Questions and Answers

8 April 2019 | ESMA31-62-780

Prospectuses

30th updated version – April 2019

 
 
 
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Table of contents 
Background ........................................................................................................................ 7 
Purpose .............................................................................................................................. 9 
Status ................................................................................................................................. 9 
Questions and answers ....................................................................................................10 
 Information from issuers to host competent authorities ..................................................11 
 Notice ............................................................................................................................11 
 Publication of a prospectus in the host Member States .................................................12 
 Prospectuses published on the Competent Authority’s website-disclaimer ....................12 
 Share option schemes ...................................................................................................13 
 Free offers .....................................................................................................................13 
 Incorporation by reference: language requirements.......................................................14 
 Incorporation by reference of information contained in a former base prospectus that 
is no longer valid .........................................................................................................15 
 Order of the information in the prospectus .....................................................................16 
 Prospectus composed of separate documents: duplication of information .....................16 
 Risk factors section .......................................................................................................17 
 Notification which third country issuers are required to make under Article 30.1 
Directive (DELETED) ..................................................................................................17 
 Nearly equivalence of Euro 1.000 (Article 2.1m)(ii) Directive) ........................................17 
 Item 20.1 of Annex I of the Regulation...........................................................................17 
 Interaction between item 20.1 of Annex I Regulation and IAS 8 ....................................18 
 Item 20.1 Annex I of the Regulation: historical financial information of issuers that 
have been operating in its current sphere of economic activity for less than one 
year ............................................................................................................................19 
 Item 20.1 of Annex I Prospectus Regulation: interpretation of “such shorter period 
that the issuer has been in operation” .........................................................................21 
Date: 8 April 2019 
ESMA31-62-780 

 
 
 

 Application of the different schedules of the Regulation ................................................22 
 Supplement to prospectuses: interim financial information ............................................23 
 Supplement to prospectuses: profit forecast ..................................................................23 
 Supplement to prospectuses: right of withdrawal (DELETED) .......................................23 
 Supplement: Period for filing a supplement after a significant new factor has 
occurred ......................................................................................................................24 
 Non relevant information in relation to a published prospectus that does not trigger 
the obligation to publish a supplement ........................................................................24 
 Interim financial information included in the prospectus .................................................25 
 Profit forecasts or estimates ..........................................................................................25 
 How should the €5 million limit set in Article 1(2)(h) of the Prospectus Directive and 
the €75 million limit set in Article 1(2)(j) of the Prospectus Directive be calculated? ....26 
 Convertible or exchangeable securities (DELETED) .....................................................27 
 Convertible bond falling in the definition of equity security .............................................28 
 Conversion or exchange of non-transferable securities and exemption from 
publishing a prospectus ..............................................................................................28 
 Exemptions provided for in Articles 4.1 c) and 4.2 d) Directive in case of mergers (Qa 
DELETED) ..................................................................................................................29 
 Exemption for admission to trading provided for in point (a) of the first subparagraph 
of Article 1(5) of Prospectus Regulation (EU) 2017/1129 ............................................29 
 Exemptions from the obligation to publish a prospectus in Article 1(5) Prospectus 
Regulation (EU) 2017/1129 as stand-alone exemptions .............................................31 
 Quality of translations of passported prospectuses........................................................31 
 Updating of the prospectus ............................................................................................32 
 Precautionary measures (Article 23 Directive) ...............................................................33 
 Offering programmes ....................................................................................................33 
 Validity of prospectuses under Article 9.3 Directive .......................................................34 
 Scope of Article 1.2 j) Directive......................................................................................34 
 Depository Receipts over shares: determination of the home Member State (Qa 
DELETED) ..................................................................................................................34 
 Total consideration in warrants ......................................................................................35 
 Inclusion of a summary in the prospectus on a voluntary basis (DELETED) ..................35 

 
 
 
4 
42.  Rights issue: communication by a custodian to its clients in one member state about 
pre-emption rights in relation to a public offer of new shares taking place in another 
EEA member state ......................................................................................................36 
43.  Subscription of securities by residents of a country where the public offer is not 
taking place.................................................................................................................37 
44.  Obligation to publish a prospectus for admission of securities to trading on a 
regulated market (Article 3(2) Directive) ......................................................................37 
45.  Information on taxes on the income from the securities withheld at source ...................38 
46.  Definition of Home Member State in case of base prospectuses (Article 2.1 m) 
Directive) ....................................................................................................................38 
47.  Responsibility statement: selling shareholders ..............................................................39 
48.  Guarantor’s responsibility for the content of a prospectus .............................................40 
49.  Use of the term “prospectus” .........................................................................................40 
50.  Pro forma financial information: clarification of certain terms used in item 20.2 of 
Annex I and in Annex II Regulation .............................................................................41 
51.  Pro forma financial information: illustrative examples of the application of the 
requirements on pro forma (special reference to item 5 of Annex II – letters (a) to 
(c)) ..............................................................................................................................43 
52.  Pro forma financial information in cases where several transactions have taken place .46 
53.  Pro forma financial information: cases where issuers have already published pro 
forma financial information in a previous prospectus ...................................................47 
54.  Pro forma financial information included in a prospectus on a voluntary basis ...............48 
55.  Auditor’s statement in Pro Forma Financial information (section 7 Annex II 
Prospectus Regulation) ...............................................................................................48 
56.  Retail cascade offers (DELETED) .................................................................................49 
57.  Delineation between the Base Prospectus and the Final Terms (Articles 5.4 and 16.2 
Directive) (DELETED) .................................................................................................49 
58.  Level of disclosure concerning price information for share offerings (Article 8.1 
Directive and item 5.3.1 of Annex III Regulation) ........................................................49 
59.  Disclosure of major holdings by third country issuers: interpretation of item 18.1 of 
Annex I Prospectus Regulation ...................................................................................51 
60.  Items 5.4.1 and 5.4.2 of Annex III Regulation: name of co-ordinator, placers, paying 
and depositary agents in the various countries where the offer takes place ................52 
61.  Clarification of certain terms used in item 3.2 of Annex III Regulation: Capitalisation 
and indebtedness .......................................................................................................52 

 
 
 

 Updated capitalisation and indebtedness statement (item 3.2 Annex III PR) .................53 
 Rights issue to existing shareholders (DELETED) .........................................................53 
 More than one final terms for a specific issue of bonds .................................................54 
 Significant Change Statements and Half-Yearly Financial Reports ................................54 
 Item 4.6 of Annex III of Regulation No. 809/2004 ..........................................................55 
 Transferable securities ..................................................................................................56 
 Disclosure for Mineral Companies in the CESR Recommendations (DELETED) ..........56 
 Scope of the wording ‘any bankruptcies, receiverships or liquidations’ used in item 
1 of Annexes I and X ..............................................................................................57 
 Disclosure requirements for securities which are "unconditionally and irrevocably 
guaranteed by one of a Member State's regional or local authorities" .........................57 
 Employee Share Scheme Prospectuses: Short-form disclosure regime for offers to 
the employees in those cases where a prospectus is required (application of Article 
4 of the Prospectus Regulation) .............................................................................59 
 Valuations and statements prepared by an expert .........................................................60 
 Material contracts ..........................................................................................................61 
 Definition of public offer .................................................................................................61 
 Validity of prospectuses under Article 9 PD ...................................................................62 
 References to credit ratings in prospectuses (Qd DELETED) ........................................62 
 Global Depositary Receipts (GDRs) ..............................................................................63 
 Issue specific details in case of Category B items .........................................................64 
 Interpretation of the term "index description" included in item 4.2.2 of Annex XII ...........65 
 Format of the summary (Annex XXII) ............................................................................66 
 The consent given in “retail cascades” (DELETED) .......................................................67 
 Summaries in relation to proportionate disclosure regimes ............................................67 
 Type of underlying .........................................................................................................68 
 Definition of Profit Estimate ...........................................................................................69 
 Estimate expenses charged by a financial intermediary in a retail cascade ...................69 
 Age of the last year financial statements according to the item 13(1) in Annex XXVI 
and item 11(1) in Annex XXVII to the Prospectus Regulation ......................................70 
 Item 20.4 and 20.5 in Annex XXV to the Prospectus Regulation ...................................70 

 
 
 
6 
88.  “Agreement” of the independent accountant/auditor where a profit estimate is 
included in a prospectus .............................................................................................71 
89.  Proportionate disclosure regime for prospectuses for rights issues ...............................72 
90.  Proportionate disclosure regime for prospectuses for Rights Issues (Annex XXIII and 
XXIV) ..........................................................................................................................72 
91.  Format for the individual summary relating to several securities ....................................73 
92.  Applicable Registration Document schedule where a listed issuer proposes to issue 
convertible or exchangeable debt securities where the underlying securities are the 
issuer's shares ............................................................................................................74 
93.  Presentation of selected historical key financial information in the summary .................74 
94.  Minimum information required in Section D of Annex XXII of the Prospectus 
Regulation ..................................................................................................................75 
95.  Inclusion of “extra” information in individual summaries .................................................76 
96.  Level of disclosure for securities subject to conversion or write-down powers under 
the BRRD ...................................................................................................................76 
97.  Additional column in capitalisation and indebtedness statements ..................................77 
98.  Offers going beyond the validity of a base prospectus ...................................................78 
99.  Dissemination of amended advertisements ...................................................................79 
100.  Inclusion of Alternative Performance Measures (APMs) in information disclosed 
about the offer to the public or the admission to trading on a regulated market ...........80 
101.  Applicability of ESMA’s Guidelines on Alternative Performance Measures (APMs) to 
prospectuses comprising documents published before and on/after 3 July 2016 ........81 
102.  Definition of Profit Forecasts .........................................................................................82 
103.  Choice of PD home Member State for third country issuers *modified* .........................85 
104.  Use of prospectuses approved by the UK *modified* ....................................................86 
 
 
   

1 Background

1. The Prospectus Directive 2003/71/EC (PD) and the Commission Regulation on Prospec-

tuses (EC No 809/2004) became effective on 1 July 2005. The Prospectus Directive and

accompanying Regulation establish a harmonised format for prospectuses in Europe and

allow companies to use the same prospectus prepared for admitting securities to trading on

their home market to admit securities to any number of further European markets without

having to re-apply for approval from the local regulator. In so doing, the intention is to help

companies avoid the inherent delays and cost that any re-application process would involve.

The new legislation also sought to ensure investors had access to more consistent and

standardised information that would enable them to compare more effectively the various

securities offers available from a wide number of European companies.

2. The prospectus regime is made up of the following main pieces of European legislation:

a) Directive 2003/71/EC

, which was adopted in November 2003. It is a ‘framework’

Level 1 Directive which has been supplemented by the Directive 2010/73/EC (see

Level 1 legislation in b. below) and technical implementing measures (see the Level

2 legislation below).

b) Directive 2010/73/EU

, which was adopted in November 2010. It is a Directive

amending Directive 2003/71/EC. The deadline for implementation was 1 July 2012.

c) Directive 2010/78/EU

, which was adopted in November 2010. It is a Directive

amending Directive 2003/71/EC and Directive 2010/73/EU.

d) Implementing Regulation 809/2004

(Level 2 legislation)

e) Implementing Regulation 211/2007

. (Level 2 legislation) It is a Regulation amending

Regulation 809/2004.

Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 onthe prospectus to be published when

securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, 31.12.2003, OJ L 345/64.

Directive 2010/73/EU of the E uropean Parliament and of the Council of 24 November 2010 amending Directives 2003/71/EC on

the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the

harmonisation of transparency requirements in relation to information, 11.12.2010, OJ L 327/1

Directive 2010/78/EU of the European Parliament and of the Council of 24 November 2010 amending Directives 98/26/EC,

2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and

2009/65/EC in respect of the powers of the European Supervisory Authority (European Banking Authority), the European

Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority

(European Securities and Markets Authority), 15.12.2010, OJ L 331/120

Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing 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 dissemination of advertisements, 30.4.2004, OJ L 149/1, as corrected by OJ L 215, 16.6.2004, p. 3.

Regulation as amended by Regulation (EC) No 1787/2006 (OJ L 337, 5.12.2006, p. 17).

Commission Regulation (EC) No 211/2007 of 27 February 2007 amending Regulation (EC) No 809/2004 implementing Directive

2003/71/EC of the European Parliament and of the Council as regards financial information in prospectuses where the issuer has a

complex financial history or has made a significant financial commitment, 28.2.2007, OJ L 61/24

f) Implementing Commission Delegated Regulation (EU) No 486/2012

(Level 2 legis-

lation). It is a Regulation amending Regulation 809/2004. It entered into force on 1

July 2012.

g) Implementing Commission Delegated Regulation (EU) No 862/2012

(Level 2 legis-

lation). It is a Regulation amending Regulation No 809/2004. It entered into force on

22 September 2012.

h) Implementing Commission Delegated Regulation (EU) No 759/2013

(Level 2 legis-

lation). It is a Regulation amending Regulation No 809/2004. It entered into force on

28 August 2013.

i) Commission Delegated Regulation (EU) No 382/2014

(Level 2 legislation). It is a

regulation supplementing Directive 2003/71/EC. It entered into force on 5 May 2014.

j) Regulation (EU) 2017/1129 of the European Parliament and of the Council on the

prospectus to be published when securities are offered to the public or admitted to

trading on a regulated market, and repealing Directive 2003/71/EC (‘the Prospectus

Regulation’) was published in the Official Journal of the European Union on 30 June

2017. The Regulation entered into force 20 days after its publication and shall apply

from 21 July 2019 except for Article 1(3) and Article 3(2) which shall apply from 21

July 2018 and points (a), (b) and (c) of the first subparagraph of Article 1(5) and the

second subparagraph of Article 1(5) which apply from 20 July 2017.

3. One of ESMA’s objectives is to foster supervisory convergence through promoting common

supervisory approaches and practices. ESMA’s predecessor (CESR) produced a series of

questions and answers (Q&A), based on questions received through CESR’s PD Q&A

mechanism, which reflect common positions agreed by CESR Members. The Q&As were

one of the tools used by CESR to elaborate on the provisions of EU legislation and ESMA

will continue to play an active role in their development.

Commission Delegated Regulation (EU) No 486/20121 of 30 March 2012 amending Regulation (EC) No 809/2004 as regards the

format and the content of the prospectus, the base prospectus, the summary and the final terms and as regards the disclosure

requirements, 9.6.2012, OJ L 150/1

Commission Delegated Regulation (EU) No 862/2012 of 4 June 2012 amending Regulation (EC) No 809/2004 as regards

information on the consent to use of the prospectus, information on underlying indexes and the requirement for a report prepared by

independent accountants or auditors, 22.09.2012, OJ L 265/4

Commission Delegated Regulation (EU) No 759/2013 of 30 April 2013 amending Regulation (EC) No 809/2004 as regards the

disclosure requirements for convertible and exchangeable debt securities

Commission Delegated Regulation (EU) No 382/2014 of 7 March 2014 supplementing Directive 2003/71/EC of the European

Parliament and of the Council with regard to regulatory technical standards for publication of supplements to the prospectus

2 Purpose

4. The purpose of this document is to promote common supervisory approaches and practices

in the application of the PD and its implementing measures. It does this by providing re-

sponses to questions posed by the general public and competent authorities in relation to

the practical application of the PD.

5. The content of this document is aimed at competent authorities under the PD to ensure that

in their supervisory activities their actions are converging along the lines of the responses

adopted by ESMA. However, these responses are also meant to provide market participants

with an indication of what constitutes proper implementation of the PD rules. The answers

are intended to help issuers of securities by providing clarity as to the content of the PD

requirements without necessarily imposing an extra layer of requirements.

3 Status

6. On 1 July 2012 the amended Prospectus Directive and Commission Delegated Regulation

No 486/2012 entered into force. Following the entry into force of this legislation and Com-

mission Delegated Regulation (EU) No 862/2012, ESMA conducted a review of the legisla-

tive references contained in this document and has updated and revised it accordingly. Cer-

tain questions were deleted as the issues contained in these questions were either clarified

by the new legislation or superseded by it.

7. The Q&A mechanism is a practical convergence tool used to promote common supervisory

approaches and practices under Article 29(2) of ESMA Regulation.

8. Therefore, due to the nature of Q&A’s, formal consultation on the draft answers is considered

unnecessary. However, even if they are not formally consulted on, ESMA may check Q&A

responses with representatives of ESMA’s Securities and Markets Stakeholder Group, the

relevant Standing Committees’ Consultative Working Group or, where specific expertise is

needed, with other external parties.

9. ESMA will review these questions and answers to identify if, in a certain area, there is a

need to convert some of the material into ESMA guidelines and recommendations. In such

cases, procedures set in Article 16 of ESMA Regulation will be followed.

10. The views of the Commission Services on some of the issues discussed in this Q&A were

sought. However, both the Commission Services and ESMA note that only the European

Court of Justice can give a legally binding interpretation of the provisions of EU legislation.

Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European

Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission

Decision 2009/77/EC Regulation, 15.12.2010, L331/84.

The views expressed in the paper do not bind the European Commission as an institution, and the Commission would be entitled to

take a position different to that set out in this ‘Q&A’ guide in any future judicial proceedings concerning the relevant provisions.

11. At the Commission’s request, CESR developed CESR’s Recommendations for the con-

sistent implementation of the European Commission’s Regulation on Prospectuses No

809/2004 (CESR/05-054b) which has proved useful to market participants in addition to this

Q&A which aim to provide greater clarity for issuing companies regarding the provisions to

disclose information on a range of areas and to promote greater transparency in the way

supervisors apply the Regulation, without imposing further obligations on issuers. CESR

consulted market participants during the development of these recommendations. The re-

sponses and feedback statement can be accessed on ESMA’s website

(http://www.esma.europa.eu). CESR’s Recommendations for the consistent implementation

of the European Commission’s Regulation on Prospectuses No 809/2004 (CESR/05-054b)

were published on 10 February 2005. On 20 March 2013 ESMA published the latest update

of these recommendations (ESMA/2013/319). ESMA will continue to monitor the Recom-

mendations and revise them as appropriate.

4 Questions and answers

12. CESR published its first Prospectus Q&As in July 2006 and ESMA last updated these in

January 2019. This document includes all the Q&As previously adopted by CESR

, as

amended and readopted by ESMA. The date each question was last amended is included

after each question for ease of reference. Questions which reflected the view of CESR, and

which have now been readopted by ESMA retain their original date. ESMA will continue to

edit and update this document as and when new legislation is adopted or new questions are

received.

13. If you wish to submit a question to ESMA on the practical application of any of the PD re-

quirements, please use ESMA’s dedicated web tool available at https://www.esma.eu-

ropa.eu/questions-and-answers.

On the basis of Article 8(4) of the Rules of Procedure of the ESMA Board of Supervisors (ESMA/2011/BS/1), guidelines,

recommendations, standards and any other Level 3 material issued by CESR continued in force until such time as they were readopted,

replaced or revoked, having the status provided for under the Charter of the Committee of European Securities Regulators.

1. Information from issuers to host competent authorities

Date last updated: February 2009

Q) Should the issuer notify/file with the host competent authorities the following infor-

mation:

a) The price and/or amount of the securities omitted in stand alone prospectuses as

permitted by Article 8.1 of the Directive

A) The issuer is obliged by the Prospectus Directive to file the above mentioned information

with the home competent authority (Articles 8.1 of the Directive).

The Directive does not specifically require that the above information is filed with all the host

competent authorities.

Notwithstanding the above, the host authorities would expect to receive the said information

from the issuer and the home competent authority will inform the issuer during the approval

process or generally by any other means of that fact.

b) Should the issuer notify/file with the host competent authorities the means of publica-

tion of the prospectus chosen by the issuer?

A) The Directive does not require the issuer to inform the host authorities of the means of pub-

lication it has chosen.

2. Notice

Date last updated: February 2009

Q) Can a host Member State require the issuer to publish a notice in its jurisdiction in rela-

tion to a prospectus that has been passported into its jurisdiction?

A) No. A Member State might require in its national legislation that issuers have to publish a notice

stating how the prospectus has been made available and where it can be obtained by the public

(Article 14.3 of the Directive). If a Member State has made use of this option, the obligation will

apply to the public offers or admissions to trading where its competent authority has acted in its

capacity of home competent authority.

