-end), exemption from prospectus requirement for 22

competent authority 21–2competency of 31–2, 43powers of 37

consolidated financial statements 39–40

quarterly statements 40content of financial report 39content of prospectus 26–7continuous or regular basis,

exemption from prospectus requirement for shares issued on 22–3

converted shares, exemption for 25disclosure of information

38–42documents submitted with

application for approval of prospectus 32–3

electronic format, publication in 36

employee share offers, exemption for 24, 25

Euro exchange rate 44n2examination of prospectus 33exchanged shares, exemption for 25exemptions from prospectus

requirement 22–6final price and amount of securities

offered, issuer/offeror’s responsibility to disclose and publish 29

financial reportdisclosure of 39responsibilities 39

financial statementsconsolidated 39–40liability for 39

financial supervision, extent of regime 44n1

format of prospectus 27free shares, exemption from

prospectus requirement for 24, 25

guarantor of securities, prospectus liability 31

‘home country’, definition of 38‘host country’, definition of 38implementing the Directive,

legislation 19–20information not published in

prospectusliability arising from 31restriction on 37

initial disclosure of information of public offers, legislation regulating 20–1

investment intermediaries, legislation regulating 20

investorsright to claim transaction null

and void 26right to withdraw acceptance of

offer 28judicial control 44language requirements 30, 42

application for approval of prospectus 32

legislationimplementing the Directive 22,

26

375

Index

for securities regulation 20–1liability for financial statements 39liability for prospectus 31liable persons identified in

prospectus 31market abuse, legislation against 20merger, exemption for securities

offered in connection with 24merger, exemption from prospectus

requirement for securities offered in connection with, 24

money market instruments, exemption from prospectus requirement for 38

multiple-document prospectus 28choice of 27

newspapers, publication in 36non-equity securities issued by banks,

exemption from prospectus requirement for 22–3

non-profit organisations, exemption from prospectus requirement for securities issued by 22

null and void transactions 26offers of securities to the public

exemptions 23–4legislation regulating 20

initial disclosure of information 20–1

‘public offering of securities’, definition of 44n3

suspension of 37offers representing a percentage of

traded shares 24official gazette, publication in 36omission of information,

authorised 28–9other Member States, offers and

applications in 34–5excluding Bulgaria 30including Bulgaria 30language requirements

excluding Bulgaria 42including Bulgaria 42

printed format, publication in 36procurator, prospectus liability 31

prospectus liability 31‘public offering of securities’,

definition of 44n3public sector bodies

exclusions from requirements for disclosure of information 40

by issuers of high-value securities 41

public sector bodies, exemption from prospectus requirement for securities offered by

guaranteed by 22issued by 22

publication of prospectus 34qualified investors, exemption from

prospectus requirement for offers to 23

quarterly activity report 40quarterly financial statements 40refusal of approval for prospectus

33register of securities

documentation 36, 41–2resales of securities, exemption

for 23responsible persons, identification in

prospectus 31sanctions 37securities traded on another market,

exemption for 25–6single-document prospectus, choice

of 27size of offer or value of securities,

rules relating toapplications for admission to trade

in other Member States, language requirements 30

banks’ non-equity securities 23

exclusions from requirements for disclosure of information by issuers of high-value securities 41

exclusions from requirements for disclosure of information by banks 41

exemptions relating to 23, 26

376

Index

Bulgaria (cont.)language requirements 42status as/as not home Member

State 31–2substitute shares, exemption from


summary of prospectus, liability arising from 31

supplement to prospectus 29–30suspension of public offer or

admission to trade 37takeover, exemption from prospectus

requirement for securities issued in connection with 24

time limitsdisclosure of financial report 39disclosure of information 42investor’s withdrawal of acceptance

of offer 28notification following examination

of prospectus 33notification of decision to assign

approval to other competent authority 32

publication in register 36publication of prospectus 36publication of quarterly financial

statements and activity reports 40

submission of updated information on traded shares 29

validity of base prospectus 34validity of prospectus 34

updated information 29validity of prospectus 34value of securities see size of offer


Cyprusadmissions to trading on a regulated

marketapproval and appeal

procedures 50exemptions 50

advertisements 55–6prohibition/suspension of 47

annual bulletin, publication of 59n3appeals 49, 59n6approval and appeal

procedures 48–50supplement to prospectus 52

approved version, published prospectus to be identical to 54

base prospectus 52claim for damages, burden of

proof 58competent authority 46–8

competence of 50notification of decision to

approve/reject prospectus 48

notification of incomplete documents 48

publication of documents on website 54–5

content of prospectus 50–2corrections to draft prospectus 48damages, burden of proof in claim

for 58disclosure of information, competent

authority’s powers to require 47

draft prospectus, corrections to 48electronic format, publication

in 54English, documents in 53, 56exemptions from prospectus

requirementadmissions to trading on a regulated

market 50offers of securities to the public,

49–50existing shares, exemption for offers

representing a percentage of 50

fines for breach of regulations 56–7



implementing the Directiveimpact 58–9legislation 46–7

377

Index

inaccurate information, investors’ right to withdraw because of 53

incomplete documents 48incorporation of information by

reference 52initial disclosure of information of

public offers, publication of prospectus 53–4

investors’ right to withdraw acceptance of offer 53

language requirements 53passported prospectuses 56

legislationimplementing the Directive

46–7 for securities regulation 47

liability 57new information, investors’ right to

withdraw because of 53newspapers, publication in 54offers of securities to the public

