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ESMA Guidelines on disclosure requirements under the Prospectus Regulation

The European Securities and Markets Authorities (ESMA) has published its final guidelines on disclosure requirements under the Prospectus Regulation. The Guidelines comprise guidance to participants in the financial market concerning the disclosure of financial and non-financial information to be included in the prospectus when making an offer of securities to the public. Moreover, the Guidelines aim to ensure that market participants have a universal understanding of the relevant disclosures that are required in the numerous annexes included in the Commission Delegated Regulation (EU) 2019/980.

Thus, the new Guidelines aim to promote consistency across the EU to determine how the annexes to the Delegated Regulation are applied. The Guidelines cover a variety of financial and non-financial issues, such as:

  • Working capital statements
  • Capitalisation and indebtedness
  • Profit forecasts and estimates
  • Historical financial information
  • Operating and financial review
  • Options agreements
  • Collective investment undertakings

The requirements set out in the Guidelines include that the persons responsible for the prospectus should ensure that the Operating and Financial Review (OFR) assists investors in assessing the issuer’s business, financial condition and performance and that it informs investors of any material changes in the issuer’s results. The OFR must also be tailored to the target audience, covers a relevant time frame and is both reliable and comparable. The OFR must also provide information on returns to shareholders, including information on distributions and share repurchases, and that it facilitates an investor’s assessment of the future sustainability of earnings and cash flows.

The Guidelines also clarify ESMA’s expectation in regard to key areas of working capital statement, as well as pro forma information and for working capital statements. Moreover, there is also new guidance as to how offerings are to be considered when determining whether an issuer can provide a clean working capital statement. Moreover, ESMA established its position regarding the aggregation of several transactions for the purposes of pro forma information. Most notably, the aggregation principle is an important policy change from an investor protection perspective. 

These Guidelines are the latest in a series of ESMA’s workstreams undertaken during the transition from the Prospectus Directive to the Prospectus Regulation.

Article written by Dr Cherise Abela Grech and Legal Trainee Ms Emma-Marie Sammut.

For more information on the requirements to draft and register a Prospectus in Malta, you may contact Dr Ian Gauci and Dr Cherise Abela Grech.

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.