The Commission Services consider that requirements imposed by Member States under Article

14.3 of the Prospectus Directive on the notice can apply only in relation to issuers for which it is

the home Member State, and it is not possible to extend those requirements to prospectuses that

have been passported from another Member State.

Article 8.1 of the Directive allows issuers to omit in the prospectus the final offer price and amount of the securities where they cannot

be included in the prospectus. The final offer price and amount of securities shall be filed with the home competent authority and

published in accordance with the arrangements provided for in Article 14.2.

3. Publication of a prospectus in the host Member States

Date last updated: December 2012

Q) Is the host competent authority entitled to intervene in the publication of the prospec-

tus?

A) ESMA considers that if the issuer complies with the publication requirements set out in Article

14.2 of the Prospectus Directive, the host authority is not entitled to intervene in the publication of

the prospectus.

Article 14 of the Directive sets a list of means of publication of the prospectus all of which are valid

for all the investors across the EU (in the home Member State and in the host Member States). At

a minimum, and following changes to the Prospectus Directive by Directive 2010/73/EU, all pro-

spectuses must now be available electronically.

Article 30 of the Regulation sets a specific rule for publication in newspapers, meaning that the

specific needs of investors in the host Member States have to be taken into account. According to

the second paragraph of this Article, the home competent authority shall determine a newspaper

whose circulation is deemed appropriate if it is of the opinion that the newspaper chosen by the

issuer does not comply with the requirements of paragraph 1 in relation to the circulation of the

newspaper. In particular, ESMA considers that in such a case, the home competent authority

might require the publication of the prospectus (or any translations thereof) in a newspaper of the

host member state.

Finally, the home competent authority has to publish on its website either all the prospectuses

approved or, at least, the list of prospectus approved. In the latter case, if applicable, it would

include a hyperlink to the website of the issuer or of the regulated market where the prospectus

has been published. In addition, Article 32 of the Regulation requires the home competent author-

ity to mention in the list how the prospectuses have been made available and where they can be

obtained.

4. Prospectuses published on the Competent Authority’s website-disclaimer

Date last updated: February 2007

Q) In case that the competent authority decides to publish on its website all the prospec-

tuses approved, is it obliged to take measures to avoid targeting residents in Member

States or third countries where the offer of securities to the public does not take place,

for example insertion of a disclaimer

A) ESMA considers that in the case described the competent authority is not making a public of-

fer and therefore it does not need to post any disclaimer.

Please note that according to Article 29.2 of the Regulation 809/2004 the issuers, financial intermediaries and regulated markets

must take measures such as the insertion of the above disclaimer in order to avoid targeting residents in Member States or third

countries where the offer of securities to the public does not take place, if the prospectus is made available on their websites.

5. Share option schemes

Date last updated: December 2012

Q) Are non-transferable options covered by the Prospectus Directive? Even if they are

not, would the exercise of those options constitute an offer of the underlying shares?

A) ESMA agreed that non-transferable options do not fall under the Prospectus Directive as the

Directive only applies to transferable securities (Article 2.1 a)).

Concerning the exercise of non-transferable options, at the time of the conversion or exercise

there is no public offer within the meaning of Article 2.1 d) of the Prospectus Directive since it is

just the execution of a previous offer.

Where in the view of national competent authorities transactions are structured as options, but

are in reality an offer of shares, such authorities reserve the right to re-qualify the options as an

offer of shares in order to overcome any circumvention of the Prospectus Directive.

6. Free offers

Date last updated: December 2012

Q) Can free offers be considered outside the definition of public offer (for example op-

tions granted to employees for no consideration)? If they fall under the definition, could it

be considered that they have a total consideration of zero and, therefore, fall outside the

scope of the Prospectus Directive? (see Article 1.2 h) offers where the total consideration

is less than EUR 5,000,000).

A) ESMA considers that where securities are generally allotted free of charge no prospectus

should be required and has sought the views of the Commission Services on the correct legal

basis for this conclusion. The views of the Commission Services are included in the following three

paragraphs:

In the case of allocations of securities (almost invariably free of charge) where there is no element

of choice on the part of the recipient, including no right to repudiate the allocation, there is no "offer

of securities to the public" within the meaning of Article 2.1 d) PD. This is because the definition

refers to a communication containing sufficient information "to enable an investor to decide to"

purchase or subscribe for the securities. Where no decision is made by the recipient of the secu-

rities, there is no offer for the purposes of the Directive. Such allocations will therefore fall outside

the scope of PD.

Offers of free shares, where the recipient decides whether to accept the offer, are properly re-

garded as an offer for zero consideration. As such, they would fall within the excluded offers under

Article 1.2 h), but are also subject to the exemption for offers of less than EUR 100,000 so no

prospectus can be required.

This analysis does not prevent competent authorities from assessing whether an offer presented

as an offer of free shares in fact disguises a "hidden" consideration. However, the Commission

Services take the view that in most cases where free shares are offered in the context of an em-

ployee share scheme, where shares are not offered in lieu of remuneration that the employee

would otherwise receive, it would be incorrect to find "hidden" consideration in the employment

relationship, for example by claiming that the employees would have a higher salary if an equity

participation scheme were not available to them. Such reasoning would be speculative, and the

"hidden" consideration difficult to prove, let alone quantify. However, if the shares are expressly

offered in the place of quantifiable financial benefits in another form, then it might be appropriate

to identify consideration to the value of the benefits that the employee would otherwise have been

entitled to receive.

ESMA considers that the ‘document’ in Articles 4.1.d and 4.1.e of the PD should be made available

only in cases where:

i. the offers fall within the definition of an offer as set out in Article 2.1.d and

ii. the offers do not fall within the excluded offers under Article 1.2.h or the exemption under

Article 3.2.e.

For example in free offers, where no decision is made by the recipient of the securities, there is

no such obligation.

7. Incorporation by reference: language requirements

Date last updated: November 2010

Qa) Is it possible to incorporate by reference information in a language different than the

language in which the prospectus is drafted?

Aa) Yes, the issuer can incorporate a document drawn up in a different language than that of the

prospectus provided that the language of the incorporated document complies with the language

rules of the Directive.

For example: the competent authority of Poland approves a prospectus drawn up in English that

incorporates by reference the annual financial statements drawn up in Polish. However, if the is-

suer wishes to passport this prospectus it could do so only to countries where Polish is accepted

by the host competent authorities.

Qb) Is it possible to incorporate by reference the translation of a document that has been

approved or filed with the competent authority in a different language? For instance, a

Spanish issuer has drawn up its prospectus in English, can it have its annual report trans-

lated into English and incorporate it by reference into the prospectus?

Ab) The translation of a document may be incorporated by reference as long as it complies with

Article 11 and 19 of the Directive.

Qc) Is it possible to include or incorporate by reference only the translation of the audited

financial statements and the audit report without a letter/ statement of consent of the audi-

tor to fulfil the requirement of Annex I, 20.1. Prospectus Regulation (“audited historical

financial information”)? If yes, is it necessary to request a written confirmation for the ac-

curacy of the translation and, if so, who has to issue this written confirmation?

Ac) Yes, it is it possible to include or incorporate by reference the translation of the audited finan-

cial statements and the audit report without a letter/ statement of consent of the auditor. No written

confirmation for the accuracy of the translation is needed.

ESMA draws attention to the fact, that according to national legislation it might be necessary to

ask for the auditor’s consent to include or incorporate by reference the audit report in the prospec-

tus. Also in case of third country issuers, national legislation might stipulate to include a letter/

statement of consent of the auditor to guarantee the accuracy of the translation.

8. Incorporation by reference of information contained in a former base prospectus

that is no longer valid

Date last updated: September 2007

Q) Is it possible to incorporate by reference information contained in a former base pro-

spectus that is no longer valid into a new base prospectus?

In this context, issuers have explicitly asked how to proceed if a tranche of an issue of

securities which has been issued under a base prospectus no longer valid is being in-

creased.

This issue may be illustrated by the following example:

- A tranche under a base prospectus dated September 2005 is issued in November 2005

and shall be increased in January 2007 (16 months later). There is a new base prospectus

as of September 2006 the terms and conditions of which differ slightly from those con-

tained in the base prospectus of September 2005.

- At the date where the increase takes place, the base prospectus of September 2005 is

no longer valid. Therefore it is not possible to draw up “new” final terms relating to the

base prospectus of September 2005, as this base prospectus is no longer valid. Neither is

it possible to draw up “new” final terms referring to the base prospectus as of September

2006 as its terms and conditions differ from the terms and conditions contained in the

base prospectus as of September 2005.

A) ESMA considers that according to Article 28.1.5 of the Prospectus Regulation an issuer could

incorporate by reference information from a prior base prospectus that is no longer valid into the

new base prospectus as long as the requirements included in this Article 28 are followed. There-

fore, in the above example the issuer could incorporate by reference information from the 2005

base prospectus (i.e. terms and conditions of the issue the issuer wishes to increase) into the

new 2006 base prospectus.

9. Order of the information in the prospectus

Date last updated: September 2007

Q) Articles 25 and 26 of the Prospectus Regulation provide that the elements of a prospec-

tus shall be structured in the following order 1) a table of contents, 2) the summary, 3) the

risk factors and 4) the other information items included in the schedules and building

blocks according to which the prospectus is drawn up. Would be possible to have certain

items not following this order?

For example, issuers are asking whether the responsibility statement could be inserted

before the table of contents; whether the section “general description of the programme”

could be inserted between the table of contents and the summary or whether disclaimers

may be inserted before the table of contents.

Also the question arises in relation to issuers that are using their annual report as regis-

tration document. The annual report as approved by the shareholders does not neces-

sarily follow the order prescribed by these Articles.

A) The order prescribed by Articles 25 and 26 is mandatory (table of contents, summary, risk

factors and the other information items included in the schedules and building blocks). This does

not mean that the issuer may not include in addition a brief cover note which has general infor-

mation about the issuer and the issue before the items prescribed in Articles 25 and 26 are stated

in the prospectus. However, the cover note is not a substitute for the summary or the disclosure

requirements under the Regulation.

Where an issuer is not under an obligation to include a summary in a prospectus, but wishes to

produce some overview section in the prospectus, ESMA considers that issuers may include an

“overview” section in the place where a summary would usually appear.

10. Prospectus composed of separate documents: duplication of information

Date last updated: February 2007

Q) Can cross-references be made between the different documents which compose a pro-

spectus (registration document and securities note), even if these documents are pub-

lished separately, when there is duplication of information

A) Theoretically, duplication between information in the securities note and information in the

registration document should not happen as the Commissions Regulation clearly separates the

information that has to be provided in each of these documents so there are no duplicated items.

However, if this duplication occurs, a cross-reference list can be provided.

Recital 4 of the Regulation: “Care should be taken that, in those cases where a prospectus is composed of separate documents,

duplication of information is avoided”.

11. Risk factors section

Date last updated: July 2006

Q) Is it possible to omit the risk factors section from the prospectus on the basis of Arti-

cle 23.4 of the Prospectus Regulation?

A) No, the prospectus must always include a description of the risk factors.

12. Notification which third country issuers are required to make under Article 30.1 Di-

rective (DELETED)

Date last updated: July 2006

13. Nearly equivalence of Euro 1.000 (Article 2.1m)(ii) Directive)

Date last updated: July 2006

Q) When determining the home CA, the figure EUR 1,000 is a key element. ESMA dis-

cussed how the second sentence of Article 2.1m)(ii) of the Directive, in particularly the

term "nearly equivalent to EUR 1,000", is applied in practice to cases where the securities

are denominated in a currency other that euro.

A) The decision regarding which CA should approve the prospectus on the basis of the denomi-

nation of the non equity securities according to Article 2.1 m)(ii) of the Directive should be made

at the time of the submission of the draft prospectus. At that time, “nearly equivalent” doesn’t

mean exactly EUR 1,000.

14. Item 20.1 of Annex I of the Regulation

Date last updated: July 2006

Q1) The 1st paragraph of item 20.1 requires issuers to disclose audited historical finan-

cial information covering the latest 3 financial years and the audit report in respect of

each year. If historical information has not been restated and the issuer decides to pre-

sent the historical financial information for the last 3 years in a columnar format and an

accountants report is provided for the purposes of the prospectus, would this meet the

requirements of the Regulation?

A) The issuer has the right to choose the format of the historical financial information as far as

the minimum information required by item 20.1 is included.

Q2) If the statutory financial information has been reviewed by a competent authority and

the competent authority has requested additional disclosures or even a restatement of

the accounts, how should this additional information be included in the prospectus?

Should an audit report be requested on the new information?

A) It is necessary to distinguish between:

- A restatement made by the issuer according to item 20.1 of the Annex: in this case,

ESMA’s Recommendations for the consistent implementation of EC Regulation 809/2004

(ESMA/2013/319)) apply.

A restatement made by the issuer following an enforcement procedure: in this case, the restated

information should be included along with the original accounts, except if the original accounts

are officially corrected. The restated information does not necessarily have to be audited as this

would depend on the circumstances of the case.

Q3) How should last paragraph of item 20.1 be applied? Should this statement/ declaration

by the auditor be given for all prospectuses even if historical financial information has been

incorporated by reference? What is the difference of this statement and that required by

item 20.4.1 of Annex I?

A) The audit report may be incorporated by reference. Last paragraph of item 20.1 of Annex I

contains a requirement on the historical financial information whilst item 20.4.1 of Annex I requires

the issuer to make a statement in the prospectus.

15. Interaction between item 20.1 of Annex I Regulation and IAS 8

Date last updated: March 2011

Q) When an issuer changes an accounting policy in its financial statements (e.g. upon ini-

tial application of a new Standard or Interpretation issued by IASB or IFRIC or upon a vol-

untary change in accounting policies) and following IAS 8, it applies the new policy to

comparative information for prior periods, should this mean that the issuer has to restate

in a prospectus the comparative figures affected by the retrospective application of the

new accounting policy?

A) The following example illustrates this situation:

In 2008, an issuer prepares a prospectus in which it includes 3 years of complete sets of financial

statements for 2005, 2006 and 2007, pursuant to item 20.1 of Annex I. For all 3 years, the sets of

financial statements were prepared in accordance with IFRS.

In 2007, the issuer changed one of its accounting policies e.g. to start applying a new IFRS or

upon a voluntary change in accounting policies, according to IAS 8.

According to IAS 8, the issuer should present in its 2007 financial statements:

- 2007 figures according to the new policies

- 2006 comparative figures restated according to the new policies.

The 2006 comparative restated figures presented in 2007 financial statements are not separately

re-audited by the statutory auditor whose audit opinion only refers to the set of financial statements

for 2007 figures. On the 2006 restated figures, the auditor will normally only verify that the restate-

ment is correct.

The question being analysed is how many years of financial statements presented in the prospec-

tus is the issuer supposed to restate pursuant to IAS 8?

ESMA considers that no additional requirements of IAS 8 should be applicable in a prospectus.

Indeed, IAS 8 does not supersede the prospectus regulation. Thus, IAS 8 applies solely to the set

of financial statements for the year 2007 (including the comparative information included therein)

and no additional requirement of IAS 8 should be applicable to the other sets of financial state-

ments (years 2006 and 2005) included in a prospectus in accordance with Annex I item 20.1.

Therefore, in the prospectus, according to Annex I item 20.1, the issuer should present the follow-

ing financial statements:

- 2007 audited financial statements (including 2006 comparative figures restated according

to the new policies);

- 2006 audited financial statements;

- 2005 audited financial statements.

For 2006 and 2005 audited financial statements, there is no restatement. These financial state-

ments are the financial statements which were approved by the Annual General Meeting and

published.

16. Item 20.1 Annex I of the Regulation: historical financial information of issuers that

have been operating in its current sphere of economic activity for less than one year

Date last updated: February 2007

Qa) How should the expression “that period” included in the third paragraph of item 20.1

of Annex I be interpreted?

A) According to section 20.1 third paragraph of Annex I, an issuer which has been operating in its

current sphere of economic activity for less than one year has to prepare audited historical finan-

cial information in accordance with the standards applicable to annual financial statements for the

issuer covering that period.

To answer this question ESMA analysed the case of an issuer that started up its operations in 1

November 2005 and prepared audited historical financial information as of 31 December 2005 (as

required by national accounting legislation). In June 2006 the issuer produces a prospectus.

Theoretically it would be possible to understand the expression “that period” (which is less than

one year) included in the third paragraph of item 20.1 of Annex I in two ways:

1. From the date of incorporation of the issuer (or the date where it started its operations in

its current sphere of economic activity, if different from the date of incorporation) until the

end of the financial year chosen by the issuer according to its national accounting legisla-

tion. In the example of question a), the financial year of the issuer is from January to De-

cember, so the period referred to in paragraph 3 of item 20.1 would be two months: from

1 November 2005 until 31 December 2005.

2. From the date of incorporation of the issuer (or the date where it started its operations in

its current sphere of economic activity, if different from the date of incorporation) until the

most practicable date before the publication of the prospectus. This means that the histor-

ical financial information should be prepared by the issuer just for the purposes of the

prospectus and the period it would cover would not be consistent with the future reports

produced according to the accounting legislation. For example, in the case described the

period could be from 1 November 2005 until 31 March 2006.

As regards interim financial information, in the example described above, the issuer would not be

obliged by the Prospectus Regulation to include it:

i) as it would not have elapsed more than 9 months since the end of the last audited financial year

until the date of the prospectus or the registration document (item 20.6.2 of Annex I of the Regu-

lation);

ii) as the issuer would not have published yet the half-yearly financial report, the draft prospectus

being submitted for approval in June (item 20.6.1 of Annex I of the Regulation).

Concerning quarterly information, the issuer would have published the interim management state-

ment for the first quarter if allowed or required by national legislation (Article 6.2 of the Transpar-

ency Directive).

Interpretation 1 has the advantage of keeping consistency between the historical financial infor-

mation required by the accounting and the prospectus rules whilst interpretation 2 would oblige

the issuer to produce financial statements just for the purposes of the prospectus and having a

closing date that would not be consistent with future reports or with those from other companies.

ESMA considers that when the issuer has already published the historical financial information

required by national legislation, this should be normally the only one required to comply with item

20.1, third paragraph, of Annex I of the Prospectus Regulation (interpretation 1 above). ESMA

considers that inclusion of the historical financial information required by national legislation to-

gether with requirements under item 20.9 of Annex I

and the Recommendations published for

start-up companies by ESMA (see paragraphs 135 to 139 of ESMA/2013/319) will normally pro-

vide investors with the relevant information in the prospectus and enable issuers to comply with

Article 5.1 of the Prospectus Directive. This treatment would be the most appropriate to the exam-

ple described above.

However, ESMA thinks that in exceptional circumstances (such as the absence of interim finan-

cial information in the prospectus combined with a significant amount of months elapsed since

the end of the last audited financial statements) interpretation 2 would be more appropriate to

comply with Article 5.1 of the Prospectus Directive.

Significant change in the issuer’s financial or trading position

A description of any significant change in the financial or trading position of the group which has occurred since the end of the last

financial period for which either the audited financial information or the interim financial information have been published, or provide

an appropriate negative statement.

Qb) Further, if an issuer being incorporated in January 2006 produces a prospectus in June

2006 (no 1) and a new prospectus in November 2006 (no 2), should audited historical finan-

cial information be prepared both for the period from January to the most recent practica-

ble date before publication of prospectus no 1 and for an additional period in connection

with prospectus no 2?

A) In this example the issuer has not yet produced financial statements according to its national

accounting legislation. Therefore, the prospectus number 1 should include audited financial state-

ments for the current period (from the date of incorporation to the most recent practicable date

before publication of the prospectus) prepared for the purpose of the prospectus according to item

20.1 of Annex I of the Prospectus Regulation (interpretation 2 to the previous question).

Regarding the second prospectus, ESMA considers that the audited historical financial information

produced for the first prospectus (together with the half yearly report that the issuer will have pub-

lished by the end of August) would be sufficient under normal circumstances.

Qc) Does this requirement apply in all cases where the issuing entity has been operating

in its current sphere of economic activity for less than one year, i.e. also in cases where

the issuer is a newly incorporated holding company inserted over an established busi-

ness? Or is the requirement applicable only if the business considered as a whole has less

than one year of history?

A) Item 20.1, first paragraph, of the Prospectus Regulation applies where the issuer has been

operating in its current sphere of economic activity for one year or more.