approval and appeal procedures 48–9

content of prospectus 51exemptions for 49–50prohibition/suspension of 47

omission of information, authorised 51

other Member Statesadvertisements relating to offers

and applications in 55prospectuses approved in 56

printed format, publication in 54prohibition/suspension of

of advertisements 47offers of securities to the

public 47trading on regulated market 47

prospectus liability 57publication of prospectus 53–5published prospectus to be identical to

approved version 54qualified investors

advertisements to 56exemption for offers to 49

register of securities documentation 54–5

resales of securities, exemption from prospectus requirement for 49

sanctions 56–7securities and transactions not subject

to Directive 58separate documents, prospectus

in 52single-document prospectus 52size of offer or value of securities,

exemptions from prospectus requirement relating to 49, 50

substitute shares, exemption from prospectus requirement for 49

summary of prospectusamendment of 53liability for 58

supplement to prospectus 52–3suspension see prohibition/suspensiontakeover, exemption from prospectus

requirement for securities issued in connection with 49, 50

time limitsapproval of supplement 52notification by competent authority

of incomplete documents 48notification of competent authority’s

de cision to approve/reject prospectus 48

prohibition/suspension of of advertisements 47

prohibition/suspension of trading on regulated market 47

publication of documents on competent authority’s website 54–5

publication of prospectus for initial public offer 53–4

trading on regulated market, prohibition/suspension of 47

transfer of competence by competent authority 48

underwriterliability of 58role of 48–9

validity of prospectus 55

378

Index

Cyprus (cont.)value of securities see size of offer


Finlandadmissions to trading on a regulated

marketapproval procedures 64inclusion of all necessary

information, requirement for 65

advertisements, approval of 64annual summary 68approval procedures 64

prospectuses from outside EEA 69

base prospectus 65claim for damages, cost of translation

of prospectus, responsibility for 66

competent authority 61, 64, 69

powers and sanctions 70publication of prospectus on

website 64content of prospectus 65–6EEA, prospectuses from outside

69electronic format, publication in

67exemptions

exempt securities 62from obligation to prepare a

prospectus 62–3from publication of annual

summary 68financial information in accordance

with IFRS 65–6foreign prospectuses, translation

of 69format of prospectus 65further guidance on Directive 61IFRS, financial information in

accordance with 65–6implementing the Directive

impact 71legislation 60, 61

incorporation of information by reference 66

investors’ right to withdraw acceptance of offer 67–8

language requirements 66foreign prospectuses 69

legislationimplementing the Directive 60,

61for securities regulation 61

scope of 61–2liability see prospectus liabilitymultiple-document prospectus 65obligation to prepare a

prospectus 62omission of information,

authorised 66passported prospectuses 69printed format, publication in 67prospectus liability 70public sector bodies, exemption from

prospectus requirement for securities offered by 63

publication of prospectus 67on competent authority’s

website 64qualified investors, exemption from


sanctions 70securities note 65single-document prospectus 65size of offer or value of securities,

rules relating toexemption from publication of

annual summary 68exemption from requirement to

publish a prospectus 63inclusion of all necessary information,

requirement for 65summary of prospectus 65, 66supplement to prospectus 67–8

time limit for approval 64time limits

approval of supplement 64investors’ right to withdraw

acceptance of offer 67–8publication of prospectus 67

379

Index

review of prospectus by competent authority 64

submission of advertisements 64


validity of prospectus 67transfer of competence by competent

authority 69translation of prospectus

foreign prospectuses 69responsibility for cost in damages

claim 66validity of prospectus 67value of securities see size of offer


Franceadmissions to trading on a regulated

marketdefinition of 74exempt from obligation to publish

prospectus 77language requirements where

no admission sought in France 81

prospectus in English 81French translation of

summary 81publication of notice in official

gazette 78advertisements 83–4annual report format for

prospectus 80annual review of registration

document 80approval and appeal

procedures 75–8auditor, comfort letter from 85auditors, waiver of requirements

for offers to qualified investors 85

banks 79base document 80base prospectus 80CESR Recommendations, compliance

with 79

choice of single or multi-document format 80

collective investment schemes 77comfort letter 85competent authority 73, 74–5

publication of prospectus on website 82

content of prospectus 78–9debt issues, distinction between

‘retail’ and ‘wholesale’ 79demerger, exemption for securities

offered in connection with 77

due diligence letter from listing sponsors 85

electronic format, publication in 82English, documents in 81–2equity securities, French summary of

passported prospectus 82exemptions 75–8‘final terms’, approval of 80financial report, prospectus used

as 85format of prospectus 80further guidance on Directive 73implementing the Directive 78–9

