EC to relax rules on IPOs
The European Commission has significantly watered down its proposed directive on prospectuses following intense lobbying by the financial services industry, the European Parliament and some member states including Britain.
Links: Lack of confidence hits IPOs
The main change, announced last week, is to exempt small and medium-sized companies from the obligation to publish a draft prospectus if their public offering is ? ¬2.5m (£1.55m) or less.
Where an SME issues a larger public offering, they would have to issue a prospectus, but less information would be required than for larger companies ‘and the requirement to update information annually would be limited to a reference to their annual financial statements’.
The purpose of the directive is to introduce a ‘single passport’ so that once approved by the authority in one country, a prospectus would then have to be accepted everywhere else in the EU. There are fears in London that this could lead to a levelling down of high UK investor protection standards and further lobbying is expected before the measure becomes law.
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