Item 20.1, third paragraph, of the Prospectus Regulation applies where the issuer has been oper-

ating in its current sphere of economic activity for less than one year.

The information that has to be provided in these two cases applies to the legal group of the issuer.

Additionally, when the entire business undertaking at the time of the prospectus is not accurately

represented in the historical financial information required under item 20.1, then the issuer will

have to assess whether pro-forma information or complex financial histories information is needed.

17. Item 20.1 of Annex I Prospectus Regulation: interpretation of “such shorter period

that the issuer has been in operation”

Date last updated: May 2008

Q) ESMA discussed the interpretation of the expression “such shorter period that the is-

suer has been in operation” in item 20.1 of Annex I (and related items of other annexes).

A) The following example illustrates the question:

- A company has been incorporated in February 2006 and is in operation since June 2006.

- Applicable Annex would be Annex I, so the company would need to provide audited historical

financial information covering the latest 3 financial years (or such shorter period that the issuer

has been in operation).

- The company presents audited financial information for the short period February-December

2006 and un-audited interim financial information for the first half-year period 2007.

-The company has submitted a prospectus for approval at the end January 2008.

ESMA agreed on the following clarification:

As the company has no audited historical financial information for a whole financial year it would

need to cover the “shorter period that the issuer has been in operation”. The audited financial

information prepared by the issuer for the short period February-December 2006 is considered

sufficient.

In addition, interim financial information would be provided in accordance with item 20.6 of Annex

I (and related items of other annexes).

18. Application of the different schedules of the Regulation

Date last updated: July 2006

Q) Which schedule should be applicable to public offers of securities named “real estate

certificates”, being debt securities that give right to the income, proceeds and realisation

value of one or more real estate properties that are identified at the time of the public offer?

At the moment of the public offer, no mortgage is granted on the real properties in favour

of the holders of the real estate certificates, but a mandate to take a mortgage in their favour

is, in some cases, given to a third party:

Can these debt securities be defined as ABS? This question implies an interpretation of

the words "are secured by assets", laid down in Article 2.5 b) of the Commission Regula-

tion: are securities secured by assets if an underlying asset that generates proceeds exists

or is it necessary to have a legal guarantee/security on the underlying asset (like a mort-

gage (or a mandate to take a mortgage?) or a pledge).

If these debt securities cannot be defined as ABS, would it nevertheless be acceptable to

apply the schedules/building blocks applicable to ABS, interpreted in function of, or

adapted to, the deviating characteristics of real estate certificates.

A) Where the security to which the prospectus refers is not the same but comparable to the various

types of securities mentioned in the table of combinations set out in Annex XVIII of the Commission

Regulation, the issuer shall add the relevant information items from another securities note sched-

ule, taking into account the relevant characteristics of the securities being offered (Article 23.2 of

the Commission Regulation).

19. Supplement to prospectuses: interim financial information

Date last updated: July 2006

Q) Is the publication of interim financial statements considered as a significant new factor

that requires the publication of a supplement in accordance with Article 16 of the Directive?

A) There is no systematic requirement to supplement the prospectus when interim financial state-

ments are produced. This will depend on the circumstances of the case, in particular the relevance

of the information included in the interim financial statements (such as any significant deviation in

relation to previous financial information) or the type of securities to which the prospectus refers.

In case of doubt ESMA recommends issuers to produce the supplement.

20. Supplement to prospectuses: profit forecast

Date last updated: February 2007

Q) Is the publication of a profit forecast before the final closing of the offer, a significant

new factor that requires the publication of a supplement in accordance with Article 16,

given that, under the Regulation, the insertion of a profit forecast in a prospectus is op-

tional?

A) Paragraph 44 of ESMA´s Recommendations for the consistent implementation of the European

Commission Regulation on Prospectuses nº 809/2004 (ESMA/2013/319) states:

“ESMA considers that there is a presumption that an outstanding forecast made other than in a

previous prospectus will be material in the case of shares issues (especially in the context of an

IPO). This is not necessarily the presumption in case of non-equity securities”.

Although it is up to the issuer to decide when a supplement is needed, according to that statement,

there would be a presumption in the case described in the ESMA´s Recommendations that the

publication of a profit forecast before the final closing of the offer would constitute material infor-

mation. Therefore, in such a case a supplement should be prepared including the profit forecast

and complying with item 13 of Annex I of the Regulation.

21. Supplement to prospectuses: right of withdrawal (DELETED)

Date last updated: August 2009

22. Supplement: Period for filing a supplement after a significant new factor has oc-

curred

Date last updated: December 2008

Q) Within what timeframe during the offer period, after a significant new factor has occurred

or material mistake or inaccuracy is discovered, shall an issuer draw up a supplement

within the meaning of Article 16 of the Directive and file it with the competent authority for

approval?

A) The issuer should draw up and file with the competent authority a supplement as soon as

practicable after a significant new factor occurs or a material mistake or inaccuracy is discovered.

23. Non relevant information in relation to a published prospectus that does not trigger

the obligation to publish a supplement

Date last updated: December 2012

Q) ESMA considered how to deal with information that arises after the publication of the

prospectus which is not significant in the Prospectus Directive meaning (is not capable of

affecting significantly the assessment of the securities and therefore does not require a

supplement), but could be useful for investors

A) The PD states that the text and the format of the prospectus, and/or the supplements to the

prospectus, published or made available to the public, shall at all times be identical to the original

version approved by the home CA (Art. 14.6). Moreover, according to Article 16.1, every significant

new factor, material mistake or inaccuracy relating to the information included in the prospectus

which is capable of affecting the assessment of the securities shall be published through a sup-

plement to the prospectus. There are cases when the information is not significant in the PD

meaning, however could be useful for investors. For example, where the prospectus contains mis-

takes or inaccuracies which are not material.

As prescribed by Article 14, the prospectus approved by the competent authority can not be sub-

sequently modified (apart from the supplement procedure). However, in case the prospectus con-

tains a mistake or inaccuracy that is not material or significant pursuant to Article 16 of the Di-

rective, the issuer should be entitled to make an announcement to the market explaining the mis-

take or inaccuracy.

The above comments are without prejudice to the obligations imposed to issuers having their se-

curities admitted to trading on a regulated market by other directives, in particular Directive

2003/6/EC on Market Abuse.

24. Interim financial information included in the prospectus

Date last updated: July 2006

Q) According to Article 20.6.1 of Annex I of Commission Regulation “If the issuer has pub-

lished quarterly or half yearly financial information since the date of its last audited finan-

cial statements, these must be included in the registration document”. In case the issuer

has published quarterly and half yearly financial information since the date of its last au-

dited financial statements should the registration document include both quarterly and

half yearly financial information or is the latest published interim financial information suf-

ficient?

A) Two different situations can be envisaged:

a) An issuer files a prospectus on July 30th. The issuer has published half-yearly financial infor-

mation (30 June) and information on the first quarter: In that case the latest interim financial infor-

mation is sufficient (half-yearly).

b) An issuer files a prospectus on October 30th. The issuer has published information on the third

quarter and half-yearly financial information (30 June): In that case the latest interim financial in-

formation is not sufficient and the issuer should include in its prospectus both quarterly (Q3) and

half-yearly financial information provided that there is no duplication of information.

25. Profit forecasts or estimates

Date last updated: December 2012

Q1) The combination of paragraph 13.1 of Annex I and paragraph 44 of the ESMA‘s Recom-

mendations for the consistent application of EC Regulation (ESMA/2013/319) means that

equity issuers are always required to include any outstanding forecast on the record in a

prospectus and report on it or disclaim such forecast in accordance with paragraph 13.4

on Annex I

ESMA discussed whether there could ever be circumstances where this approach was not

followed so that an issuer of shares was not required to reproduce an outstanding forecast

in a prospectus or disclaim such forecast (for example, because a Stock Exchange required

such forecasts to be published).

A1) Paragraphs 43 and 44 of ESMA’s Recommendations (ESMA/2013/319) state that there is a

presumption that an outstanding forecast made in another document than in a previous prospectus

will be material in the case of share issues.

When the rules applicable to the issuer require the publication of profit forecasts, ESMA considers

that they will be open to discuss the interpretation of paragraphs 43 and 44 of ESMA’s Recom-

mendations on a case by case basis.

Q2) The registration document annex for debt and derivative securities with a denomina-

tion per unit of at least EUR 100,000 (Annex IX) provides in item 8 for disclosure when an

issuer chooses to include a profit forecast or estimate, yet item 8.2 only appears to relate

to forecasts. This item states that any profit forecast must be accompanied by a statement

confirming the forecast has been properly prepared on the basis stated and that the basis

of accounting is consistent with the accounting policies of the issuer. Annexes I, IV, X and

XI read the same save for the statement being in the form of a report prepared by independ-

ent accountants or auditors, confirming that the forecast or estimate have been properly

compiled on the basis stated and that the basis of accounting used for the profit forecast

or estimate is consistent with the accounting policies of the issuer. Is the lack of a reference

to "estimate" in Annex IX item 8.2 a deliberate omission?

A2) No, this is not a deliberate omission. ESMA can see no reason why the provisions in Annex

IX item 8.2 should not apply to estimates in the same way as other Annexes, and it is our view

that Annex IX item 8.2 should be read in the same way as the other Annexes as far as forecasts

and estimates are concerned. This view does not affect the present requirements for an account-

ants or auditors report. Forecasts and estimates are defined in Article 2 of the Directive.

26. How should the €5 million limit set in Article 1(2)(h) of the Prospectus Directive and

the €75 million limit set in Article 1(2)(j) of the Prospectus Directive be calculated?

Date last updated: December 2015

CALCULATION OF LIMIT OF €5 MILLION

Qa) Should the limit be calculated per type of securities or should all types of securities be

taken into account as a whole?

Aa) The Article 1(2)(h) exemption applies separately to offers of different kinds of securities within

a 12 month period. ESMA is of the view that equity securities and debt securities should be con-

sidered separately for the calculation of the limit. For example, if a company issues debt securities

in January of €4 million and equity securities in March of €2 million, the issuer would not be obliged

to draw up a prospectus for the second issue.

Qb) Should offers during the 12 month period where other exemptions are applicable (for

example offers to qualified investors) be included for the calculation of the limit?

Ab) No. Only offers where the issuer has previously used the exemption in Article 1(2)(h) should

be included for the calculation of the limit.

Qc) Should offers where a prospectus has been approved be included for the calculation

of the limit?

Ac) No. Since information about the previous offers has already been disclosed to the public

through the prospectus, these offers should not be taken into account for the calculation of the

limit.

CALCULATION OF LIMIT OF €75 MILLION

Qd) Should the limit be calculated per type of non-equity securities or should all types of

non-equity securities be taken into account as a whole?

Ad) In applying the Article 1(2)(j) exemption, all securities that fall within the exemption should be

added together. For example, if a credit institution issues plain fixed rate debt securities of €70

million and floating rate debt securities of €10 million within a 12 month period, the exemption

threshold would be breached and the issuer would be obliged to draw up a prospectus for the

second issue.

Offers of securities other than those falling under the scope of Article 1(2)(j) should not be consid-

ered for the calculation of the limit (e.g. debt securities linked to a derivative component).

Qe) Should offers during the 12 month period where other exemptions are applicable (for

example offers to qualified investors) be included for the calculation of the limit?

Ae) No. Only offers where the issuer has previously used the exemption in Article 1(2)(j) should

be included for the calculation of the limit.

Qf) Should offers where a prospectus has been approved be included for the calculation of

the limit?

Af) No. Since information about the previous offers has already been disclosed to the public

through the prospectus these offers should not be taken into account for the calculation of the

limit.

27. Convertible or exchangeable securities (DELETED)

Date last updated: October 2017

28. Convertible bond falling in the definition of equity security

Date last updated: December 2008

Q) Does it influence the assessment of "convertible bonds" as "equity securities" if the

conversion right is solely at the investor's discretion?

A) No. For the assessment of whether "convertible bonds" fall within the definition of "equity se-

curities" under the Prospectus Directive it does not matter whether the conversion is solely at the

investor's discretion or not.

The key element to distinguish “equity” convertible bonds from “non-equity” convertible bonds is

to see if the issuer of the convertible bond is the issuer of the underlying shares or an entity be-

longing to the group of the said issuer (“equity” convertible bond) or not (“non-equity” convertible

bond).

Although some confusion may arise due to the wording included in recital 12 PD ("(…) convertible

notes, e.g. securities convertible at the option of the investor, fall within the definition of non-equity

securities set out in this Directive) the definition under Article 2.1b for equity securities clearly

includes bonds which give the investor the right to acquire shares as a consequence of their con-

version by the investor. Recital 12 should be read as referring to convertible securities which fall

outside the scope of the definition, i. e. which are not issued by the issuer of the underlying shares

or by an entity belonging to the group of the said issuer.

29. Conversion or exchange of non-transferable securities and exemption from pub-

lishing a prospectus

Date last updated: October 2017

Q) Does the exemption provided for in point (b) of the first subparagraph of Article 1(5) of

the Prospectus Regulation (EU) 2017/1129

include cases where non-transferable securi-

ties are converted into shares?

A) ESMA considers that the exemption in point (b) of the first subparagraph of Article 1(5) of the

Prospectus Regulation (EU) 2017/1129 does not apply to cases of non-transferable securities

converted into shares. The Prospectus Directive specifically defines “securities” as “transferable

securities”

and does not give room to consider that Article 1(5) (b) applies to the conversion of

According to Article 1(5)b) of the Prospectus Regulation(EU) 2017/1129 the obligation to publish a prospectus shall not apply to the

admission to trading on a regulated market of “shares resulting from the conversion or exchange of other securities or from the exercise

of the rights conferred by other securities, where the resulting shares are of the same class as the shares already admitted to trading

on the same regulated market, provided that the resulting shares represent, over a period of 12 months, less than 20 % of the number

of shares of the same class already admitted to trading on the same regulated market, subject to the second subparagraph of this

paragraph“.”

The definition of securities in the Prospectus Directive 2003/71/EC is repeated in Prospectus Regulation (EU) 2017/1129.

non-transferable securities (especially taking into consideration that this relates to an exemption

of publishing a prospectus).

30. Exemptions provided for in Articles 4.1 c) and 4.2 d) Directive in case of mergers

(Qa DELETED)

Date last updated: December 2012

Qb) Could a document already assessed by a competent authority as equivalent to the

prospectus be used by the issuers in other EU jurisdictions as well?

Ab) The Directive passport regime does not apply to the exemptions in Article 4. Therefore, the

evaluation of equivalence will have to be undertaken in each Member State where the exemption

is to be used. Nevertheless, the competent authorities, if so wish, might use the work previously

carried out by another authority when assessing equivalence. Where the assessment is to be

undertaken by several competent authorities at the same time, these authorities are encouraged

to cooperate in assessing equivalence.

31. Exemption for admission to trading provided for in point (a) of the first subpara-

graph of Article 1(5) of Prospectus Regulation (EU) 2017/1129

Date last updated: October 2017

Qa) How is the exemption provided for in point (a) of the first subparagraph of Article 1(5)

applied in practice?

Aa) Admissions under this exemption must not equal or exceed 20% of the issuer’s securities of

the same class already admitted to trading on the same regulated market over a 12 month period.

To calculate whether the issuer is exceeding this percentage it should include in the numerator

the securities that have benefited from this exemption during the previous 12 months. However, it

should not include securities admitted without a prospectus due to other types of exemptions.

In the denominator the issuer should include the number of securities of the same class already

admitted to trading on the same regulated market at the time it is applying for the new admission

(therefore, there is no need to calculate for the denominator the 12 month average of the securities

admitted to trading).

For example:

This Q&A has not changed in substance. It applies to securities issued on or after 20 July 2017 under the Prospectus Regulation

(EU) 2017/1129 point (a) of the first subparagraph of Article 1(5) in the same way as under Article 4(2)(a) of the Directive. It has been

updated in terms of dates and figures used to take account of the increased threshold for issuing securities without a prospectus set

out in point (a) of the first subparagraph of Article 1(5) of the Prospectus Regulation (EU) 2017/1129.

August 2017: total number of shares admitted to trading is 100. The issuer applies for a further

admission of 10 shares (10%). No prospectus is required.

October 2017: total number of shares admitted to trading is 110. The issuer applies for a further

admission of 4 shares resulting from an offer addressed to the employees. No prospectus is re-

quired because the employees’ exemption applies (Article 4(2) of PD).

March 2018: total number of shares admitted to trading is 114. The issuer applies for a further

admission of 8 shares. No prospectus is required as it amounts to 16% (18/114).

October 2018: total number of shares admitted to trading is 122. The issuer applies for a further

admission of 24 shares. The August 2017 admission of 10 shares is disregarded because since

then more than 12 months have elapsed. Also the October 2017 admission is disregarded be-

cause it was subject to another exemption. However, the March 2018 admission does count and

therefore the issuer has to add 8 shares to the new application of 24 shares and a prospectus is

required as it amounts to 26% (32/122).

Qb) Should the basis for the 20% calculation be adjusted for legal measures affecting the

number of securities admitted to trading, for example a share split 1 to 2 or a similar re-

versed split?

Ab) Yes. For example:

Securities admitted to trading in January are 100.

In January the issuer applies for the admission of 18 additional shares: the exemption applies as

the new admission only represents 18%.

In June the company splits its capital exchanging the existing 118 shares for 236 new shares (1 x

2).

In December the issuer applies for the admission of 12 new shares. These new shares plus the

previous exempted 18 shares (=30) represent only 13% of the total number of shares (30/236).

However, taking into consideration the split that took place in June, the previous 18 shares should

be adjusted to 36 (18x2). Therefore to determine whether this further admission in December

could benefit from the exemption, the numerator should be 48 adjusted shares (36+12). Conse-

quently 48 shares divided by the number of shares already admitted (236) amount to 20% and

therefore the issuer should produce a prospectus in December for the admission of the 12 new

shares.

32. Exemptions from the obligation to publish a prospectus in Article 1(5) Prospectus

Regulation (EU) 2017/1129 as stand-alone exemptions

Date last updated: October 2017

Q) An issuer issues new shares as a result of a merger. The new shares that the issuer

wishes to admit to trading in a regulated market represent less than 20% of its total number

of shares. Does the issuer need to make available the equivalent document referred to in

Article 4(2)(d) in order to avoid the obligation to publish a prospectus?

A) No because the exemption in point (a) of the first subparagraph of Article 1(5) of the Prospectus

Regulation (EU) 2017/1129 applies. All the exemptions in Article 1(5) Prospectus Regulation (EU)

2017/1129 are stand-alone and therefore if one of them applies there is no requirement to publish

a prospectus.

33. Quality of translations of passported prospectuses

Date last updated: July 2010

There is no provision in the Prospectus Directive dealing with the quality of the translation of a

prospectus. Therefore, the following practical aspects have to be tackled:

Qa) Should the quality of the translations be left entirely to the responsibility of the issuer?

Aa) Yes. ESMA considers that the person responsible for the prospectus is also responsible for

any translation of the approved prospectus.

Qb) Notwithstanding last sentence of Article 17.1 of the Prospectus Directive, would it be

possible or desirable that the host competent authority scrutinises the quality of the trans-

lation of a prospectus to its own language?

Ab) No.

Qc) If the host competent authority decided to undertake that task voluntarily, would it

mean that the offer cannot proceed until the translation has been accepted or checked by

the host competent authority?

Ac) No, the passport process may not be stopped. However, if the host competent authority finds

that a translation is not accurate, it could refer its findings to the competent authority of the home

Member State as envisaged in Article 23 of the Directive (precautionary measures).

ESMA recommends issuers to insert in any translation of a prospectus a statement that clarifies

that the document is a translation of the approved prospectus made under the sole responsibility

of the person responsible for the approved prospectus.

Qd) The translated version of the prospectus referred to in Article 19.3 of the Prospectus

Directive should contain the same information as the original version published in the

home Member State. What should be the reaction of the issuer and the home competent

authority in case of significant mistakes or omissions of information in such translated

version in respect of the information contained in the approved prospectus?

Ad) Without prejudice to the fact that the person responsible for the prospectus is also responsible

for any translation of the approved prospectus, if a translated version of a prospectus contains

material mistakes or omissions of information which might cause investors to make a misleading

assessment of the issuer and/or the securities, both the home competent authority and the issuer

should cooperate with the host competent authority in finding the solution which better fits the

specific case.