impact 85–6legislation 73


reference 79individual exemptions, granting

of 78information document published

instead of prospectus 77–8issuer/offeror/applicant

limitation of liability 85responsibility for publication of

prospectus and supporting information 82

language requirements 81–2company documents of non-French

companies 78legislation for securities

regulation 73legislation implementing the

Directive 73, 78–9

380

Index

France (cont.)merger, exemption for securities

offered in connection with 77multiple-document prospectus 80newspapers, publication in 82non-French companies

filing of translation of company documents 78

offers of securities to the publicdefinition of 74exempt from obligation to publish

prospectus 77–8language requirements where no

offer made in France 81prospectus in English 81

official gazette, publication innotice of admission to trading 78

other Member States, prospectuses from

competence of competent authority 75

passported prospectusescontrol in cases of

irregularities 84passported prospectuses, requirement

for summary in French 82portfolio managers, offers to 76previous prospectus, reference to

80printed format, publication in 82private placements 76–7prohibition/suspension of

transaction 84prospectus liability 85

summary of prospectus 79public sector bodies 77publication of prospectus 82qualified investors

definition of 76–7listing prospectus in English 81–2waiver of requirements of auditors

and listing sponsors 85real estate collective investment

schemes 77registration document 80

annual review of 80updated by securities note 80

‘retail’ and ‘wholesale’ debt issues, distinction between 79

sanctions 84securities, definition of 74securities note 80

updating registration document 80

size of offer or value of securities, rules relating to 77

competence of competent authority 75

distinction between ‘retail’ and ‘ wholesale’ debt issues 79

exemptions 76, 77French translation of

English-language summary 81

language requirements 81summary of prospectus 79

sponsors of listing, comfort letter from 85

sponsors of listing, due diligence letter 85

sponsors of listing, waiver of requirements for offers to qualified investors 85

summary of prospectus 79, 80incorporation of information by

reference 79supplement to prospectus 80–1

incomplete documents 78suspension of transaction 84time limits

approval procedures 78publication of prospectus on

competent authority’s website 82

publication of prospectus on issuer’s website 82

translationEnglish-language summary

81translation of non-French companies’

documents, filing of 78Transparency Directive, requirement

for true and fair view of financial statements 85

381

Index

true and fair view of financial statements, Transparency Directive requirement for 85

value of securities see size of offer or value of securities, rules relating to

‘wholesale’ and ‘retail’ debt issues, distinction between 79

Germanyadmissions to trading on a regulated

marketprospectus liability 98

advertisements 96base prospectus 94choice of single or multi-document

format 93claim for liability based on summary

of prospectus 98closed-ended funds, prospectus

requirement 98–9competent authority 89–90

disclaimer accompanying reference to approval of prospectus 91

content of prospectus 92–3cross-references in summary 93decoupled bookbuilding 93definitions in summary 93disclaimer accompanying reference to

approval of prospectus 91documents submitted with draft

prospectus 90draft supplement, approval of 94electronic format, publication in 95English, documents in 94–5equivalent information, authorisation

of 93exemptions

securities and transactions not subject to Directive, rules for 98–9

exemptions from obligation to publish prospectus 91–2

final offer price, inclusion in prospectus 93

final terms, publication of 94

financial intermediaries, responsibility of 98

fines for breach of regulations 97format of prospectus 93–4implementing the Directive

impact 99legislation 88


draft prospectus 90incorrect/incomplete information,

liability for 98initial public offering, time limit for

end of 95investment funds, prospectus

requirement 98–9investors’ right to withdraw

acceptance of offer 93, 94, 98

language requirements 94–5legislation for securities

regulation 88–9legislation implementing the

Directive 88 multiple-document prospectus 93newspapers, publication in 95number of securities offered,

inclusion in prospectus 93offers of securities to the public

prospectus liability 98omission of information,

authorised 92base prospectus 94

other countries, prospectuses approved in 97

passported prospectuses 97price range

inclusion in prospectus 93published in supplement 93

printed copies of prospectus available free of charge 95

printed format, publication in 95

prohibition/suspension of advertisements 96

prospectus liability 98

382

Index

Germany (cont.)publication of prospectus 95–6reference to approval of prospectus,

disclaimer accompanying 91responsible persons, identification in

prospectus 98sanctions 97securities and transactions not subject

to Directive, rules for 98–9single-document prospectus 93stock exchanges’ role in applying

sanctions 97stock exchanges’ role in deciding

if Prospectus Directive applies 91–2

summary of prospectus 93liability claim based on 98supplement to 94

supplement to prospectus 94price range published in 93

suspension of advertisements 96time limits

approval of draft prospectus 90–1

approval of draft supplement 94end of initial public offering 95investors’ right to withdraw

