EC to relax rules on IPOs

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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