34. Updating of the prospectus

Date last updated: December 2012

Q) What are the updating obligations of a prospectus? Is the issuer entitled to use its

prospectus drawn up as a single document to make several offers?

A) ESMA discussed the updating of a prospectus different than a base prospectus, distinguishing

between a prospectus drawn up as a single document and prospectus consisting of separate

documents.

- Article 9.1: a prospectus drawn up as a single document has to be updated through a

supplement if any of the situations described under Article 16 arises or is noted before the

final closing of the offer or the time when trading on a regulated market begins, whichever

is later.

- Article 9.4: a prospectus consisting of separate documents. The registration document is

updated either by way of supplement in accordance with Article 16 or through the securities

note published each time the issuer wishes to offer securities in accordance with Article

12(2).

The following example illustrates ESMA’s position. In October 2005 the issuer had a prospectus

drawn up as a single document approved in order to make a public offer of securities at that time.

Subsequently, in June 2006 it decides to make another offer of securities. For this new offer, the

issuer would have to produce a new prospectus in June 2006. This could be done by producing a

prospectus to which the information related to the issuer included in the October 2005 prospectus

could be incorporated by reference. Any necessary updates of the information related to the issuer

should be included in the prospectus produced in June 2006.

Issuers having an outstanding prospectus published as a single document and wishing to make a

subsequent offer without the need to publish a new prospectus have to consider whether the pub-

lished prospectus contains the information required by the Regulation in relation to the second

offer. In particular, if the terms and conditions disclosed in the published prospectus under item 5

of Annex III of the Regulation change for the new offer, this seems to imply that that prospectus

may not be used for the second offer as it does not contain the relevant information for investors.

Article 16 of the Directive envisages the update of a prospectus in case of a significant new factor,

material mistake or inaccuracy relating to the information included in the prospectus which is ca-

pable of affecting the assessment of the securities and which arises or is noted between the time

when the prospectus is approved and the final closing of the offer to the public.

According to Article 16, the supplement does not seem to be the appropriate way to convey the

information on the new offer to investors. The supplement may only be published in respect of an

offer whose offering period is open, which is not the case for the second offer whose offering

period has not commenced yet.

Notwithstanding, even if the issuer has to publish a new prospectus for the second offer, incorpo-

ration by reference of all the information in the previous prospectus (except the details on the offer)

will ease this process.

35. Precautionary measures (Article 23 Directive)

Date last updated: February 2007

Q) Do the irregularities and breaches referred to in Article 23 of the Directive

relate to

obligations under the Prospectus Directive (as implemented into the national legislation of

the host member state) or do they refer to any other legislation or regulation of the host?

A) ESMA agreed that as the Prospectus Directive only harmonises the aspects included in it, the

irregularities and breaches mentioned in Article 23 refer only to obligations under the Prospectus

Directive as transposed into the host national legislation.

36. Offering programmes

Date last updated: February 2007

Q) Is it mandatory for issuers to set in a base prospectus a fixed amount for the pro-

gramme?

A) ESMA considers that it is not mandatory to include the amount of the programme in the base

prospectus.

According to Article 23 of the Directive the host competent authority is to refer to the home CA any findings on "irregularities" or "

the issuer has breached its obligations by reason of the fact that securities are admitted to trading on a regulated market".

37. Validity of prospectuses under Article 9.3 Directive

Date last updated: February 2007

Q) Can under Article 9.3 a prospectus be valid for more than 12 months if the securities

concerned are issued in a continuous or repeated manner during a period longer than 12

months?

A) Yes the prospectus will be valid until the securities concerned are no longer issued in a contin-

uous or repeated manner. Issuers should bear in mind that in these cases the updating require-

ments in the Directive apply during the whole period of the validity of the prospectus.

38. Scope of Article 1.2 j) Directive

Date last updated: December 2012

Q) Do redeemable debt securities - cases where the issuer has the right to redeem the

security before maturity

- fall under the scope of Article 1.2 j) of the Directive?

A) ESMA considers that Article1.2 j) of the Prospectus Directive includes offers of redeemable

debt securities (as defined above) whose total consideration is less than EUR 75,000,000 issued

by credit institutions and whose characteristics comply with other conditions provided by this Arti-

cle.

ESMA’s view is that the reference to a derivative instrument in the last subparagraph of letter j) of

Article 1.2 refers only to a derivative component that affects the right of the investor and not to the

coverage of the issuer. Therefore, the fact that in this type of securities the issuer enters into a

derivative contract in order to cover its risk does not exclude them from the scope of Article 1.2 j).

39. Depository Receipts over shares: determination of the home Member State (Qa DE-

LETED)

Date last updated: December 2012

Qb) How should the home Member State be determined in the following situation: a com-

pany with its registered office in Germany is issuing shares which will be the underlying of

the Depository Receipts and offers them to a Trust. The Trust has its registered office in

another Member State than Germany and will issue and offer the Depository Receipts.

In this type of securities the issuer normally enters into a derivative contract in order to cover its risk.

Ab) The rules for determining the home Member State set in Article 2.1 m) of the Prospectus

Directive should apply to this situation. For the specific case of Depository Receipts, the following

aspects should be taken into account:

- According to recital 12 of the Prospectus Directive, Depositary Receipts “fall within the

definition of non-equity securities set out in this Directive”.

- The “issuer” is the issuer of the Depository Receipts (in the abovementioned case, the

trust) and not the issuer of the underlying shares.

In the specific case mentioned above, the German competent authority will be the home compe-

tent authority if the Depository Receipts have a denomination over EUR 1.000 or give 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 the issuer is not the issuer of

the underlying securities or an entity belonging to the group of the latter issuer, and if the issuer

chooses Germany as home Member State provided that a public offer or and admission to trading

on a regulated market takes place in Germany (according to Article 2.1 m) (ii)). Otherwise, the

home competent authority will be the authority of the Member State where the trust has its regis-

tered office. If the competent authorities involved consider that the authority of the Member State

where the issuer of the underlying shares is incorporated is the best placed to approve the pro-

spectus, they could agree the transfer of the prospectus to this latter authority according to Article

13.5 of the Prospectus Directive.

40. Total consideration in warrants

Date last updated: December 2012

Q) In cases of offers of warrants (and other derivative securities) how should ‘total consid-

eration’ be calculated in respect to the EUR 100,000 (Article 3.2 c)) and EUR 5,000,000 (Ar-

ticle 1.2 h)) limits? Should only the consideration for the warrants (if any) be counted, or

should the strike price for the underlying securities be added?

A) Total consideration relates only to the consideration for the warrants, and not to the strike price

for the underlying securities.

41. Inclusion of a summary in the prospectus on a voluntary basis (DELETED)

Date last updated: February 2007

Although the issuer of the underlying shares is the person responsible for the continuing obligations under the Transparency Directive

(Article 2.1 d of the TD).

42. Rights issue: communication by a custodian to its clients in one member state

about pre-emption rights in relation to a public offer of new shares taking place in

another EEA member state

Date last updated: February 2007

Q) Is the communication made by a custodian to its clients (normally under its contractual

duty to inform them) in respect of a rights issue in another EEA Member State (where a

prospectus has been approved) in itself an "offer of securities to the public" and therefore

would not be permitted unless a passport had been obtained in order to make public offers

into the EEA Member State of the clients of the custodian?

A) The minutes of the 4th Informal Meeting on the Transposition of the Prospectus Directive deal

with this issue including the following:

"The group discussed whether it constitutes an offer of securities to the public, within the meaning

of the Directive, where a custodian bank informs shareholders in one Member State about pre-

emption rights in relation to a public offer of new shares taking place in another Member State

(which would almost certainly trigger the obligation to publish a prospectus in this latter Member

State). The Commission did not take a definite view on this question but indicated that it might

issue further guidance after having consulted its Legal Service. However, the Commission recog-

nised that the Directive should not operate as an instrument to limit cross-border share ownership,

or effectively to restrict shareholders’ ability to exercise pre-emption rights; but noted that where

a prospectus is published in connection with an offer of securities in one Member State, it may be

used to offer those securities in any other Member State (subject only to a translation of the sum-

mary if that is required by the CA of the host Member State)."

ESMA agrees with the Commission that the Directive should not be interpreted in a way that limits

cross-border share ownership or restricts the ability of custodians to comply with their contractual

duties.

ESMA considers that a communication of a custodian bank informing its clients in one Member

State about their pre-emption rights in relation to a public offer of new shares taking place in an-

other Member State or in a third country does not mean that the custodian is making a public offer

in the former Member State.

Such a communication would constitute a public offer by the custodian only if it meets the following

two conditions:

- It provides to the shareholders with the terms of the offer and the shares that would enable

them to decide to subscribe the shares and

- It acts on behalf of the offeror or issuer when making such a communication.

43. Subscription of securities by residents of a country where the public offer is not

taking place

Date last updated: September 2007

Q) Is it possible for residents in a Member State “A” where a public offer does not take

place to subscribe for securities in the Member State “B” where the public offer takes place

directly or through their financial intermediaries acting on behalf of these investors

A) Yes. There is no need for the offeror to publish a prospectus in Member State “A” as no public

offer is made in such a country. But this does not prevent investors in that country to subscribe or

buy the securities which are subject of a public offer in another Member State. What is relevant in

this case is that a prospectus is published in Member State “B” where the public offer takes place.

44. Obligation to publish a prospectus for admission of securities to trading on a regu-

lated market (Article 3(2) Directive)

Date last updated: October 2017

Q) Are the exemptions listed in Article 3(2) of the Directive applicable in case of an admis-

sion to trading?

A) The minutes of the 3rd Informal Meeting on the Transposition of the Prospectus Directive (26

January 2005) deal with this issue including the following:

“The exemptions listed in Article 3.2 are not applicable in case of an admission to trading (Article

3.3). Accordingly, if an offer of securities is exempt from the requirement to produce a prospectus

by virtue of Article 3.2, a prospectus will never the less be required under Article 3.3 if the same

securities are admitted to trading (unless an exemption in Article 4.2 applies)”.

ESMA agrees with the Commission’s view expressed above.

For securities issued on or after 20 July 2017, ESMA maintains its view that exemptions in relation

to offers and exemptions in relation to admission to trading are stand-alone. Exempt offers under

the Prospectus Regulation will require a prospectus for admission to trading unless one of the

exemptions set out in points (a) to (c) of the first subparagraph of Article 1(5) of the Prospectus

Regulation (EU) 2017/1129 apply.

There are different situations where investors in country A might find out that a public offer is taking place in country B even when

there is no public offer in country A. For example, investors in country A find out about the offer in country B by their own means,

without a communication to them in the sense of Article 2.1 (d) of the Directive; the offer in country A is not a public offer because it

falls under one of the cases set out in Article 3 of the Directive; investors are informed of the public offer in country B by their financial

intermediaries acting under their contractual duty of custodians to inform their clients.

45. Information on taxes on the income from the securities withheld at source

Date last updated: June 2012

Q) ESMA discussed the interpretation of the wording ‘where the offer is being made or

admission to trading is being sought’ included certain items of the Regulation (i.e. item

4.11 of Annex III).

A) Certain items of the Prospectus Regulation (e.g. item 4.11. of Annex III) require information on

taxes on the income from the securities withheld at source in respect of the country of the regis-

tered office of the issuer and the country(ies) where the offer is being made or admission to trading

is being sought.

For the sake of clarification, ESMA considers the term ‘where the offer is being made or admission

to trading is being sought’ refers to the countries where the prospectus has been approved and to

which the prospectus is going to be notified. ESMA believes that it is appropriate to require with-

holding tax information in respect of such country(ies) as the issuers are legally entitled to apply

for a public offer or an admission to trading in those country(ies).

As this item is not intended to require a full disclosure of the tax regime in each country where the

offer takes place or admission to trading is being sought, a statement in the tax section of the

prospectus inviting investors to seek appropriate advice on their specific situation is strongly rec-

ommended.

46. Definition of Home Member State in case of base prospectuses (Article 2.1 m) Di-

rective)

Date last updated: December 2012

Qa) Who is the Home Member State in cases of a base prospectus where non-equity secu-

rities with denomination of less than EUR 1.000 are allowed to be issued under that pro-

spectus?

Aa) Pursuant to Article 2.1m)(i) and (iii) of the Directive, the issuer is not allowed to choose its

home Member State for issues of non-equity securities with denomination of less than EUR

1,000(or a sum nearly equivalent to EUR 1,000 in another currency) unless it is an issue of non-

equity securities 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, pro-

vided the issuer is not the issuer of the underlying securities or an entity belonging to the group of

the latter issuer (Article 2.1m) (ii) of the Directive). Therefore, if the issuer's intention is to issue

non-equity securities with denomination of less than EUR 1,000 under the offering programme

and which do not comply with the requirements of Article 2.1m)(ii), it should seek the approval of

the base prospectus in the Member State where it has its registered office (or, in case of third

country issuers, in the Member State provided in Article 2.1m)(iii)).

Qb) An issuer, following Article 2.1m)(ii) of the PD, chooses as home Member State for the

approval of its base prospectus a Member State different than that where it has its regis-

tered office. Is the base prospectus approved by the competent authority of the chosen

home Member State valid to make offers and/or admissions to trading exclusively in coun-

tries different than the home (i.e. no offer or admission is made in the home)?

For example: an issuer that has its registered office in Finland, following Article 2.1m)(ii),

chooses Cyprus as Home Member State for the approval of its base prospectus. Is the base

prospectus approved by Cyprus valid to make offers and/or admissions to trading exclu-

sively in countries different than Cyprus (i.e. no offer or admission is made in Cyprus)?

Ab) ESMA believes that the issuer must have a reasonable expectation that it will make an issue

under the programme which will be admitted to trading or offered to the public in the home Member

State that is has chosen (in the example, Cyprus) and it must do so within the time of validity of

the prospectus.

Once a base prospectus has been approved, it is valid for all issues made under it regardless

whether such issues will be admitted to trading or offered to the public in the home Member State.

However, if the issuer fails to do at least one offer or admission to trading in the chosen home

Member State (during the 12 months validity of the prospectus), the competent authorities of the

home and host Member States may take appropriate action according to their national legislation

(for example, sanctions under Article 25 of the Directive as transposed into their national legisla-

tion).

47. Responsibility statement: selling shareholders

Date last updated: September 2007

Q) If a transaction is made as a combination of a sale from a shareholder and an issue of

new shares, may also the selling shareholder be required to make a responsibility state-

ment in the prospectus in addition to the issuer’s responsibility statement?

A) According to the minutes of the 4th Informal meeting on the Transposition of the Prospectus

Directive (8 March 2005) “at least one of the persons mentioned in Article 6.1 must be responsible

for the whole prospectus, notwithstanding that there might be different persons responsible sepa-

rately for particular parts of the prospectus”.

Therefore the Directive only requires that at least one of these persons mentioned in Article 6 is

responsible for the whole prospectus. It is up to national legislation to determine whether another

person (therefore, more than one person) should be also responsible for the whole or part of the

prospectus.

48. Guarantor’s responsibility for the content of a prospectus

Date last updated: August 2008

Q) Is the guarantor obliged to assume responsibility for the content of a prospectus or for

certain parts if it?

A) As already stated in the minutes of the 4th Informal meeting on the Transposition of the Pro-

spectus Directive and in Question 47 of the ESMA Q&A, at least one of the persons mentioned in

Article 6.1 of the Prospectus Directive (the issuer, the offeror, the person asking for the admission

to trading on a regulated market or the guarantor) must be responsible for the whole prospectus,

notwithstanding that there might be different persons responsible separately for particular parts of

the prospectus. Therefore the Directive only requires that at least one of these persons mentioned

in Article 6 is responsible for the whole prospectus. It is up to national legislation to determine

whether another person (therefore, more than one person, for instance also the guarantor) should

be also responsible for the whole or part of the prospectus.

Therefore, there is no provision in the Prospectus Regulation or the Prospectus Directive that

would specifically require the guarantor to assume and declare responsibility for the contents of a

prospectus or for certain parts of it. Nevertheless, subject to Article 6.1 of the Prospectus Directive,

the guarantor is allowed to accept responsibility for the whole prospectus.

49. Use of the term “prospectus”

Date last updated: December 2012

Q) May an issuer call a document “Prospectus”, even though this document does not fulfill

the requirements set out in the Prospectus Directive? For example, if an issuer is exempted

from making a prospectus, but decides to create some document with an explanation of

the securities to be offered may he call such a document a prospectus?

A) ESMA recommends issuers not to use the term “prospectus” for documents that have not been

approved according to the Prospectus Directive or according to any EU legislation where the term

“prospectus” is used. Should issuers use this term, they are encouraged to provide a clear state-

ment in the document indicating that it has not been approved in accordance with the Prospectus

Directive. Otherwise the use of the term “prospectus” could be misleading.

Where no prospectus is required in accordance with Directive 2003/71/EC, any advertisement

shall include a warning to that effect unless a prospectus which complies with the Prospectus

Directive 2003/71/EC and Prospectus Regulation 809/2004 is produced.

50. Pro forma financial information: clarification of certain terms used in item 20.2 of

Annex I and in Annex II Regulation

Date last updated: September 2007

Qa) ESMA discussed the interpretation of certain terms used in item 20.2 of Annex I (those

highlighted below in bold letters)

20.2. Pro forma financial information (Annex I)

In the case of a significant gross change, a description of how the transaction might have affected

the assets and liabilities and earnings of the issuer, had the transaction been undertaken at the

commencement of the period being reported on or at the date reported.

This requirement will normally be satisfied by the inclusion of pro forma financial information.

This pro forma financial information is to be presented as set out in Annex II and must include the

information indicated therein.

Pro forma financial information must be accompanied by a report prepared by independent ac-

countants or auditors.

Aa) ESMA agreed on the following clarifications:

Transaction: The reference made to "transaction" under item 20.2 covers both the case of a

transaction that has already occurred and the situations, as stated in Article 4a.1 second para-

graph of the Regulation

, where the transaction has not yet taken place but where the issuer has

made a significant firm commitment (i.e. a transaction that the issuer has agreed to undertake).

At the commencement of the period being reported on or at the date reported: when prepar-

ing pro forma information, in order to describe the effect of the transaction, issuers make the as-

sumption the transaction has taken place at a certain date. Item 20.2 refers to two different dates:

- The commencement of the period being reported (first day of the period): this is the hypo-

thetical date of the transaction when preparing a pro forma profit and loss account.

- The date reported (last day of the period): this is the hypothetical date of the transaction

when preparing a pro forma balance sheet. This date is independent from the date of the

Prospectus.

Normally: paragraph 2 of item 20.2 considers that in most cases the best way to describe the

effect of a significant gross change is by providing pro forma information, that will be included in

the prospectus following the requirements set in Annex II. However, the wording of the Regulation,

when stating that “this requirement will normally be satisfied by the inclusion of pro forma financial

information”, acknowledges the fact that there might be certain circumstances where the inclusion

of pro forma information in the prospectus is not feasible or might not be a fair way to describe the

effect of the transaction. In these cases, issuers would still have to comply with the requirement

As inserted by Regulation (EC) Nº 211/2007.

under 20.2 (i.e. by providing a narrative description) but would not have to follow Annex II. This

might be the case when pro forma information cannot be prepared because the issuer with rea-

sonable effort cannot gain access to the relevant information because, for example, it cannot ob-

tain financial information relating to another entity (this consideration is likely to be relevant, in

particular, in the context of a hostile takeover)

Qb) ESMA discussed the interpretation of letter (a) of item 3 of Annex II (those highlighted

below in bold letters)

Item 3 of Annex II

Pro forma financial information must normally be presented in columnar format, composed of:

(a) the historical unadjusted information;

(b) the pro forma adjustments; and

The sources of the pro forma financial information have to be stated and, if applicable, the financial

statements of the acquired businesses or entities must be included in the prospectus.

Ab) ESMA agreed on the following clarification:

Historical unadjusted information: when presenting pro forma information in the prospectus,

Annex II considers that issuers should normally follow a columnar presentation, being the first

column that containing “the historical unadjusted information”. ESMA considers that the expres-

sion “historical unadjusted information” normally refers to the statutory historical financial infor-

mation that has been prepared by the issuer normally to fulfil company law requirements or to

statutory interim financial information prepared by the issuer. In most cases, the first column under

the pro forma requirements will represent information extracted from that provided by the issuer

under items 20.1 and/or 20.6 of Annex I.