acceptance of offer 93, 94, 98

prohibition/suspension of advertisements 96

publication of prospectus 95validity of prospectus 96

transactions not subject to Directive, rules for 98–9

transfer of competence to other competent authority 90

trust assets, prospectus requirement for 98–9

validity of prospectus 96value of securities see size of offer


Icelandadmissions to trading on a regulated

marketapproval procedures 208

exemptions from prospectus requirement 208

advertisements 212appeals, offers of securities to the

public 208approval and appeal

procedures 207–8base prospectus 210

validity of 212Board of Directors, liability

of 214choice of single or multi-document

format 210competent authority 206–7

failure to respond to application does not mean approval of request 208


content of prospectus 209–10criminal penalties 213directors, liability of 214draft prospectus, documents to be

submitted with 207electronic format, publication

in 211–12English, documents in 210–11equivalent information, authorisation

of 209European Economic Area, prospectuses

from outside 209exemptions from prospectus

requirementadmissions to trading on a regulated

market 208offers of securities to the

public 208failure by competent authority to

respond does not mean approval of request 208

final price and amount of securities offered, publication of 209

fines for breach of regulations 213format of prospectus 210further guidance on Directive 206implementing the Directive 214

legislation 205–6incomplete documents 207

383

Index



language requirements 210–11legislation implementing the

Directive 205–6 liability 214multiple-document prospectus 210newspapers, publication in 211notice of availability of

prospectus 212offers of securities to the public

appeals 208approval procedures 207–8exemptions from prospectus

requirement 208omission of information,

authorised 209passported prospectuses 212–13persons responsible for prospectus,

identification in prospectus 214

printed format, publication in 211prospectus liability 214publication of prospectus 211–12qualified investors

advertisements to 212exemption from prospectus

requirement for offers to 208

registration document 210validity of 212

responsible persons, identification in prospectus 214

sanctions 213securities note 210

accompanying registration document 212

single-document prospectus 210size of offer or value of securities,

rules relating toexemptions from prospectus

requirement 208language requirements for

prospectus 211summary of prospectus 210

accompanying registration document 212

liability based on 214supplement to prospectus 210time limits

appeals 208approval/rejection of prospectus by

competent authority, notice of decision for 207



notice of incomplete documents 207

notice of transfer of competence by competent authority 207

publication of prospectus 211validity of prospectus 212

tort law, liability under 214transfer of competence by competent

authority 207validity of prospectus 212value of securities see size of offer


website, publication of prospectus on competent authority’s 212

Irelandadmissions to trading on a regulated

market, exemptions from prospectus requirement 106

advertisements 109–10annual update 108appeals 104

time limit for 104approval and appeal

procedures 102–6base prospectus 107CESR Recommendations, compliance

with 102choice of single or multi-document

format 107compensation, payment of 111competent authority 102

annual updates on website 108

384

Index

Ireland (cont.)prospectuses published on

website 109content of prospectus 106,

108draft prospectus, approval of

103electronic format, publication

in 109availability of free printed

copies 109employee share offers, exemption

for 105English, documents in 108–9‘equivalent document’, eligibility for

passport 105exemptions from prospectus

requirement 105–6filing of approved prospectus 104fines for breach of regulations 110,

111format of prospectus 107free shares, exemption for 105implementing the Directive,

legislation 101–2imprisonment for breach of

regulations 111incorporation of information by

reference 108investors’ right to withdraw

acceptance of offer 108language requirements 108–9

translation of summary of prospectus 110

legislation implementing the Directive 101–12

liability 111listing rules (stock exchange),

prospectus requirements of 111

merger, exemption from prospectus requirement for securities offered in connection with 105

multiple-document prospectus 107

newspapers, publication in 109

no prospectus to passport, exemption from prospectus requirement where 106


obligation to publish a prospectus 104–5

offers of securities to the publicexemptions from prospectus

requirement 105meaning of ‘offer to the

public’ 104by private companies 111–12

passported prospectuses 110eligibility of ‘equivalent document’

for passporting 105no prospectus to passport,

exemption from prospectus requirement where 106

persons responsible for prospectus 106–7

printed format, publication in 109private companies, offers by 111–12prospectus liability 111publication of prospectus 109

obligation to publish 104–5qualified investors, exemption for

offers to 105reference to other information 108registration document 107responsible persons 106–7sanctions 110securities note 107shares not offered to the public,

exemption from prospectus requirement for 106

single-document prospectus 107size limit on summary of

prospectus 106size of offer or value of securities,

exemptions from prospectus requirement relating to 105, 106

stock exchange listing rules, prospectus requirements of 111

substitute shares, exemption for 105

385

Index

summary of prospectus 106, 107liability based on 111requirement for translation 110

supplement to prospectus 108takeover, exemption from prospectus

requirement for securities issued in connection with 105

time limitsappeals 104approval of supplement 108filing of annual update 108filing of approved

prospectus 104investors’ right to withdraw

acceptance of offer 108notification of approval

decision 103validity of registration

document 107translation of summary of prospectus,

requirement for 110value of securities see size of offer


Italyadvertisements 128–9announcements as public

offerings 121annual update 116approval procedures 124–7auditor, role of 130–1banks, exemption from prospectus

