The 2003 Prospectus Directive harmonised requirements across the EU for preparing, getting regulatory approval for and distributing prospectuses offering securities to the public. The European Commission has recently conducted a review of the efficiency and effectiveness of the existing prospectus regime and has produced a draft Directive which proposes to: (i) reduce the administrative burdens on companies when raising capital in the European securities markets and (ii) increase legal certainty and efficiency under the existing prospectus regime.

The main changes proposed include:

• Reducing disclosure requirements for rights issues, on the basis that existing shareholders are already familiar with the company;
• Providing clearer exemptions from the obligation to publish a prospectus on the issue of securities to intermediaries for resale to retail clients and for employee share schemes;
• Aligning the concept of “qualified investors” in the Directive with that of “professional clients” as defined in the MiFID;
• Extending the validity of a prospectus to 24 months from the current 12 months; and
• Requiring that the approval for “passporting” of a prospectus must be notified to the issuer as well as the competent authority of the host Member State.

The draft Directive is due to be considered by the European Parliament and the Council of Ministers shortly and is expected to be adopted in 2010.