Qc) ESMA discussed the interpretation of letters (a) to (c) of item 5 of Annex II (highlighted

below)

Item 5 of Annex II

Pro forma information may only be published in respect of:

(a) the current financial period;

(b) the most recently completed financial period; and/or

or will be published or is being published in the same document.

See recital 13 of Regulation (EC) Nº 211/2007.

Ac) ESMA agreed on the following clarifications:

The current financial period: ESMA considers that this expression refers to a certain period in

the current financial year for which interim information different from statutory interim information

is prepared (for example, if an issuer who normally publishes half-yearly interim financial infor-

mation decides to prepare and publish its financial information for the 4 first months of the year).

The most recently completed financial period: ESMA considers that this expression refers to

the last full financial year (normally 12 months) and not an interim period.

The most recent interim period for which relevant unadjusted information has been or will

be published or is being published in the same document: ESMA considers that the reference

made to the relevant unadjusted information in this letter c) refers to the statutory interim financial

information that will normally be half-yearly financial information (it could also refer to quarterly

financial information as long as it has been prepared with the same level of quality and comfort as

the half yearly information). This interim information will normally be the one that has already been

published by the issuer (for example to comply with the requirements under the Transparency

Directive) or is being published in the prospectus where the pro forma information is being pro-

vided.

51. Pro forma financial information: illustrative examples of the application of the re-

quirements on pro forma (special reference to item 5 of Annex II – letters (a) to (c))

Date last updated: October 2013 (Effective 28 January 2014)

Q) ESMA discussed some illustrative examples of the practical of the application pro forma

requirements and how item 5 of Annex II could be applied in these cases.

A) ESMA provides below an analysis of four typical cases where issuers may be confronted with

the need to provide pro forma financial information in a prospectus and some views on how item

5 of Annex II (letters a to c) could be applied in these cases.

According to item 2 of Annex II, "In order to present pro forma financial information, a balance

sheet and profit and loss account, and accompanying explanatory notes, depending on the cir-

cumstances may be included". Therefore, in its study ESMA has analysed separately the require-

ment for a pro forma balance sheet and for a pro forma profit and loss account (P&L). As for the

inclusion of "accompanying explanatory notes", ESMA considers that the explanatory notes

should be included in all cases where any kind of pro forma financial information (balance sheet

and/or P&L) is provided in the prospectus so that investors can understand the pro forma financial

information that is being disclosed.

The following hypotheses are applicable in all cases:

- There is only one transaction;

- The transaction is significant (that is to say that it implies a variation of more than 25%

relative to one or more indicators of size);

- Only pro forma financial information, and not historical financial information in the prospec-

tus, is being considered; and

- The issuer is obliged to publish half-yearly financial information. In case the issuer pub-

lishes, in addition, quarterly financial information (as long as it has been prepared with the

same level of quality and comfort as the half-yearly financial information), the conclusions

made in the cases below could be applied in a similar way.

The time period for which a pro forma P&L is required in the cases presented illustrates a period

generally sufficient to describe how the transaction might have affected the earnings of the issuer.

There may also be situations where the time period should be longer. For example in cases where

the issuer's business is affected by seasonality, ESMA considers that a pro forma P&L for a full

financial year may be needed. The decision about the time period should always include consid-

eration of the circumstances on a case-by-case basis. If the pro forma information in the prospec-

tus is incomplete or misleading, the NCA should require additional information.

Diagram for cases 1 and 2

Case 1: as illustrated above:

- A significant transaction happened in N-1;

- A prospectus is issued in year N, during first half-year;

- The prospectus contains audited annual financial statements for the year N-1.

Balance sheet

The transaction is already integrated in the balance sheet of the most recent completed financial

statements (as of 31/12/N-1). Therefore, no pro forma balance sheet is required.

Profit and loss account

In this case, as the transaction is not reflected in the P&L for the full N-1 year, a pro forma P&L is

required for N-1 (12 months) as if the transaction had happened on 1 January N-1, complying with

letter b) of item 5 of Annex II. A pro forma P&L should be included in the prospectus if there has

been a significant transaction which is not fully (i.e. for the entire 12-month period) reflected in the

historical financial information of the most recent financial period.

The information according to Annex II compared with e.g. the disclosure required under IFRS 3 in

the case of an acquisition provides additional material information to investors; i.e. a pro forma

P&L and notes on pro forma adjustments and an identification of which pro forma adjustments

have a continuing impact on the issuer and those which have not.

Case 2: As illustrated above:

- A significant transaction happened in N-1;

Case 1/ Transaction

Case 2/ Transaction

Case 1/ Prospectus

Case 2/ Prospectus

N-1

31/12/N

30/06/N

31/12/N-1

- A prospectus is issued in N, during second half year; and

- The prospectus contains half-yearly financial information (as of 30/06/N).

Balance sheet

As in Case 1, the transaction is already reflected in the balance sheet of both the annual financial

information (as of 31/12/N-1) and the half-yearly financial information (as of 30/06/N). Therefore,

no pro forma balance sheet is required.

Profit and loss account

No pro forma financial information is necessary here since the realised P&L impact of the trans-

action is already reflected in the financial information provided under Annex I. The P&L effect of

the transaction is already reflected in the interim financial statements (here the N half-yearly fi-

nancial information). Applicable GAAPs may also request information on the impact of the trans-

action (e.g. IFRS 3).

Diagram for cases 3 and 4

Case 3: as illustrated above:

- A significant transaction happened in N, during first half year;

- A prospectus is issued in N, during first half-year, after the transaction; and,

- The prospectus contains audited annual financial statements for the year N-1.

Balance sheet

In this case, a pro forma balance sheet is required as at 31/12/N-1, as if the transaction had hap-

pened on 31/12/N-1, complying with letter b) of item 5 of Annex II.

Profit and loss account

In this case, a pro forma P&L for N-1 (12 months) is required, as if the transaction had happened

on 1 January N-1 complying with letter b) of item 5 of Annex II. A pro forma P&L should be included

in the prospectus if there has been a significant transaction which is not reflected in the historical

financial information of the most recent financial period.

Case 4: As illustrated above:

- A significant transaction happened in N (first half year); and

- A prospectus is issued in N, during second half year.

N-1

Case 3/ Transaction

Case 4/ Transaction

Case 3/ Prospectus

Case 4/ Prospectus

Balance sheet

If the issuer has not yet published its interims, then the answer in Case 3 will apply.

If the issuer has published its half-yearly financial information, then it would not generally present

a pro forma balance sheet as the transaction is already reflected in the balance sheet of the half-

yearly financial information (as of 30/06/N).

Profit and loss account

Either a pro forma P&L for N-1 (12 months) as if the transaction happened on 1 January N-1 (ac-

cording to item 5 b)) and/or a pro forma P&L for N half-yearly financial information as if the trans-

action had happened on 1 January N (according to item 5 c)) is required. In any case the trans-

action is reflected in the pro forma P&L for a period of at least 6 months.

52. Pro forma financial information in cases where several transactions have taken

place

Date last updated: December 2007

Qa) What kind of pro forma information should normally be provided in cases where there

are several transactions and only one of them is significant (variation of more than 25%)?

Aa) If there are several transactions and only one of them is significant (i.e. implies a variation of

more than 25% relative to one or more indicators of size), then generally, the pro forma financial

information shall cover only the significant transaction and, therefore, there is no need to aggre-

gate. Nevertheless, the situation should be assessed on a case by case basis to ensure that the

information provided is not misleading.

Qb) What type of pro forma information should be provided in cases where an issuer un-

dergoes several transactions none of which individually qualifies as significant but which

when taken together could be considered to qualify as significant?

Ab) If an issuer undergoes several transactions none of which individually qualifies as significant

(i.e. implies a variation of more than 25% to one or more indicators of size) but which when taken

together could be considered to qualify as significant, in general, ESMA believes no pro forma

information should be required. Nevertheless, the situation should be assessed on a case by case

basis to ensure that the information provided is not misleading.

53. Pro forma financial information: cases where issuers have already published pro

forma financial information in a previous prospectus

Date last updated: December 2007

Q) If an issuer has already published pro forma financial statements in a previous prospec-

tus, which financial information must be taken into account in order to evaluate if there is

a "significant gross change" (25%) in case of a new transaction?

In this case, the issuer has not published any other financial statements (annual or interim)

between the two transactions.

A) The following example illustrates this situation:

- Historical financial information: 100 (basis)

- Transaction No1: 40 => as transaction No1 amounts to 40% (40/100), pro forma infor-

mation No1 (reflecting transaction 1) has to be included in prospectus No1 (pursuant to

Annex II of Regulation 809/2004). After transaction No1 the “new group” is 140.

- Transaction No2: 30 => should pro forma information be provided in prospectus No2? If

yes, what pro forma information?

There are 2 options for prospectus No2:

- Option 1: No pro forma information has to be included because transaction No2 is not

significant compared to the “new group” (30/140=21%).

- Option 2: Pro forma information has to be included because transaction No2 is significant

compared to the historical financial information (30/100=30%).

The inclusion of pro forma information (option 2) seems to be the more sensible option in this

case.

According to item 3 of Annex II, the starting point for the presentation of pro forma information in

a prospectus is the historical unadjusted information (which in this case is the historical financial

information -100-). Therefore it would make sense to take this data and not the “new group” as the

basis for the calculation of the “significance” of transaction No2 since this historical unadjusted

information is the information that according to item 3 a) of Annex II has to be included in the first

column for the presentation of the pro forma information.

In this case, pro forma information shall reflect transaction No1 and transaction No2. Therefore,

the pro forma adjustments to be included in the second column according to item 3 b) of Annex

II should be those related to both transactions and not only to transaction No2.

54. Pro forma financial information included in a prospectus on a voluntary basis

Date last updated: December 2012

Q) Can pro forma information be included in a prospectus on a voluntary basis?

A) Yes. The issuer can voluntarily decide to include pro forma information in a prospectus. How-

ever, if pro forma information is provided on a voluntary basis, then this information needs to be

prepared according to Annex II (including an auditor’s opinion). The fact that the issuer voluntarily

decides to provide pro forma information in a prospectus cannot imply that it is possible for this

information to be provided with less care than when requested on a mandatory basis. As CESR

clarified in its advice to the EC (paragraphs 38 to 40 of document CESR/03-208) pro forma infor-

mation, if not prepared with due care, might confuse or even mislead investors. Therefore, for pro

forma information, whether mandatory or voluntary, to be useful for investors it should be prepared

and included in the prospectus following the requirements set in Annex II.

55. Auditor’s statement in Pro Forma Financial information (section 7 Annex II Prospec-

tus Regulation)

Date last updated: August 2008

Q1) Is the auditor’s statement on pro forma information required to include the exact word-

ing as set out in section 7 of Annex II?

A1) ESMA considers that the auditor’s statement on pro forma information is required to include

the exact wording as set out in section 7 of Annex II. No other wording of the statement is accepted.

Q2) May qualifications and/or paragraphs on emphasis of matter be included in the audi-

tor’s statement, without jeopardizing the obligation to render a statement in accordance

with section 7 of Annex II?

A2) ESMA considers that qualifications to the auditor’s statement may not be included as they

would undermine the statement given by the auditor.

In respect of emphasis of matter paragraphs, ESMA would recommend not allowing their inclusion

in the auditor’s statement because it feels that emphasis of matter paragraphs in this context will

only serve to reduce the clarity of the statement in respect of the pro forma information provided

by the auditors.

ESMA feels that an emphasis of matter paragraph cannot add substantial information from the

point of view of investor’s protection because such information can neither add to the information

already provided in the basis of preparation of the pro forma information nor add more information

regarding the consistent application of the accounting policies of the issuer without becoming a

qualification. The conclusion of the auditor's report, as required by section 7 of annex II, should

not allow the possibility of investors being left in doubt as to the conclusion the auditor has reached

on these matters.

56. Retail cascade offers (DELETED)

Date last updated: July 2012

57. Delineation between the Base Prospectus and the Final Terms (Articles 5.4 and 16.2

Directive) (DELETED)

Date last updated: December 2007

58. Level of disclosure concerning price information for share offerings (Article 8.1 Di-

rective and item 5.3.1 of Annex III Regulation)

Date last updated: October 2013 (Effective 28 January 2014)

Q) What level of disclosure concerning price information is required for shares offerings

according to Article 8.1 of the Directive and item 5.3.1 of Annex III Regulation?

A) ESMA considered the level of disclosure concerning price information for shares offerings ac-

cording to Article 8.1 of the Directive and item 5.3.1 of Annex III Regulation (Minimum disclosure

requirement for the share securities note). In this context, it considered inter alia the interpretation

of certain terms used in these provisions as well as the level of disclosure that should be given in

different situations

Both Article 8.1 and item 5.3.1 of Annex III address the topic of how the Prospectus Directive

regime allows for the omission of information about price. Item 5.3.1 of Annex III of the Prospectus

Regulation (shares securities note) has an additional scope: it is not only applicable when the

price is not known, but also when there is no established and/or liquid market for the shares. In

both cases it requires an “indication of the method for determining the offer price, including a

statement as to who has set the criteria or is formally responsible for the determination.” Article

8.1 and item 5.3.1 are generally complementary.

Article 8.1 reflects a market practice whereby the prospectus as approved by the competent au-

thority does not include the final price. Article 8.1 is thus only applicable when the final price, and

amount of the securities, cannot be included in the prospectus. The Prospectus Directive allows

this practice but sets some rules in order to protect investors. Indeed, investors must at least

either: (1) know the maximum price they may have to pay for the shares at the time they subscribe

for the offer; (2) have a withdrawal right or (3) know the criteria in accordance with which the price

and amount of securities will be determined.

ESMA considers that the maximum price and the withdrawal right can offer a satisfactory protec-

tion to investors when the final price is not in the prospectus. In relation to the third alternative,

being "the criteria in accordance with which the price and amount of securities will be determined",

ESMA is of the opinion that the "criteria" must be precise enough to make the price predictable

and ensure a similar level of investor protection. This would also allow investors to check if the

final price has been calculated properly by the issuer or the financial intermediaries acting on

behalf of the issuer. It means that a mere reference to the bookbuilding method is not acceptable

as "criteria" in application of Article 8.1. Nevertheless, the bookbuilding method satisfies the dis-

closure requirement of item 5.3.1 of Annex III when used in conjunction with a maximum price or

a withdrawal right.

ESMA is aware that its interpretation of Article 8.1, in conjunction with item 5.3.1 Annex III in the

context of shares offerings, should ensure that each alternative provides a similar level of investor

protection. Having that in mind, ESMA discussed different cases about the level of disclosure of

price information according to Article 8.1 and item 5.3.1 Annex III. This spectrum of disclosure

requirements may be simplified in the following main approaches:

When the final price is known and included in the prospectus

If there is an established and/or liquid market for the shares, the price can be fixed by the issuer

with reference to the market price. If this is the case, then that disclosure could suffice for item

5.3.1 of Annex III (because the price is known and there is a liquid market).

If there is no established and/or liquid market for the shares, the prospectus should give additional

information in accordance with item 5.3.1, even if the price is known. In order to be able to make

an informed investment decision, investors need to know how the issuer or offeror has determined

the price as there is no established and/or liquid market price that can be used as reference.

In those cases the price is generally fixed in advance by the issuer and its advisers according to

a bookbuilding exercise or a multiple criteria method (based on DCF, peer group analysis and any

other commonly accepted valuation techniques). In such situations where the price is included in

the prospectus, the method used to fix the price, and how the method is applied, should be ex-

plained in the prospectus.

When the final price is not known and thus not included in the prospectus

For IPOs (as generally there is no established and/or liquid market, as per definition of IPO) or for

public offers of shares made by unlisted issuers, in the absence of a final price, the prospectus

generally contains a maximum price or a withdrawal right is given to investors. In practice some

issuers take advantage of more than just one of the options available under Article 8.1 and explain

in the prospectus that if an indicative maximum price (or price range) were to be exceeded then a

with-drawal right would also arise.

The method used by issuers to determine the final price is almost always a bookbuilding procedure

and a maximum price or a price range is published before the offer starts. In cases where the price

range is only indicative, a withdrawal right will arise if the final price is higher than the top of the

range. As the price is not known and there is no established and/or liquid market, in accordance

with 5.3.1 of Annex III, the prospectus must indicate the method for determining the offer price,

including a statement as to who has set the criteria or is formally responsible for the determination.

In order to be able to make an informed investment decision, investors need to know how the

issuer or offeror would determine the price as there is no established and/or liquid market price

that can be used as reference. The information about the method given in accordance with 5.3.1

of Annex III may vary. In case of bookbuilding procedure its description, and how it is to be applied,

should be given. Any additional information provided in relation to price outside of the prospectus

may require the publication of a supplement to the prospectus in accordance with Article 15(5) of

the Prospectus Directive.

For subsequent public offerings, in principle there is an established and/or liquid market. In that

case, the prospectus generally provides the criteria/conditions in accordance with which the price

will be determined in order to comply with Art 8.1 as the price is determined by reference to the

market price (for example x% discount from the average market price). There is no maximum price

and no withdrawal right in that case. This information would normally also meet the requirements

of item 5.3.1 of Annex III in relation to price.

Any additional material information provided in relation to price outside of the prospectus (e.g.

valuation process etc.) should be included in the prospectus or a supplement thereto in accord-

ance with Article 15.5 of the Prospectus Directive.

59. Disclosure of major holdings by third country issuers: interpretation of item 18.1 of

Annex I Prospectus Regulation

Date last updated: December 2007

Q How should item 18.1 of Annex I

on disclosure of major holdings be interpreted, in par-

ticular in relation to third country issuers?

A) ESMA considers that the reference to “the issuer’s national law” in item 18.1 of Annex I, should

be interpreted as follows:

a) When the issuer is admitted to trading on an EU regulated market and the provisions of Trans-

parency Directive 2004/109/EC

as implemented by the Member State apply, the information that

the issuer provides to fulfil the requirements of the Transparency Directive should be included in

the prospectus to satisfy item 18.1 of Annex I;

b) When the issuer is not admitted to trading on an EU regulated market and the provisions of the

Transparency Directive do not apply, the information to be included under item 18.1 of Annex I is

that which is notifiable according to the issuer’s country of incorporation law.

When the issuer’s country of incorporation law does not require any information to be notified, the

issuer should include a negative statement in the prospectus to that effect.

In so far as is known to the issuer, the name of any person other than a member of the administrative, management or supervisory

bodies who, directly or indirectly, has an interest in the issuer’s capital or voting rights which is notifiable under the issuer’s national

law, together with the amount of each such person’s interest or, if there are no such persons, an appropriate negative statement.

Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency

requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending

Directive 2001/34/EC.

60. Items 5.4.1 and 5.4.2 of Annex III Regulation: name of co-ordinator, placers, paying

and depositary agents in the various countries where the offer takes place

Date last updated: December 2012

Q) According to items 5.4.1

and 5.4.2

of Annex III Regulation, the prospectus shall con-

tain the name and address of the co-ordinators of the offer, the placers (to the extend

known to the issuer), the paying agents and the depository agents in the various countries

where the offer takes place.

ESMA has analysed the practical application of these provisions on passported prospec-

tuses and has found out that sometimes some of this information is missing.

The problem described arises due to the issuers’ practice of requesting the passport noti-

fication for many EU countries even if they are not totally sure at that time that they will

actually make a public offer in all those countries. Hence the lack of certain information in

the prospectus relevant to all or some of the host markets.

A) ESMA considers that issuers should ensure that all the information requested in items 5.4.1

and 5.4.2 of Annex III Regulation should be included in all prospectuses as it is required by the

Prospectus Regulation or provided to host investors through announcements in the host markets

if that information is not known at the time the prospectus is approved. Issuers are encouraged to

file these announcements with the host competent authorities, where appropriate. This does not

prejudice the need for a supplement according to Article 16 Directive if the missing information

were considered to be significant according to that article.

61. Clarification of certain terms used in item 3.2 of Annex III Regulation: Capitalisation

and indebtedness

Date last updated: December 2007

Q) ESMA members discussed the interpretation of certain terms used in item 3.2 of Annex

III (those highlighted below in bold letters)

Item 3.2 of Annex III: Capitalisation and indebtedness

A statement of capitalisation and indebtedness (distinguishing between guaranteed and unguar-

anteed, secured and unsecured indebtedness) as of a date no earlier than 90 days prior to the

date of the document. Indebtedness also includes indirect and contingent indebtedness.