requirement for securities issued by 123

burden of proofin damages claims 129–30liability for false or omitted

information 130central banks of Member States,

exemption from prospectus requirement for securities issued by 123


claim for damagesburden of proof 129–30time limits for 130

collective investment bodies, types of 131n5

competent authority 114–15, 124–5

establishing content of non-standard prospectus format 118

failure to respond does not mean approval of request 125


limitation of prospectus liability according to respective competence 133n17

powers to extend exemptions from prospectus requirement 124

requests for passporting prospectus 116

right to decide on relevant information in advertisements 129

transfer of competence 125compliance with Directive,

declaration of 118content of prospectus 127

non-standard formats, competent authority to establish content of 118

damages see claim for damagesdefinitions introduced by the

Directive 119–22disclosure of information to qualified

investors 129documents submitted with passporting

application 116English, documents in 117equity securities, definition of 120equivalent information, authorisation

of 118exemptions from prospectus

requirement 123–4competent authority’s powers to

extend 124implementation of regulations

115failure by competent authority to


386

Index

Italy (cont.)false information, burden of proof of

liability 130falsification of prospectus, offence

of 131final price and amount of securities

offered, publication of 117publication in supplement 131–2n6

financial instruments, definition of 119–20

financial intermediaries as qualified investors 123–4

financial statements, requirement for certification by auditor 130–1

format of prospectus 117–18non-standard formats, competent

authority to establish content of 118

home Member State, definition of 122

host Member State, definition of 122implementing the Directive

impact on passported prospectuses 116

introduction of new definitions 119–22

legislation 114–15, 118–19incorporation of information by

reference 116–7informative note 126

approval procedure 127investment solicitation, definition

of 132n10language requirements 127–8

translation of summary of prospectus, requirement for 116

legislation implementing the Directive 114–15, 118–19

liability see prospectus liabilityMember States, exemption from

prospectus requirement for securities guaranteed by 123

multiple-document prospectus 126–7

negotiable, requirement of financial instruments to be 120

non-equity securities, definition of 120

not implemented, provisions 115objective of offer as factor in

qualification as offering of securities 132n11

offers of securities, qualification of offer as 132n11


omitted information, burden of proof of liability 130

passported prospectuses 115–16impact of Directive on 116implementation of

regulations 115publication of 116translation of summary of

prospectus, requirement for 116

prospectus liability 129–30limitation according to respective

competence 133n17summary of prospectus 130

public offering of financial productsannouncement as 121definition of 120–2offers qualifying as 121–2originally offered to qualified

investors 121public sector bodies, exemption

from prospectus requirement for securities offered by 123

publication of prospectusinformation incorporated by

reference 117passported prospectuses 116prohibition of unauthorised 124–5

qualified investorsdecision on who qualifies

as 123–4disclosure of information to 129exemption from prospectus

requirement for offers to 123

financial intermediaries as 123–4

387

Index

public resales of securities originally offered to 121

small- and medium-sized enterprises (SMEs) as 123, 124

qualified operators, definition of 132n12

registration document 126approval procedure 126–7

relevant information, inclusion of 132n8

resales of securities originally offered to qualified investors 121

revocation of subscriptions 128self-executing directive, Prospectus

Directive as 114‘silent consent’ principle 125size of offer or value of securities,

rules relating toexemption from prospectus

requirement 123identification of home Member

State 122publication of final price and size of

offer in supplement 131–2n6small- and medium-sized enterprises

(SMEs), definition of 123, 124as qualified investors 124

subscriptions, revocation of 128summary of prospectus 117–18,

126liability for 130translation of 116

supplement to prospectus, publication of final price and size of offer in 131–2n6

suspension of advertisements 129, 133n16

time limitsapproval of prospectus 126damages claims 130requests for passporting

prospectus 116revocation of subscriptions 128suspension of advertisements 129,

133n16validity of prospectus 127


transferable, requirement of financial instruments to be 120



Liechtensteinadministrative offences 227admissions to trading on a regulated

market, approval and appeal procedures 218–19

advertisements 225appeals 220approval and appeal

procedures 217–20supplement to prospectus 222

basic prospectus 222choice of single or multi-document

format 221–2competent authority 216–17

approval of prospectus no guarantee for issuer against liability 218


register of prospectuses 224submission of documents in

electronic format to 219content of prospectus 220–1criminal penalties 226–7damages, liability for 227–8date of issue on prospectus,

requirement for 221electronic format

publication of prospectus in 224

availability of free printed copies of prospectus 224

submission of documents to competent authority in 219

European Economic Areainclusion within 215–16prospectuses approved

outside 225–6prospectuses approved

within 225

388

Index

Liechtenstein (cont.)exemptions from prospectus

requirement 219–20exemption from requirement for

summary 221failure by competent authority to


false information, liability for damages for 228

filing of approved prospectus 219final price and amount of securities

offered, publication of 220–1

fines for breach of regulations 217, 226–7

format of prospectus 221–2free printed copies of prospectus

alongside electronic version, availability of 224

German language, official status of 223

German prospectus legislation as model 216

home-contracting partychoice of 223definition of 223

home-Member State, choice of 223

implementing the Directiveimpact 228–9legislation 215–16


reference 222investors’ right to withdraw

acceptance of offer 222judicial offences 226–7language requirements

222legislation implementing the

Directive 215–16liability see prospectus liabilitymerger, exemption from prospectus