A) ESMA agreed on the following clarifications:

“Name and address of the co-ordinator(s) of the global offer and of single parts of the offer and, to the extend known to the issuer or

to the offeror, of the placers in the various countries where the offer takes place”

“Name and address of any paying agents and depository agents in each country”

Indirect indebtedness: indirect indebtedness is any obligation that has not been directly incurred

by the issuer, which is considered on a consolidated basis, but which may fall on the issuer to

meet in certain circumstances: for instance a guarantee to honour a loan advanced by a bank to

an entity (that is not in the issuer’s group) if this entity defaults on repayments due on the loan.

Contingent indebtedness: contingent indebtedness is the maximum total amount payable in re-

lation to any obligation which although incurred by the issuer has yet to have its final amount

assessed with certainty, irrespective of the likely actual amount payable under that obligation at

any one moment in time: for instance the total VAT liability due on goods in a bonded warehouse

where the actual amount payable to the tax authorities in any given financial period will depend

not on the actual goods bought by the issuer and deposited in the warehouse but on the level of

those goods actually sold on to customers.

62. Updated capitalisation and indebtedness statement (item 3.2 Annex III PR)

Date last updated: December 2008

Q) Does item 3.2 of Annex III Prospectus Regulation require updated information in case of

a significant change relating to capitalisation and indebtedness within the 90 days limit or

is any statement sufficient as long as it is as of a date no earlier than 90 days prior to the

date of the prospectus?

A) Item 3.2 of Annex III Prospectus Regulation

requires a statement of capitalization and indebt-

edness as of a date no earlier than 90 days prior to the date of the prospectus.

ESMA considers that this determines the last possible date of the capitalisation and indebtedness

statement in the absence of a significant change.

Where an event which could be described as a significant change occurs between the 90-day-

period and the date of the prospectus, the issuer must reflect this change in its capitalisation and

indebtedness statement, as appropriate, otherwise the statement may be misleading. Generally

the capitalisation and indebtedness statement must be consistent with the financial information

included in the prospectus and the disclosure on significant changes in the issuer's financial or

trading position according to item 20.9 of Annex I Prospectus Regulation.

63. Rights issue to existing shareholders (DELETED)

Date last updated: May 2008

ESMA issued some guidance in relation to item 3.2 in paragraph 127 of its Recommendations for the consistent implementation of

EC Regulation 809/2004 (ESMA/2013/319).

64. More than one final terms for a specific issue of bonds

Date last updated: December 2012

Q) Can an issuer provide investors and file with the competent authority more than one

document with final terms for a specific issue of bonds?

A) ESMA has analysed 2 cases where more than one document with final terms for a specific

issue of bonds could be filed:

1. Amendment of information included in final terms that is not a significant new factor, material

mistake or inaccuracy: in this case, ESMA considers that issuers, pursuant to Art.2a, para 2 (2),

of Regulation No. 809/2004, shall publish a notice of the change. In addition, issuers should also

be allowed to file, on a voluntary basis, a replacement of the final terms with the new information

ESMA notes that the practice in some Member States is to allow the issuer to amend final terms,

if it has reserved such right in the applicable terms and conditions. It is the issuer's responsibility

to ensure compliance with the applicable terms and conditions and any national laws in order to

prevent an infringement of the existing securities holders' rights

2. A significant new factor, material mistake or inaccuracy relating to the information included in

the final terms which is capable of affecting the assessment of the securities: in this case, it is

ESMA‘s view that a supplement to the related base prospectus with reference to the amended

final terms in accordance with Article 16 of the Prospectus Directive would be required. In addition

to the required supplement, ESMA recommends to file a second set of final terms replacing the

first set of final terms to give a clear picture for investors. This allows the investors to easily have

a full and clear view on the relevant issue.

In line with other ESMA‘s statements in this Q&A (cf. answer to Question 20 - Supplement to

prospectuses: profit forecast), ESMA considers that it is up to the issuer to assess the significance

or materiality of a new factor, mistake or inaccuracy, without prejudice to the powers of the home

competent authority.

65. Significant Change Statements and Half-Yearly Financial Reports

Date last updated: December 2008

Q) A company has a year-end of 31 December, and has published a half-yearly financial

report as of 30 June. It is preparing a prospectus for a wholesale issue of securities, using

Annex 9 for registration document disclosure. For the purposes of significant change in

paragraph 11.6, the issuer is required to provide the statement as of the date of "the end of

the last financial period" - this could either be the interim financial information or the date

of the audited financial information. (Note: for issues of at least EUR 100,000 there is no

half-yearly reporting requirement).

If it is at the date of the half-yearly report, should the issuer be including the half-yearly

report in the prospectus even though Annex 9 does not require this?

A) As the half-yearly report is the last financial period for which financial information has been

published, Annex 9, paragraph 11.6 should be given since 30 June - i.e the date of the last financial

period to reflect the full picture of the company's financial situation. Provided issuers are satisfied

that for the purposes of Article 5 of the Prospectus Directive the prospectus contains all necessary

information, the half-yearly report will not be required in the document. The issuer would however

be expected to include the half-yearly financial information in the list of documents on display

under paragraph 14 (b) of the Annex since it is referred to in the prospectus.

In case of a significant change in the issuer's financial or trading position after the date of the

audited financial information the issuer may wish to include interim financial information to satisfy

the materiality principle in Article 5 of the Prospectus Directive.

66. Item 4.6 of Annex III of Regulation No. 809/2004

Date last updated: December 2008

Q) How should the requirement in item 4.6 of Annex III of the Prospectus Regulation on the

disclosure of resolutions, authorisations and approvals be interpreted?

A) The wording 'by virtue of which the securities have been or will be created and/or issued' in

item 4.6. of Annex III of the Prospectus Regulation implies that according to this item only legal

acts on the part of the issuer, i.e. general meeting resolutions and board of directors decisions,

need to be disclosed.

However, disclosure on any legal acts on the part of third parties, e. g. approvals by the central

bank or competition authorities, or the fulfillment of any other external preconditions to the creation

or the issuance of the securities might be appropriate according to item 5.1.1 of Annex III Pro-

spectus Regulation and Article 5.1 Prospectus Directive.

If any internal resolutions, authorisations or decisions on the part of the issuer or any external

preconditions on the part of third parties are pending or can be revoked, the issuer is expected to

include a clear statement to that effect and an explanation of the consequences in case the re-

quired resolution, authorization, approval is not given or a precondition is not fulfilled. This infor-

mation might also be required according to item 5.1.4. of Annex III Prospectus Regulation. Certain

of the abovementioned elements might be considered as risk factors.

67. Transferable securities

Date last updated: December 2008

Q1) If an offer to purchase shares is directed to investors under the condition that each

participating investor must sign an agreement (e.g. a shareholders agreement) which pre-

scribes that the shareholders restrict their right to freely transfer their shares, does this

condition of the offer affect the status of the shares as transferable securities?

A1) The definition of transferable securities under the Prospectus Directive refers to the definition

under Article 4.1.18) of Directive 2004/39/EC on markets in financial instruments.

As stated in the document entitled "Your questions on MiFID" published by the European Com-

mission Services (answer to question N° 115): "The essence of the definition of transferable se-

curities in Article 4(18) MiFID is that, as a class, they are negotiable on the capital markets (…)”.

The transferability of securities may be reduced on a contractual basis, such as selling restrictions

applicable in a specific country or by a lock up agreement between the Company and existing

shareholders. In these cases, ESMA considers that those securities remain "transferable securi-

ties" falling into the scope of the Prospectus Directive.

This view is also backed by the fact that Prospectus Regulation requires information in relation to

restrictions on the free transferability of the securities (Annex III, 4.8) and information in relation to

lock-up agreements of selling securities holders (Annex III, 7.3).

Nevertheless, ESMA is aware that some restrictions may be so broad that they result in trans-

forming "transferable securities" into non-transferable securities, falling no longer into the scope

of the PD.

ESMA will analyse whether the security that is subject to a restriction is transferable or not on a

case by case basis.

Q2) If the shares are considered transferable securities, irrespective of the conditions of

the agreement, should information in relation to the agreement be incorporated in the pro-

spectus?

A2) Yes. The Prospectus Regulation requires information in relation to restrictions on the free

transferability of the securities (Annex III, 4.8) and information in relation to lock-up agreements of

selling securities holders (Annex III, 7.3).

68. Disclosure for Mineral Companies in the CESR Recommendations (DELETED)

Date last updated: December 2008

69. Scope of the wording ‘any bankruptcies, receiverships or liquidations’ used in item

14.1 of Annexes I and X

Date last updated: December 2008

Q) Third paragraph under (c) of item 14.1 requires that the prospectus includes:

“details of any bankruptcies, receiverships or liquidations with which a person de-

scribed in (a) and (d) of the first subparagraph who 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 the previous five years;”

Is the required disclosure limited to declared bankruptcies, receiverships or liquidations?

A) ESMA considers that the scope of the required disclosure is not restricted to declared bank-

ruptcies, receiverships or liquidations but that also information on bankruptcies, receiverships or

liquidations that are pending or in are progress should be provided.

70. Disclosure requirements for securities which are "unconditionally and irrevocably

guaranteed by one of a Member State's regional or local authorities"

Date last updated: December 2012

Background

ESMA is aware that given the current market circumstances several Members States are consid-

ering the possibility of unconditionally and irrevocably guaranteeing, under various forms, securi-

ties issued by credit institutions in their jurisdictions to reactivate the market. ESMA has been

approached by some of those credit institutions that are considering the possibility of drawing up

a prospectus in accordance with the Prospectus Directive (to benefit from the option of passporting

the prospectus) to make a pan-european offer. Some of these credit institutions have applied for

derogations from some of the requirements of the annexes to the Prospectus Regulation on the

basis that these securities have been guaranteed by Member States and that information on Mem-

ber States is already in the public domain. Other institutions have argued that they are not readily

able to obtain information required on the Member States in the Annexes.

Following these requests, ESMA has discussed the issue and has reached the following agree-

ment.

Q1) What are the disclosure requirements for securities "unconditionally and irrevocably

guaranteed by one of a Member State's regional or local authorities" if an issuer decides

to draw up a Prospectus Directive compliant prospectus (in accordance with Article 1.3

Directive)?

A1) According to Article 1.2 d) Prospectus Directive, the Directive shall not apply to securities

"unconditionally and irrevocably guaranteed by a Member State or by one of a Member State's

regional or local authorities".

Therefore, it is up to Member States legislation to define how to regulate these offers and admis-

sions to trading. Member States might have set different requirements for these situations, mean-

ing that issuers would have to check each national regime of the Member States where they want

to make an offer to the public or an application for admission to trading on a regulated market.

Nevertheless, Article 1.3 Prospectus Directive entitles an issuer (or a person asking for admission

to trading on a regulated market) to opt-in the Prospectus Directive; i.e. to draw up a prospectus

in accordance with the Directive when securities are offered to the public or admitted to trading.

ESMA considers that once an issuer decides to use the option provided in Article 1.3 Prospectus

Directive to draw up a Prospectus Directive compliant prospectus for securities "unconditionally

and irrevocably guaranteed by a Member State or by one of a Member State's regional or local

authorities", all the requirements included in the Prospectus Directive and the Prospectus

Regulation apply. In particular, the issuer will be able to benefit from the possibility of “passport-

ing” the prospectus to all EU Member States, once it is approved by the home Member State. On

the other hand, the issuer must comply with the disclosure requirements as set in the relevant

annexes in the Prospectus Regulation.

ESMA has discussed the following example: a bank is preparing an offer of debt securities uncon-

ditionally and irrevocably guaranteed by a Member State’s regional or local authorities, with a

denomination per unit of less than EUR 100,000, and decides to opt-in the Prospectus Directive.

In this example, ESMA considers that the following annexes would be applicable:

- Banks registration document (Annex XI)

- Securities notes for debt securities with a denomination per unit of less than EUR 100,000

(Annex V)

- Guarantees building block (Annex VI)

- Registration document for Member States, third countries and their regional and local au-

thorities (Annex XVI): this information is requested as item 3 of Annex VI (Information to

be disclosed about the guarantor) states that “The guarantor must disclose information

about itself as if it were the issuer of that same type of security that is the subject of the

guarantee”. Therefore, Annex XVI should be filed in with the information of the Member

State.

Nevertheless, on a case by case basis, it is possible for the competent authority to authorise the

omission from the prospectus of certain information in accordance with Article 8 of the Directive.

Besides, in those cases where certain information requirements are not pertinent to the issuer, to

the offer or to the securities to which the prospectus relates, that information may be omitted in

accordance with Article 23.4 Prospectus Regulation.

Q2) What are the disclosure requirements for securities guaranteed (but not uncondition-

ally and irrevocably) by regional or local authorities and for securities guaranteed by third

countries, their regional or local authorities?

A2) The Directive is applicable to these types of securities (i.e. issuers do not need to opt-in to be

subject to the Directive) and therefore issuers should provide all the relevant information according

to the Prospectus Regulation. In this case, the same reasoning as the one in the example provided

in the previous question should be followed and, therefore, Annex XVI would also be applicable.

71. Employee Share Scheme Prospectuses: Short-form disclosure regime for offers to

the employees in those cases where a prospectus is required (application of Article

23.4 of the Prospectus Regulation)

Date last updated: December 2012

Background

The European Commission wrote to CESR on 18 July 2007 to request that regulators should adopt

a common 'light-touch' approach to share offers to employees under the Prospectus Directive and

Prospectus Regulation.

Following the Commission’s request, CESR published a statement in December 2007 (CESR/07-

825) stating that it was its intention to analyse the possibility of agreeing a short-form disclosure

regime for offers to the employees in those cases where a prospectus is required and requesting

market participants views. In particular, CESR stated that it would discuss the application of Article

23.4 of the Prospectus Regulation with the aim of permitting the omission of certain information

requirements contained in the Annexes, on the basis that they may not be pertinent to the specific

case of an offer to employees.

Having analysed the input received from market participants, ESMA agrees with the statements

by the European Commission (letter from commissioner McCreevy dated 11 September 2007)

that the requirement to produce a full equity prospectus for offers made in the contest of an em-

ployee share scheme is not an effective means of informing employees about the risks and ben-

efits of this particular kind of offer and imposes excessive costs on employers that are not justified

in terms of investor protection. The significant amount of detailed information that would otherwise

be required in a prospectus for third party investors is not pertinent to employee offers on the basis

that employees are privy to information in their companies and have the option to purchase the

securities directly from the market if they choose to pursue this option.

In trying to find a solution, ESMA has established the following key questions.

The European Commission has welcomed the publication of the approach adopted by

ESMA.

Q1) To which issuers should the short-form disclosure regime apply?

A1) ESMA considers that it is appropriate to restrict the application of the short-form disclosure

regime to those issuers who have securities admitted to trading on a market as this would normally

imply that they are subject to some type of on-going information requirements (e. g. yearly publi-

cation of financial information).

Therefore, the short-form disclosure regime should be applicable to public offers of securities to

existing or former directors or employees by their employer which has securities already admitted

to trading on a market or by an affiliated undertaking.

Q2) To what type of securities should the short-form disclosure regime apply?

A2) Having observed in practice that almost all the offers to employees where a prospectus is

required are offers of shares, ESMA has decided to focus on the information to be produced for

shares offerings.

Q3) What are the information disclosure requirements under this regime?

A3) The issuer should prepare a prospectus omitting, in accordance with Article 23.4 of the Pro-

spectus Regulation, all the information requested by the items of the relevant annexes which is

not pertinent in case of an offer to employees.

ESMA considers that following items are generally not pertinent for offers of shares to employees

and can thus be omitted from the prospectus in accordance with Article 23.4 of the Prospectus

Regulation:

- Annex I: 5.1.2 to 5.1.5, 5.2, 6, 7, 8, 9, 10, 11, 15, 16, 17.1, 18, 19, 20.1 to 20.5, 20.6, 21,

22, 25;

- Annex III: 3.3, 4.10, 5.1.9, 5.1.10, 5.2, 5.4.1, 5.4.3, 5.4.4, 6.3, 6.4, 6.5, 7, 10.2.

Nevertheless, the competent authority has the right to request the issuer to include the information

required in additional items from the annexes, when deemed appropriate in specific cases (in

particular if the competent authority is not satisfied that the on-going information requirements of

the relevant market ensure a sufficient level of information for investors).

Notwithstanding the omission of information in accordance with Article 23.4. of the Prospectus

Regulation, all the rules for prospectuses set in the Prospectus Directive and in the Prospectus

Regulation will still apply.

Q4) What is the role of the competent authority in relation to the prospectus prepared fol-

lowing the short-form disclosure regime?

A4) The competent authority should scrutinise and approve the prospectus prepared following the

short-form disclosure regime. Once approved, this prospectus can be passported to other Member

States.

72. Valuations and statements prepared by an expert

Date last updated: August 2009

Q) The registration document annexes (e.g. in Annex I, Item 24 (b)), requires that the reg-

istration document states that it is possible to inspect "all reports, letters and other docu-

ments, historical financial information, valuations and statements prepared by an expert at

the issuer's request" which are either referred to or included in the registration document.

Is it the intention that this paragraph should only require documents prepared by an expert

to be displayed and the reference to 'prepared by an expert at the issuer's request refer to

the whole sentence from “all reports, letters…”, or does the reference to being "prepared

by an expert" specifically only apply to "valuations and statements"?

A) It is ESMA's view that the reference to experts applies to 'valuations and statements' only,

rather than to any other report, letter, other document or historical financial information included

or referred to in the registration document. The reports, letters and other documents referred to

are expected to be put on display whether or not they are prepared by an expert and whether or

not they were prepared at the issuer’s request, provided they are referred to in the prospectus.

73. Material contracts

Date last updated: December 2012

Q) Is there a requirement (in Annex I, Item 24 and similar annexes) to display all material

contracts?

A) There is no specific requirement in the Prospectus Regulation annexes (e.g. in Annex I, item

22) to display material contracts. This requirement which was in the 2001/34 Directive was dis-

pensed in 2005 following the negotiations of the Prospectus Regulation, when some Member

States and market participants argued that there might be confidentiality and competition issues.

The only requirement (e.g. in Annex I, item 22) is for a summary of each material contract to be

included in the prospectus. ESMA would expect the summary to contain all the essential infor-

mation that an investor would reasonably expect to see. Issuers should be aware of the general

duty of disclosure under Article 5.1 of the Directive when summarising the information in material

contracts.

74. Definition of public offer

Date last updated: August 2009

Q) Is the simple indication of secondary market prices to be considered an offer to the

public?

For example: An issuer's securities are admitted to trading on a regulated market X in Mem-

ber State A. The issuer regularly publishes secondary market prices of its securities on

market X on its website. In compliance with the requirements of Art. 4.2 h) (i) to (vii) Di-

rective the issuer applies for the admission of its securities on another regulated market Y

in Member State B without publishing a prospectus. After the completion of the issuer's

dual listing secondary market prices of the issuer's securities on both markets are in the

public domain, e.g. by way of publication on the relevant stock exchanges' websites. Is the

issuer allowed to also publish all secondary market prices, i.e. regulated market X and reg-

ulated market Y prices, on its website besides information about its business and security

identification numbers without publishing a prospectus?

A) In general, the simple indication of secondary market prices should not be considered an offer

to the public if there are no further circumstances which might altogether amount to an offer to the

public. In the case described above, the issuer should be allowed to repeat on its own website

secondary market prices of its securities trading on regulated markets that are published by the

relevant stock exchanges along with securities identification numbers and factual information

about its business. Such publication does not necessarily lead to a public offer. Rather, the very

specific elements of each situation should be analysed on a case by case basis.

75. Validity of prospectuses under Article 9 PD

Date last updated: December 2012

Q) How should be calculated the validity period of a prospectus composed of separate

documents depending on the date of filing and approval of the registration document?

A) Once approved a registration document is valid for 12 months, provided that it has been up-

dated in accordance with the PD, if applicable. Within this period such a registration document

can be used to constitute a valid prospectus when taken together with a summary and a securities

note. In doing so the issuer has to keep in mind that a prospectus composed of separate docu-

ments must be as complete, comprehensible and consistent as if it were drawn up as a single

document.