requirement for securities offered in connection with 219


mutual fund, definition of 228

newspapers, publication in 224notice of availability of

prospectus 224obligation to implement

Directive 215–16offers of securities to the public

approval procedures 217–18definition of ‘public

offer’ 217–18official gazette, publication in 224


notice of publication of supplement 222


passported prospectuses 219, 225–6

persons responsible for prospectus, identification in prospectus 227

printed format, publication in 224free copies alongside electronic

version 224prohibition/suspension of

transaction 217prospectus liability 227–8

approval of prospectus no guarantee for issuer against 218

publication of prospectus 224publication of supplement 222registration document 222responsible persons, identification in

prospectus 221, 227sanctions 226–7securities and transactions not subject

to Directive 228securities note 222signature of offeror on prospectus,

requirement for 221single-document prospectus

221–2

389

Index

basic prospectus as 222size of offer or value of securities,

rules relating toexemption from requirement for

summary 221exemptions from prospectus

requirement 219, 220summary of prospectus 221

corrections by supplement 222language requirements 223–4,

225in multiple-document

prospectus 222in single-document

prospectus 221–2supplement to prospectus 222suspension of transaction 217time limits

appeals 220approval of supplement 222decision to approve/reject

prospectus 218filing of approved prospectus

219investors’ right to withdraw

acceptance of offer 222notification of incomplete

documents 218publication of prospectus 224transfer of competence by

competent authority 219transactions not subject to

Directive 228transfer of competence by competent

authority 219value of securities see size of offer


website, publication on competent authority’s 224

Maltaadvertisements 143–4agent, signing of prospectus on behalf

of directors by 139appeals 144approval procedures 138–9

availability of prospectus 142base prospectus 141

supplement to 141certificate of approval 140choice of single or multi-document

format 141collective investment schemes,

exemption from prospectus requirement for 138

companies legislation, amendment by Directive 135

company, definition of 144competent authority 136


content of prospectus 141copies of documents to be identical

to original approved version 143

directors’ obligation to sign prospectus 139


availability of free printed copies 143


English, documents in 140, 141–2exemptions from prospectus

requirement 137–8existing shareholders, exemption from


final terms, disclosure and filing of 141

Financial Services Tribunal 147n15appeals to 144

format of prospectus 141home Member State, location of 139implementing the Directive 134–5

impact 135, 146incomplete documents 139investment advertisements 143–4issue of shares following notice of

issue of prospectus 142language requirements 141

390

Index

Malta (cont.)legislation for securities

regulation 135liability see prospectus liabilityListing Rules

amendment by Directive 136regulation of prospectuses 147n6

merger, exemption from prospectus requirement for securities offered in connection with 137

multiple-document prospectus 141notice of issue of prospectus, issue of

shares following 142offers of securities to the

public 136–8original approved version, copies

of documents to be identical to 143

passported prospectuses 140, 145printed format, publication in 143prospectus, definition of 144prospectus liability 144–5public offer, definition of 136publication of prospectus 142–3registration document 141same class, exemption from

prospectus requirement for shares of 137

sanctions 145–6securities note 141separate documents, prospectus in

separate publication of documents 143


rules relating toexemption from prospectus

requirement 146n2language requirements 142location of home Member

State 139summary of prospectus 141

liability on basis of 145notice of liability in 145translation of 140

supplement to prospectus 141translation of 140

takeover, exemption from prospectus requirement for securities issued in connection with 137

time limitsavailability of prospectus 142issue of shares following notice of

issue of prospectus 142notification of decision to approve/

reject prospectus 138notification of incomplete

documents 139passporting applications 140

translation of summary and supplement 140

underwriting agreement, exemption from prospectus requirement for invitation to enter 137


website, publication on competent authority’s 142

Romaniaadmissions to trading on a regulated

marketapproval procedures 151–2exemptions from prospectus

requirement 151–2advertisements 154–5appeals 150approval and appeal

procedures 150–2time limit for approval of

advertisements 154base prospectus 153

publication of final terms 155choice of single or multi-document

format 153claim for damages, time limits

for 157competent authority 149–50


time limit for decision to approve/reject prospectus 150

content of prospectus 152

391

Index

criminal penalties 156–7directors’ shares, exemption from




exemptions from prospectus requirement

admissions to trading on a regulated market 151–2

offers of securities to the public 151

existing shareholders, exemption from prospectus requirement for offers to 151–2

final price and amount of securities offered, publication of 152, 155

fines for breach of regulations 156format of prospectus 153implementing the Directive 148–9

impact 158inaccurate, incorrect or misleading

information, persons liable for 157–8


language requirements 153legislation for securities

regulation 149legislation implementing the

Directive 148–9liability see prospectus liabilitylisted companies making multiple

offerings 153merger, exemption from prospectus

for securities offered in connection with 151

misleading information, persons liable for 157–8


multiple offerings by listed companies 153

newspapers, publication in 154


number of securities offered, publication of final 152

offeror presentation document 153


offers of securities to the publicappeals 150approval procedures 150exemptions from prospectus

requirement 151passported prospectuses 155persons liable for inaccurate,

incorrect or misleading information 157–8

persons responsible for prospectus 157

printed format, publication in 154prospectus liability 157–8publication of prospectus 154qualified investors, exemption from


sanctions 155–7securities and transactions not subject

to Directive, rules for 158securities note 153



exemptions from prospectus requirement relating to 151


summary of prospectus 153liability based on 157multiple offerings by listed

companies 153supplement to prospectus 153time limits

approval of advertisements 154claim for damages 157decision to approve/reject

prospectus 150

392

Index

Romania (cont.)investors’ right to withdraw

acceptance of offer 152validity of prospectus 152

transactions not subject to Directive, rules for 158



Sloveniaadmissions to trading on a regulated

marketadmissions exempt from

Directive 178–80securities already admitted

to another regulated market 179–80

advertisements 171–2prohibition/suspension of 174

annual update 164–5appeals 165–6approval procedures 163–5

time limit for approval of supplement 169

approval/rejection of prospectus by competent authority, decision for 163

banks, exemption from prospectus requirement for securities issued by 176

base prospectus 168definition of 166validity of 164–5

central banks of Member States, exemption from prospectus requirement for securities issued by 176


collective investments (non- closed-end), Directive not applying to 175

competent authority 162decision to approve/reject

prospectus 163

liability of 175notification of incomplete

documents by 163publication of prospectus on

website 170–1register of qualified

investors 162register of securities

documentation 170–1transfer of competence 163

content of prospectus 166–8converted shares, exemption from

Directive 179criminal penalties 174debt securities, definition of 162debt securities issued by banks not

subject to Directive 176defences to prospectus

liability 175definitions introduced by the

Directive 161–2demerger, exemption for securities

offered in connection withexemption from Directive 179

demerger, exemption from prospectus requirement for securities offered in connection with 178

directors’ shares, exemption from prospectus requirement for 178

electronic format, publication in 170–1

employee share offersexemption from Directive

179employee share offers, exemption

from prospectus requirement for 178

equivalent information, authorisation of 166

Euroadoption of 160exchange rate with Tolar 180n1

exempt securities 177–8exempt transactions 177

exemptions

393

Index

admissions to trading on a regulated market 178–80

securities already admitted to another regulated market 179–80

notice of intention to rely on 177, 178, 180

filing of approved prospectus 164final price and amount of securities

offered, publication of 166

financial services companies as qualified investors 161–2

fines for breach of regulations 174

first and further sale of securities, definition of 161

format of prospectus 168free printed copies of prospectus


free shares, exemption from prospectus requirement for 178, 179

further sales of securities, approval and publication of prospectus prior to 164–5

implementing the Directiveimpact 180


reference 167separate publication of

documents 171investment companies as qualified

investors 162


prohibition/suspension of transaction, following 174

language requirements 169–70summary of prospectus 180

legislationimplementing the

Directive 160–2for securities regulation

159–60

liability 175

Member States, exemption from prospectus requirement for securities guaranteed by 176

merger, exemption for securities offered in connection with

exemption from Directive 179merger, exemption from prospectus



separate publication of documents 171

validity of registration document 164–5

natural persons as qualified investors 162

newspapers, publication in 170non-profit organisations, exemption

from prospectus requirement for securities issued by 180n4

notice of availability of prospectus 171, 180

notice of intention to rely on exemption 177, 178, 180

offering programme, definition of 161

offers of securities to the public, definition of 161

omission of information, authorised 166–7

passported prospectuses 172–3persons responsible for

prospectus 175printed format, publication

in 170free printed copies of prospectus


prohibition/suspension of transaction 174

prospectus liability 175public bodies

as qualified investors 162

394

Index

Slovenia (cont.)securities not subject to

Directive 176publication of prospectus 170–1

prior to further sales of securities 164–5

qualified investorsdefinition of qualified

investor 161–2offers to, exempt from

Directive 177register of qualified investors

162register of securities

documentation 170–1registration document, validity

of 164–5rejection of prospectus, grounds

for 164responsible persons 175same class, exemption from


sanctions 173–4securities and transactions not

subject to Directive 160, 175–6

securities note 164–5simplified prospectus 168, 176single-document prospectus 168size of offer or value of securities,

rules relating todebt securities issued by banks not

subject to Directive 176language of prospectus 170requirement for summary of

prospectus 167, 168securities and transactions not

subject to Directive 160simplified prospectus 168, 176transactions not subject to