The validity period of a prospectus composed of separate documents does not depend on the

dates of filling and approval of its registration document, but of the date when all these documents

are approved: registration document, securities note and the summary. Concretely, a prospectus

composed of separate documents is valid for 12 months after the approval of the securities note

and the summary (and registration document if not published yet), provided that the prospectus is

completed by any supplements required pursuant to Article 16.

76. References to credit ratings in prospectuses (Qd DELETED)

Date last updated: December 2012

Qa Does Article 4 (1) refer to any credit rating mentioned in a prospectus?

Aa) The Prospectus Regulation only requires issuers or offerors to disclose in the prospectus

‘credit ratings assigned to an issuer or its debt securities at the request or with the co-operation of

the issuer in the rating process. A brief explanation of the meaning of the ratings if this has previ-

ously been published by the rating provider’ (Annex V, item 7.5). However, the requirement im-

posed by the Regulation on CRAs would also cover other references to ratings included in the

prospectus that are not required by the relevant Annex of the Prospectus Regulation.

For example, an issuer might mention in its prospectus:

- a rating assigned by rating agency A to some underlying assets of the security that is the

subject of the prospectus;

- a rating assigned by rating agency B to a loan granted to the issuer;

- a rating issued by rating agency C on the securities that are the subject of the prospectus

that was not solicited by the issuer and that was determined without participation of the

issuer in the rating process;

- that its investment policy is to invest only in securities assigned the highest rating by rating

agency D.

None of the credit ratings above need to be disclosed in a prospectus according to the Annexes

to the Regulation. It can be assumed that, if the issuer voluntarily includes disclosures about those

ratings in the prospectus is because it considers that the ratings are relevant information for pro-

spective investors. ESMA understands that if the disclosure of a credit rating is relevant, infor-

mation on whether the CRA is registered in the EU is also material. Therefore, in all those cases

the issuer should state whether rating agencies A, B, C, and D are registered or not in accordance

with the Regulation on CRAs.

Qb How issuers and offerors find out whether a credit rating agency (CRA) is registered

under the Regulation?

Ab) Article 18 (3) of the Regulation on CRAs provides that ESMA shall publish on its website a list

of credit rating agencies registered in accordance with this Regulation. That list shall be updated

within five working days following the adoption of a decision under Article 16, 17 or 20. The Com-

mission shall publish that updated list in the Official Journal of the European Union within 30 days

following such update.

Qc Do prospectuses relating to non-equity securities referred to in Article 5(4)b of the Pro-

spectus Directive registered before 7 December 2010 need to be supplemented?

Ac) Outstanding prospectuses, relating to non-equity securities referred to in Article 5(4)b of the

Prospectus Directive, approved prior to the 7

of December 2010 including a reference to a credit

rating do not need to be supplemented to comply with Article 4 (1) of the Regulation on CRAs if

the issuer or offeror wishes to make a public offer or admission to trading.

77. Global Depositary Receipts (GDRs)

Date last updated: June 2012

Q) How should the PD be applied in the case of admissions to trading of GDRs where, as a

result of investors exchanging shares for GDRs (and vice versa) on a continuous basis, the

number of GDRs in issue fluctuates?

A) ESMA recognises that the operation of a typical GDR facility, where the number of GDRs in

issue fluctuates as a result of the facility for investors to exchange shares for GDRs (and vice

versa) at any time and outside the issuer's control, should be accommodated by a pragmatic ap-

proach to the application of the PD. ESMA therefore believes that it is acceptable for a person

applying for admission of GDRs to trading to produce a prospectus covering the admission of "up

to" a specified number of GDRs. The number of GDRs can be no more than the equivalence of

100% of the issued capital of the issuer at the date of the GDR prospectus, because they can only

reflect the existing amount of the issuer’s shares. That prospectus will be valid for admission(s)

for so long as the total number of GDRs in issue does not exceed the limit set out in the prospectus.

This would also allow new shareholders (individuals that hold newly issued shares that were is-

sued after the date of the establishment of the GDR “up to” facility) to exchange their shares for

GDRs, so long as the number of GDRs in issue does not exceed the amount of the “up to” facility.

The use of the “up to” amount is appropriate to facilitate market activity in that it enables share-

holders to exchange their shares for GDRs.

78. Issue specific details in case of Category B items

Date last updated: June 2012

Q) What relevant details not known at the time of the approval of the base prospectus may

be included in final terms in case of Cat.B items?

A) When according to Article 2a and Annex XX Regulation (EC) 809/2004 as amended by Com-

mission Delegated Regulation (EU) No. 486/2012 of 30 March 2012 (Prospectus Delegated Reg-

ulation) an item is categorized as “CAT. B”, the base prospectus should contain all the general

principles of such item and only placeholders for the relevant details not known at the time of the

approval of the base prospectus. ESMA also believes that requiring a defined and limited list of

issue specific details ensures legal certainty and harmonization of the final terms.

ESMA therefore believes that such details can only refer to amounts, currencies, dates, time pe-

riods, percentages, reference rates, screen pages, names and places.

The final terms may replicate or refer to such principles and fill out the relevant placeholders,

pursuant to Recital 26 of the Prospectus Regulation.

Examples of CAT. B Items:

a) Example of final terms replicating the principle:

THE BASE PROSPECTUS:

“Redemption Amount payable in respect of each certificate as determined by the Calcula-

tion Agent shall be:

(i) if the Final Reference Price is equal to or greater than [O] of the Initial Reference Level,

then the settlement Amount shall be [O]

(ii) if the Final Reference Price is less than [O] of the Initial Reference Level, then the

Settlement Amount shall be [O]”

THE FINAL TERMS:

“Redemption Amount payable in respect of each certificate as determined by the Calcula-

tion Agent shall be:

(i) if the Final Reference Price is equal to or greater than 80 per cent of the Initial Reference

Level, then the Settlement Amount shall be 200 EUR

(ii) if the Final Reference Price is less than 80 per cent of the Initial Reference Level, then

the Settlement Amount shall be 0 EUR”

b) Example of final terms referring to the principle:

THE BASE PROSPECTUS:

”XY. Redemption at the option of the Issuer (Issuer Call)

If Issuer Call is applicable, the Issuer may:

(a) in not less than 15 nor more than 30 days’ notice to the Noteholders; and

(b) in not less than 4 days before the giving of the notice referred to in a notice to the

Trustee redeem all or some only of the Notes then outstanding on any Optional Redemp-

tion Date and at the Optional Redemption Amount specified in, or determined in the man-

ner specified in, the applicable Final Terms.”

THE FINAL TERMS:

”Redemption at the option of the Issuer (as referred to under condition XY)

Optional Redemption Date: 09/04/11

Optional Redemption Amount: 1000 EUR”

79. Interpretation of the term "index description" included in item 4.2.2 of Annex XII

Date last updated: September 2012

Q) ESMA has discussed how the term “index description” included in item 4.2.2 of Annex

XII should be interpreted.

A) ESMA considers that the index description should contain the essential characteristics to ena-

ble an investor to fully understand the index and its dynamics and make an informed assessment.

For, at least, the following items the essential characteristics should be provided:

- strategy of the index/Investment policy

- description of the individual selection process of the components weighting factors

- method and formulas of calculation

- name of the calculation agent

- adjustment rules

- review frequency

- type of index (price return, excess return, etc.)

- currency

80. Format of the summary (Annex XXII)

Date last updated: July 2012

Q) What is the initial guidance on the format of the summary (Annex XXII of the Commission

Delegated Regulation (EU) No 486/2012 of 30 March 2012) before the publication of the

forthcoming Implementing Technical Standards (‘ITS’) concerning a uniform template?

A) In order to ensure clarity and comparability ESMA expects the summary to follow the formatting

requirements set out below:

- The wording of the headings of the Sections A-E of Annex XXII must be included in the

summary. As for Section B the reference to guarantor should be deleted if not applicable;

- References to the specific annexes are not required;

- The Elements-numbering of the relevant annexes shall be included in the summary.

- A short description of the Element’s disclosure requirement of each applicable Element for

the specific type of securities and Issuer shall be given in the summary as an introduction-

ary heading.

- The following introduction is required in the summary to give more guidance to readers of

a summary:

‘Summaries are made up of disclosure requirements known as ‘Elements’. These elements

are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type

of securities and Issuer. Because some Elements are not required to be addressed, there

may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the

type of securities and Issuer, it is possible that no relevant information can be given re-

garding the Element. In this case a short description of the Element is included in the sum-

mary with the mention of ‘not applicable’.

- Where information is not included in the body of a prospectus in relation to a particular

Element, a reference to ‘not applicable’ should appear followed by a short description of

the disclosure requirement. ‘Not applicable’ should not be abbreviated to ‘N/A’.

Insofar as it is possible, issuers would be expected to provide the information included in the

summary in the form below (example below is for a debt prospectus using Annex IV or Annex

XI):

Section B – Issuer [and any guarantor]

B.1

Legal and Commercial Name

[….]

B.2

Domicile/Legal Form/Legislation/Coun-

try of Incorporation

[…]

B.4b

Known trends

Not Applicable; there are no known trends

affecting the Issuer and its industries in

which it operates.

B.5

Group

Not Applicable; the Issuer is not part of a

group.

[…]

81. The consent given in “retail cascades” (DELETED)

Date last updated: September 2012

82. Summaries in relation to proportionate disclosure regimes

Date last updated: October 2014

Q) How should a summary in relation to proportionate disclosure regimes be prepared?

A) ESMA is aware that Article 24 and Annex XXII of the Prospectus Regulation as amended by

the Commission Delegated Regulation (EU) No 486/2012, which determines the disclosure re-

quirements in summaries, contains no explicit reference to the proportionate schedules set out in

Annexes XXIII to XXIX.

Article 5 (2) of the Prospectus Directive requires, except for non-equity securities with a denomi-

nation of at least EUR 100,000, that a prospectus shall include a summary providing key infor-

mation and that the summary shall be drawn up in a common format in order to facilitate compa-

rability of the summaries of similar securities and its content should convey the key information of

the securities in order to aid investors when considering whether to invest in such securities.

ESMA’s view is that there was no intention to exclude the proportionate disclosure regime from

the requirements for summaries, and the Commission Services confirm this view. ESMA expects

that Annex XXII should also be applicable to issuers, to offerors or the person asking for admis-

sion, using the proportionate disclosure regimes and elements in Annex XXII which are not re-

quired by the relevant proportionate schedules could be left out in the summary of a prospectus

which complies with the proportionate disclosure regime.

Thus, summaries related to:

- Annex XXIII and Annex XXV should follow summary requirements applicable to Annex I,

- Annex XXIV should follow summary requirements applicable to Annex III,

- Annex XXVI should follow summary requirements applicable to Annex IV,

- Annex XXVIII should follow summary requirements applicable to Annex X,

- Annex XXIX should follow summary requirements applicable to Annex XI,

excluding those elements which are not required by the relevant proportionate disclosure sched-

ules.

83. Type of underlying

Date last updated: December 2012

Q) Prospectus Regulation (PR) Annex V item 4.7, Annex XII item 4.2.2 and Annex XIII item

4.8 require a statement setting out the type of the underlying. According to Annex XX, a

statement setting out the type of the underlying is labelled as Category A information and

must, therefore, be included in the base prospectus.

When making the Category A statement setting out the type of the underlying in the base

prospectus, how precise should the information be?

A) All information known at the time of drawing up of the base prospectus must be disclosed in

the base prospectus itself. Therefore, if the precise underlying is known by the issuer, then full

and complete information must be included in the base prospectus.

If the issuer has not decided on the details of the underlying at the time of the approval of the base

prospectus, then a more general statement setting out the type of the underlying should be in-

cluded. The minimum disclosure in the base prospectus would be whether the underlying is

- an equity security

- a non-equity security

- an interest rate

- an index or

- a commodity.

If the type of underlying does not fall within the categories listed above, the type of underlying

should be defined.

If the underlying is a basket of underlyings, the type(s) of underlying(s) should be defined in the

same manner as described above.

The final terms then have to state the details of the underlying(s) pursuant to Category C infor-

mation requirements and may provide information in accordance to Annex XXI. In case of propri-

etary indices further disclosure requirements must be complied with in accordance with the Pro-

spectus Regulation.

84. Definition of Profit Estimate

Date last updated: May 2013

Q1) How should the term "for which results have not yet been published" in Article 2 (11)

of the Prospectus Regulation be understood?

A1) ESMA considers that the publication of results for an annual financial period which has expired

means publication of the final figures which have been approved by the person responsible within

the issuer and the auditor’s report has been published.

Q2) Should cumulative figures for the full financial year, disclosed in quarter four reports,

be considered a profit estimate or interim financial information?

A2) For the avoidance of doubt, ESMA considers that quarter four reports which contain unaudited

results for an annual financial period should be considered as interim financial information.

85. Estimate expenses charged by a financial intermediary in a retail cascade

Date last updated: May 2013

Q) Does the prospectus summary have to contain information about estimated expenses

charged by intermediaries offering securities in the retail cascade?

A) Financial intermediaries in a retail cascade are offerors, but their offer is not the current offer

which is the subject matter of the prospectus, and the second delegated Regulation expressly

requires a notice specifying that the financial intermediaries acting in a retail cascade shall make

available the information on the subsequent retail cascade offer when it will occur.

The issuer, offeror or person seeking admission to trading on a regulated market is not required

to disclose expenses charged to the investor by financial intermediaries offering securities in a

retail cascade in elements E.1 and E.7 of Annex XXII. Expenses charged to investors by the fi-

nancial intermediaries will be disclosed in the financial intermediaries’ terms and conditions.

86. Age of the last year financial statements according to the item 13(1) in Annex XXVI

and item 11(1) in Annex XXVII to the Prospectus Regulation

Date last updated: May 2013

Q) How old can the latest audited financial information be according to Annexes XXVI and

XXVII, given that these annexes do not contain any provisions in this regard?

A) According to item 13(1) of Annex XXVI and item 11(1) of Annex XXVII of the Prospectus Reg-

ulation, a statement with regard to audited financial information is required for the last financial

year. It is necessary to underline that only a statement with regard to audited financial information

is required to be included in the prospectus, and not the whole set of financial statements. ESMA

realises that it would be practically impossible for issuers to have audited financial information in

place just after the financial year has expired. Therefore ESMA is of the opinion that the issuer is

under the obligation to include the said statement as soon as the financial year has expired and

the issuer has already at its disposal the audited financial information for that period.

The alleviation in comparison with the “full” prospectus regime as is required by Annexes IV and

IX of the Prospectus Regulation only refers to the statement. The issue of the age of the latest

audited financial information should not deviate from the normal regime.

In the absence of an explicit provision regarding the age of the latest financial information provided

for in Annexes XXVI and XXVII, ESMA believes that the last year of audited financial information

may not be older than 18 months as is required by Annexes IV and IX of the Prospectus Regulation

which are applicable for debt and derivative securities, depending on the denomination per unit.

87. Item 20.4 and 20.5 in Annex XXV to the Prospectus Regulation

Date last updated: May 2013

Q1) How old can the audited annual financial information be in the prospectus drawn up

according to the Annex XXV to the Prospectus Regulation in the absence of published in-

terim financial statements?

A1) ESMA believes that the last year of audited financial information may not be older than 15

months from the date of the registration document in case the issuer does not include interim

financial statements in the registration document.

If the issuer submits a prospectus to the competent authority and the audited financial information

is older than 15 months (but up to 18 months), ESMA considers that in such a case, the competent

authority could nevertheless approve the prospectus if the issuer includes audited interim financial

statements in the registration document.

Q2) Which period should (at least) be covered by interim financial statements if required

according to item 20.4.1. of Annex XXV to the Prospectus Regulation?

A2) ESMA believes that the interim financial period for interim financial statements, in the context

of item 20.4.1 of Annex XXV, should cover at least the first six months of the financial year. Such

interpretation would follow a general principle (reflected e.g. in item 20.6.2. of Annex I) saying that

interim financial information should cover a period which is meaningful for investors, also taking

into consideration Article 5(1) of the Prospectus Directive.

88. “Agreement” of the independent accountant/auditor where a profit estimate is in-

cluded in a prospectus

Date last updated: October 2013

Q1) Who should make the statement on the agreement required by part b of item 13.2 (sub-

paragraph 2) of Annex I (and corresponding items in other annexes) of the Prospectus

Regulation?

A1) While reaching the necessary agreement will be dependent on both the issuer and the auditor;

the statement may be made by the auditor or the issuer, offeror or person asking for admission to

trading on a regulated market.

Q2) What does "substantially consistent with the final figures to be published in the next

annual audited financial statements" mean?

A2) ESMA believes it is important to clarify that the issuer’s statement concerning the agreement

by auditors under item 13.2 of Annex I of the Prospectus Regulation (and corresponding items in

other annexes) does not necessarily imply that auditors should already be able to issue their audit

opinion on the issuer’s financial statements when the prospectus is published. In fact the Prospec-

tus Regulation requires the issuer to state in the prospectus that the financial information related

to the previous financial year is unaudited (cf. part c of subparagraph 2 of item 13.2). This means

that the auditors can provide their agreement with a lower level of assurance than the one needed

for issuing the audit report.

ESMA is of the opinion that the auditors’ agreement on the fact that the information is "substantially

consistent with the final figures to be published in the next annual audited financial statements"

means that the auditors do not expect the figures to change substantially, except in case of un-

foreseen events. Such agreement can more easily be given by auditors, for example, in circum-

stances where the issuer has confirmed to the auditors that the financial information related to the

previous financial year has been approved as final by its competent body (e.g. board of directors,

general meeting etc.) and/or where the audit work is at an advanced stage.

It should be noted that, as the auditors’ agreement is not an audit opinion, there is no specific time

frame to give it. This means that it is up to the issuer and the auditors to decide in the particular

case if the statement can be inserted in the prospectus.

89. Proportionate disclosure regime for prospectuses for rights issues

Date last updated: October 2013

Q) Can the issuer apply the proportionate disclosure regime for a prospectus relating to

rights issues for an offer of the shares, not subscribed by the existing shareholders and/or

not subscribed by the pre-emptive rights holders, to investors not being existing share-

holders or pre-emptive rights holders?

A) Following the closing of the subscription period for a rights issue which was not fully subscribed,

any subsequent offer to the public of shares should be considered a separate public offer. The

prospectus accompanying such offer should be drawn up according to Annexes I-III of the Pro-

spectus Regulation and the proportionate disclosure regime for rights issues is not applicable,

unless exemptions set out under Article 3.2 of the Prospectus Directive apply.

Where an issuer anticipates making a public offer of outstanding shares to investors, who are

neither existing shareholders nor pre-emptive rights holders following a pre-emptive rights pro-

cess, the issuer should also produce a prospectus drawn up according to Annexes I-III of the

Prospectus Regulation.

90. Proportionate disclosure regime for prospectuses for Rights Issues (Annex XXIII

and XXIV)

Date last updated: October 2013

Q) Can the issuer use a prospectus drawn up in accordance with the proportionate disclo-

sure regime for rights issues for the admission to trading on a regulated market of new

shares offered to existing shareholders or pre-emptive rights holders through a rights is-

sue which were wholly or partially not subscribed by them, but subscribed for following

the rights issue procedure pursuant to an exempt offer (e.g. by other investors through a

private placement or by institutional investors)?

A) The prospectus drawn up in accordance with the proportionate disclosure regime for rights

issues (in Annexes XXIII and XXIV of the Prospectus Regulation) is also applicable to the admis-

sion to trading on a regulated market of new shares neither subscribed by existing shareholders

nor by pre-emptive rights holders but placed with other investors by using the exemptions provided

in Article 3.2 of the Prospectus Directive.

91. Format for the individual summary relating to several securities

Date last updated: October 2014

Q) What are permissible formats for the individual summary relating to several securities?

A) Article 24 (3) (second paragraph) of the Prospectus Regulation explicitly recognises the possi-

bility of an individual summary relating to several securities, provided that the securities differ only

in some very limited details, such as the issue price or maturity date, and that the information

referring to the different securities is clearly segregated.

In any case, the information in the individual summary to specific securities needs to be easily

accessible and the comprehensibility of the summary shall not be affected (e.g. in case of Format

1 below by the tables being unduly lengthy). In addition the individual summary relating to several

securities is subject to the constraints on the length of a summary pursuant to Art 24 (1) (second

paragraph) (third sentence) of the Prospectus Regulation.