Directive 177small- and medium-sized enterprises

(SMEs) as qualified investors 162

substitute sharesexemption from Directive 178


summary of prospectuscontent of 167–8language requirements 181n8liability based on 175in multiple-document

prospectus 164–5notice of availability of

prospectus 180supplement to 169translation of 169when not required 168

supplement to prospectus 164–5, 166, 169

base prospectus 168suspension of transaction 174takeover, exemption from prospectus

requirement for securities issued in connection with 177, 178

time limitsapproval of supplement 169decision to approve/reject

prospectus 163filing of approved prospectus 164investors’ right to withdraw

acceptance of offer 169, 174

notice of intention to rely on exemption 177, 178, 180

notification of incomplete documents 163

prohibition/suspension of transaction 174


validity of prospectus 164–5base prospectus 164–5registration document 164–5

Tolar (former Slovenian currency), replacement by Euro 160

rate of exchange at changeover 180n1

transactions not subject to Directive 160

395

Index


validity of prospectus 164–5base prospectus 164–5


Spainadmissions to trading on a regulated

market, exemptions from prospectus requirement 187

advertisements 190approval and appeal

procedures 185–7banks as qualified investors 186base prospectus 189choice of single or multi-document

format 188collective investment schemes as

qualified investors 186competent authority 185content of prospectus 187–8continuous or regular basis, securities

issued onbase prospectus for 189exemption from prospectus

requirement 187converted shares, exemption from


credit institutions, exemption from prospectus requirement for shares issued by 187

defences to prospectus liability 193directors’ shares, exemption from




English, documents in 189–90exemptions from prospectus

requirement 186–7

increased scope of ‘private placement’ exemptions 186

fixed income securities, detailed prospectus template for 187–8



further guidance on Directive 183–4, 194n1–2

identification in prospectus of responsible persons 193

implementing the Directiveimpact 184, 194

individual persons as qualified investors 186

insurance companies as qualified investors 186

investment firms as qualified investors 186


issuer assumes prospectus liability in place of offeror 193

language requirements 189–90requirement for translation of

summary 188legislation for securities

regulation 182–3legislation implementing the

Directive 183–4length of summary 188merger, exemption from prospectus


multiple-document prospectus 188, 188–9

newspapers, publication in 190no prospectus to passport, exemption

from prospectus requirement where 187


offeror’s exemption from prospectus liability 193

396

Index

Spain (cont.)offers of securities to the public

definition of ‘public offering’ of securities 185–6


passported prospectuses 190–1no prospectus to passport,

exemption from prospectus requirement where 187

requirement for translation of summary 190

pension funds as qualified investors 186

persons responsible for prospectus 192

printed format, publication in 190

‘private placement’ exemptions, increased scope of 186

prohibition/suspension of transaction 191–2

prospectus liability 192–3public bodies

exemption from prospectus requirement for securities issued or guaranteed by 187

as qualified investors 186publication of prospectus 190qualified investors

definition of 186offers to 185–6

register of qualified investors 186registration document 188–9regular or continuous basis, securities

issued onbase prospectus for 189exemption from prospectus

requirement for shares issued on 187

resales of securities as separate offers 186

responsible persons 192same class, exemption from


sanctions 191–2

securities and transactions not subject to Directive 193–4

securities note 188, 189separate offers, resales of securities

as 186single-document prospectus 188size of offer or value of securities,

rules relating toexemption from requirement

for translation of summary 190

offers that are not public offerings 185

requirement for summary of prospectus 188

requirement for translation of summary 188

small- and medium-sized enterprises (SMEs) as qualified investors 186

statute of limitations for prospectus liability 193


summary of prospectus 188, 189liability on basis of 193requirement for translation of

summary 190supplement to prospectus 189takeover, securities offered in

connection with, exemption from prospectus requirement for 186

templates for prospectuses, production of more detailed 187–8

time limitsapproval of supplement 189investors’ right to withdraw

acceptance of offer 189prohibition/suspension of

transaction 191–2statute of limitations for prospectus

liability 193validity of prospectus 188validity of registration

document 189

397

Index

transactions not subject to Directive 193–4

validity of prospectusmultiple-document prospectus 188registration document 189single-document prospectus 188


Swedenadmissions to trading on a

regulated market, exemptions from prospectus requirement 198–9

approval and appeal procedures 196–9

supplement to prospectus 199choice of single or multi-document

format 199competent authority 196content of prospectus 199converted shares, exemption from


directors’ shares, exemption from prospectus requirement for 197, 198

employee share offers, exemption from prospectus requirement for 197, 198

exemptions from prospectus requirement 196–9

final price and amount of securities offered, publication of 199

format of prospectus 199free shares, exemption from prospectus

requirement for 197, 198investors’ right to withdraw

acceptance of offer 199language requirements 200legislation implementing the

Directive 195 merger, exemption from prospectus

requirement for securities

offered in connection with 197, 198


obligation to publish a prospectus 196

offers of securities to the publicdefinition of ‘offered to the

public’ 196exemptions from prospectus

requirement 197optional publication of

prospectus 199registration document 199same class, shares of, exemption

from prospectus requirement for 198

securities note 199simplified prospectus 199single-document prospectus

199size of offer or value of securities,

rules relating toexemptions from prospectus

requirement 196–7exemptions from prospectus

requirement for 197language requirements 200

substitute shares, exemption from prospectus requirement for 197, 198

summary of prospectus 199

supplement to prospectus 199

takeover, exemption from prospectus requirement for securities issued in connection with 197, 198


voluntary publication of prospectus 199