Subject to compliance with the aforementioned requirements, ESMA considers that the following

two formats for the individual summary relating to several securities are permissible:

Format 1: The individual summary contains tables within all relevant elements and each of these

tables contains the information required by the specific element in relation to the different securi-

ties.

Format 2: The individual summary contains (i) only one additional table with the ISINs and other

relevant divergent information in relation to the securities at the end of the individual summary,

together with (ii) respective cross-references in the relevant elements of the individual summary

to the aforementioned table. In addition to short, but meaningful descriptions of the relevant infor-

mation the table header shall contain the elements-numberings of the relevant elements.

Meaning of the wording “some very limited details”

The wording "some very limited details" is meant to safeguard that the information in an individual

summary relating to several securities is easily accessible and comprehensible and that the sum-

mary is comparable to summaries of similar securities. In this regard the wording "some very lim-

ited details" limits the number of details in which the securities may differ, without setting a fixed

maximum number. As regards the question which details are allowed to differ, the phrase does

not specifically exclude certain (security-related) details from being different. However, consider-

ing the comprehensibility of the summary, the individual summary of derivative securities should

only relate to securities having the same type of underlying (e.g. shares or indices) and same risk

factors. Furthermore, it is expected that the formula for the calculation of the redemption amount

is always the same.

92. Applicable Registration Document schedule where a listed issuer proposes to issue

convertible or exchangeable debt securities where the underlying securities are the

issuer's shares

Date last updated: January 2014

Q) Should the prospectus be drawn up using the share registration document schedule or

according to relevant debt securities registration document schedules, in case of a listed

issuer and a public offer or request for admission to trading of convertible or exchangeable

debt securities, where the underlying securities are the issuer's shares that will be issued

upon conversion?

A) The definition of “equity securities” in Article 2(1)(b) of the Prospectus Directive includes certain

types of convertible or exchangeable securities, provided that such convertible or exchangeable

securities are “issued by the issuer of the underlying shares…”. Article 4 of the Prospectus Regu-

lation requires the use of the share registration document schedule (Annex I) (or Annexes XXIII

or XXV if the proportionate schedules are applicable) in cases of convertible or exchangeable

securities ‘provided that these shares or other transferable securities equivalent to shares are or

will be issued by the issuer of the security and are not yet traded on a regulated market’.

In cases where these shares are already issued and admitted to trading on a regulated market, a

debt registration document (Annexes IV, IX, XI or applicable proportionate schedules) can be

used.

The reference to ‘these shares’ means those particular new shares arising from conversion or

exchange and not in general that the issuer has shares of the same class that are already issued

and admitted to trading on a regulated market.

In addition, after the amendments of the Third Delegated Regulation (EC) No. 759/2013), Article

8(4), and Article 16(4) of the Prospectus Regulation require that information on the issuer also

includes the working capital and capitalisation and indebtedness statements in accordance with

items 3.1 and 3.2 of Annex III, or, if applicable, of Annex XXIV.

93. Presentation of selected historical key financial information in the summary

Date last updated: October 2014

Q) How should the selected historical key financial information required under Elements

B.7 and B.12 be presented in cases in which the applicable annexes do not require selected

financial information (e.g. Annexes IX and XI)?

A) The requirement to present selected historical key financial information in the summary is ap-

plicable via B.7 for Annex I, via B.12 for Annex IV (these annexes require disclosure of selected

financial information in the prospectus) and via B.12 for Annexes IX and XI (these annexes do not

require disclosure of selected financial information in the prospectus).

The requirement to disclose selected historical key financial information in the summary for An-

nexes IX and XI where there is no requirement to disclose selected financial information in the

prospectus is designed to ensure that the summary includes financial information regarding the

issuer. In these instances, the source of the selected historical key financial information to be

disclosed in the summary is the information disclosed in the prospectus under item 11 of the rele-

vant annex.

Where an issuer has drawn up a prospectus according to Annex XXVII and has included financial

information and an Annex XXII compliant summary, such summary should follow the summary

requirements applicable to Annex IX.

94. Minimum information required in Section D of Annex XXII of the Prospectus Regu-

lation

Date last updated: October 2014

Q) What minimum information is required in section D of PR Annex XXII and how should

the key information on the key risks be presented?

A) In determining what information is to be disclosed in the summary in accordance with Section

D of Annex XXII, issuers should take into account that a different materiality test applies for risk

information that is required to be disclosed in the summary as compared to the risk factors section

of the prospectus. The prospectus must contain all the ‘material’ risks in the risk factor section

while Section D of Annex XXII only requires the disclosure of key information on the key risks that

are specific to the issuer (Elements D.1 and D.2) and its industry (Element D.1) and the securities

(Element D.3).

Therefore, the assumption is that not all the risks included in the risk factor section of the prospec-

tus should be included in section D of the summary but only those considered by the issuer as key

risks.

The description of risk factors in the summary shall allow investors to identify source, nature and,

if possible, consequences of the risk. If the title of the risk factor satisfies these requirements and

gives an explanation of the risk in the context of the issuer’s business or the issue of the securities

in question, there is no need to provide any additional information.

95. Inclusion of “extra” information in individual summaries

Date last updated: October 2014

Q) Can a summary related to an individual issue contain further information for which there

is neither an option nor placeholder in the summary previously included in the base pro-

spectus?

A) No. The applicable legal framework does not leave issuers free to include any of the items of

information required by the applicable securities note schedule which are already contained in the

base prospectus in the summary of the individual issue. A summary of the individual issue shall

only contain the information set out in Article 24(3) of the Prospectus Regulation. This means that

the issuer, offeror or person asking for admission to trading on a regulated market shall not include

information in the summary of the individual issue which was neither included in the summary of

the base prospectus nor in the other parts of the base prospectus (including final terms).

96. Level of disclosure for securities subject to conversion or write-down powers under

the BRRD

Date last updated: December 2015

Q) What level of disclosure should be included in a prospectus when the securities which

are the subject matter of the prospectus may be subject to write-down or conversion pow-

ers in accordance with the Bank Recovery and Resolution Directive (Directive 2014/59/EU)

(‘BRRD’)?

A) In addition to the disclosure of the rights, and limitations to rights, attaching to securities which

must be included in a prospectus, in the context of securities which are subject to the BRRD,

issuers should consider whether additional disclosure regarding the possibility of conversion or

write-down by a resolution authority (“bail-in”) should be included in the prospectus.

Where the issuer considers the possibility of bail-in to be material, taking into account the proba-

bility of such and the possible impact on investors, this should be reflected in the risk factors

section and summary of a prospectus.

ESMA considers that the risk factor should, at a minimum, alert prospective investors to the pos-

sibility that, in the event that write-down or conversion powers are exercised by a Union resolution

authority:

(a) the amount outstanding may be reduced, including to zero;

(b) the security may be converted into ordinary shares or other instruments of ownership;

In this regard, such risk factor should also alert prospective investors to the fact that financial

public support should only be used as a last resort after having assessed and exploited, to the

maximum extent practicable, the resolution tools, including the bail-in tool.

97. Additional column in capitalisation and indebtedness statements

Date last updated: April 2016

Q) Can a prospectus include an additional column to reflect recent or future material

changes to the capitalisation and indebtedness statements required pursuant to Item 3.2

of Annex III and Annex XXIV of the Prospectus Regulation?

Recent changes

ESMA considers that in case a recent change has triggered the requirement to disclose pro forma

financial information, an additional column illustrating pro forma capitalisation and indebtedness

can be presented. It should be consistent with the pro forma financial information presented

elsewhere in the prospectus. Adjustments may be explained by referring to pro forma financial

information elsewhere in the prospectus.

In case of a recent complex change which has not triggered the requirement to disclose pro forma

financial information (e.g. an acquisition not constituting a significant gross change), the issuer

may present pro forma financial information in the prospectus on a voluntary basis, following the

requirements set out in Annex II of the Prospectus Regulation, and present an additional column

accordingly. If the issuer wishes to present an additional column with adjusted figures without

compiling pro forma financial information according to Annex II, special attention needs to be given

to the comprehensibility of the information contained in the additional column. If the additional

column is not comprehensible or easily analysable, it should not be presented in the prospectus.

In case of a recent straightforward change which has not triggered the requirement to present pro

forma financial information (e.g. conversion of debt into equity), presentation of an additional

column is normally allowed. If the additional column consists of illustrative figures, e.g. half yearly

figures to the end of June adjusted by a capital conversion which has been fulfilled in July, special

attention needs to be given to the comprehensibility of the information contained in the additional

column. Adjustments need to be explained in detail.

Recent changes may also be presented through the inclusion of the actual figures in the

capitalisation and indebtedness statement.

Future changes

In case a future material change has triggered the requirement to disclose pro forma financial

information (e.g. due to a binding agreement), an additional column illustrating pro forma

capitalisation and indebtedness can be presented. It should be consistent with the pro forma

financial information presented elsewhere in the prospectus. Adjustments may be explained by

referring to pro forma financial information elsewhere in the prospectus.

If the issuer wishes to present an additional column illustrating a potential future outcome, such

as the possible outcome of the offer, the additional column should not give the impression that a

presented future outcome is certain (unless it truly is). The adjustments made and their underlying

assumptions should be described. If shares are offered at a price range, the average price should

be used when calculating the possible offer proceeds, unless there are special grounds to use a

different price. Transaction costs should be taken into account.

Presentation of any other potential future change than the outcome of the offer is only allowed if

factually supportable. If the future outcome is uncertain, such as where an issuer wishes to present

a future change in its debt structure even though negotiations with the credit institution(s) are

incomplete, presenting an additional column reflecting the potential outcome may endanger the

comprehensibility and analysability of the prospectus and is therefore normally not allowed.

The mere inclusion of an additional column in the capitalisation and indebtedness statement to

reflect recent or future material changes does not normally trigger the requirement to prepare pro

forma financial information according to Annex II, as referred to in Q&A 54, due to its limited

effects.

98. Offers going beyond the validity of a base prospectus

Date last updated: April 2016

Qa) Is it possible for an issuer to continue an offer beyond the validity of a base prospectus,

e.g. when the issuer files final terms prior to the end of the base prospectus validity and

the offer period extends beyond the base prospectus validity?

Aa) Yes, the prospectus regime does not outlaw certain offer periods. The term of the offer period

and the term of validity of the base prospectus are distinct. However, when a base prospectus is

used for an offering programme of non-equity securities, ESMA considers that the offer must have

a start and an expected end date – even if such is beyond the validity period of the base prospec-

tus – as it has to relate to a specified issuing period (cf. Article 2(1)(k) PD).

Qb) Which conditions apply to continuing an offer beyond the validity of the base prospec-

tus?

Ab) The following conditions should be fulfilled in order for the issuer to continue the offer

beyond the validity of the initial base prospectus:

i. As regards the base prospectus, the issuer is required to have complete and up-to-date

prospectus documentation in place at any point in time during the offer period. If the issuer

wishes to continue an offer beyond the validity of the base prospectus under which it was

initiated, the issuer should have a new base prospectus approved and published before

the initial base prospectus expires, i.e. the new base prospectus should be approved and

published no later than on the last day of validity of the initial base prospectus. For the

avoidance of doubt, ESMA clarifies that being in the process of having a new base pro-

spectus approved does not interfere with the issuer’s obligation to supplement the original

base prospectus until the end of its validity and grant the associated withdrawal rights.

ii. As regards the final terms, while the issuer may decide to publish and file a new set of final

terms referring to the new base prospectus, where the issuer wishes to continue using the

final terms related to the initial base prospectus, the new base prospectus should include

or incorporate by reference the form of the final terms from the initial base prospectus. It

should furthermore identify the securities which are relevant for the continuing offer, e.g.

by listing ISINs, and specify where the final terms of those securities are published. The

final terms related to the initial base prospectus should contain a prominent warning on

their first page indicating the last day of validity of the initial base prospectus and where

the succeeding base prospectus will be published.

99. Dissemination of amended advertisements

Date last updated: July 2016

Q) How should the requirement to disseminate an amended advertisement at a minimum

through the same means as the original advertisement (cf. Article 11(3) of Commission

Delegated Regulation (EU) 2016/301) be applied when the advertisement in question is a

roadshow?

A) Article 11(3), second sentence of the Commission Delegated Regulation clarifies that the

requirement to disseminate the amended advertisement at a minimum through the same means

as the original one does not apply to orally disseminated advertisements. As set out in paragraph

170 of ESMA’s Consultation Paper regarding the Regulatory Technical Standards underlying the

Commission Delegated Regulation (ESMA/2014/1186), this exemption was drawn up with the

intention to cover roadshows and to avoid that a new roadshow would have to be organised in

order to deliver an amended version of the information provided in the original roadshow. ESMA

considers that the exemption also applies to roadshows in which visual or printed elements (e.g.

slides, handouts) are used, as the overall nature of the advertisement is that it is delivered in an

oral context.

However, ESMA emphasises that the general requirement to amend the roadshow advertisement

still applies. Therefore, the issuer, offeror or person asking for admission to trading on a regulated

market should disseminate an amended version of the information provided in the roadshow

through the means which it considers most suitable to reach the participants of the roadshow.

Depending on the type of roadshow conducted and the nature of the participants, this might for

example be by way of a press release, publication on the website of the issuer, offeror or person

asking for admission to trading or by direct correspondence with the roadshow participants.

100. Inclusion of Alternative Performance Measures (APMs) in information disclosed

about the offer to the public or the admission to trading on a regulated market

Date last updated: July 2016

Q) Given that Article 12, first subparagraph, letter d of Commission Delegated Regulation

(EU) 2016/301 sets out that only APMs included in the prospectus can be included in infor-

mation disclosed about the offer to the public or the admission to trading on a regulated

market, how should the issuer, offeror or person asking for admission to trading proceed

in case a participant at a live presentation (e.g. a roadshow/interview) requests information

about an APM which is not included in the prospectus?

Before the prospectus is approved and published

If a participant at a live presentation requests information about an APM that is not included in the

draft prospectus which has been submitted to the relevant national competent authority (NCA) but

which has not yet been approved and published, the issuer, offeror or person asking for admission

to trading is free to provide information on the APM in question. However, in order to ensure that

no APM is included in information disclosed about the offer/admission to trading without being

included in the prospectus, the issuer, offeror or person asking for admission to trading should

afterwards include the APM in the draft prospectus before this is approved and published, it being

understood that the ESMA Guidelines on Alternative Performance Measures should be taken into

account.

After the prospectus is approved and published

If a participant at a live presentation requests information about an APM that is not included in the

approved and published prospectus, the issuer, offeror or person asking for admission to trading

can proceed in two ways. It can decide to provide information on the APM and afterwards publish

a supplement containing this APM, thereby ensuring consistency between the prospectus and the

information disclosed about the offer/admission to trading. In such case, the ESMA Guidelines on

Alternative Performance Measures should be taken into account. Alternatively, if the issuer, offeror

or person asking for admission to trading does not wish to publish a supplement, it should decline

to provide information on the APM as there will otherwise be a breach of the requirement set out

in Article 12, first subparagraph, letter d of Commission Delegated Regulation (EU) 2016/301.

101. Applicability of ESMA’s Guidelines on Alternative Performance Measures (APMs) to

prospectuses comprising documents published before and on/after 3 July 2016

Date last updated: December 2016

Q) ESMA’s Guidelines on Alternative Performance Measures (ESMA/2015/1415) apply to

APM’s disclosed by issuers or persons responsible for the prospectus when publishing

regulated information or prospectuses on or after 3 July 2016, cf. paragraph 5 of the Guide-

lines. Given that a prospectus can be formed by a combination of a registration document

and a securities note, and a summary where applicable, and that prospectuses or base

prospectuses can incorporate by reference the information contained in a previously ap-

proved registration document, do the Guidelines apply:

- to a registration document containing APMs which was published before 3 July when that

registration document is combined with a securities note published on/after 3 July?

- to a registration document (or prospectus) containing APMs which was published before

3 July when the information contained in that registration document is incorporated by

reference into a prospectus or base prospectus published on/after 3 July?

- to a supplement containing APMs published on/after 3 July when the prospectus or reg-

istration document was published before 3 July?

A) As set out in paragraph 5 of the Guidelines (cited above), the applicability of the Guidelines is

determined with reference to the publication date of the prospectus.

As such, where a registration document containing APMs was published before 3 July and that

registration document is combined with a securities note published on/after 3 July, the Guidelines

do not apply to the registration document but only to the securities note and the summary, where

applicable. Equally, where the information contained in such a registration document is incorpo-

rated by reference into a prospectus or a base prospectus published on/after 3 July, the Guidelines

do not apply to the registration document but only to the remainder of the prospectus or base

prospectus.

Where a registration document containing APMs was approved but not published before 3 July

and that registration document is combined with a securities note published on/after 3 July, or the

information contained in that registration document is incorporated by reference into a prospectus

or a base prospectus published on/after 3 July, the Guidelines apply to the registration document

as well as to the securities note and the summary, where applicable, or to the prospectus/base

prospectus. In these instances, the registration document should be updated through the mecha-

nism set out in Article 12(2) of the Prospectus Directive.

Where a prospectus or registration document published before 3 July is supplemented on/after 3

July and the supplement contains APMs, the Guidelines apply to the supplement.

102. Definition of Profit Forecasts

Date last updated: March 2018

Q) Issuers sometimes make statements that can be taken to be profit forecasts. How can

it be determined whether or not a profit forecast has been made?

A) Article 2(10) of the Prospectus Regulation No 809/2004 states that a profit forecast means:

‘a form of words which expressly states or by implication indicates a figure or a minimum or max-

imum figure for the likely level of profits or losses for the current financial period and/or financial

periods subsequent to that period, or contains data from which a calculation of such a figure for

future profits or losses may be made, even if no particular figure is mentioned and the word “profit”

is not used.’

ESMA has analysed terms used in the Article to determine what can be considered a profit fore-

cast. In this respect, where applicable, ESMA notes that this Q&A should be read in conjunction

with paragraphs 38 to 50 of the ESMA update of the CESR recommendations (ESMA/2013/319)

which deal with the same topic.

Wording that is considered to be a profit forecast

The first of these terms is the ‘minimum or maximum figure’. Profit forecasts refer to the issuer’s

projections for future periods, where the wording, either directly or indirectly, indicates the likely

minimum or maximum level of the issuer’s future profit or loss. Instead of a precise figure, a profit

forecast can also refer to a range of figures particularly when a minimum or maximum figure is

mentioned or implied.

Examples of profit forecasts:

• “We expect this year’s profits before taxes to be between €30 million and €50 million.”

• “The profit / loss is expected to be in line with the previous year.”

• “The profit / loss is expected to be higher / lower than the previous year.”

• “This year’s annual results will be positive / negative.”

The phrase ‘the likely level of profits or losses’ does not only refer to the profit or loss for the

year (bottom line of the profit and loss account)/ (bottom line of statement of profit or loss and

other comprehensive income)/net profit or loss but also to other measures of profitability when

these measures convey an expectation of a future performance such as for example:

Profit forecast derived from profit and loss accounts:

• EBITDA = Earnings before Interest, Taxes, Depreciation and Amortization,

• EBIT = Earnings before Interest and Taxes (and similar measures such as Operating

Profit/Earnings/Income),

• EBT = Earnings before Taxes.

• Similar and adjusted versions of the examples above (such as “Adjusted EBIT” or “Recur-

ring net income”).

Example of a profit forecast:

• “Before the estimated impact of disposals, […] current expectations for the 20XX Financial

Year are Adjusted Operating Profit of around €100 million and EBITDA […] of around €160

million.”

Accounting data or financial indicators that may, on certain conditions, be considered as

constituting a profit forecast

ESMA adopts a “substance over form” approach concerning what financial measures may be

viewed as profit forecasts for the purpose of the Prospectus Regulation.

Examples of measures that may, on certain conditions, be considered as a profit forecast:

1. If an issuer normally communicates financial performance on Gross Profit level, or if the

issuer has rigid cost structures ESMA may deem forecasted Gross Profit to be a profit

forecast.

2. Projections of cash flow metrics could be deemed profit forecasts in specific instances if

indications making it possible to deduce the likely profit level from it are given in the pro-

spectus.

3. Alternative Performance Measures or Key Performance Indicators pointing into the future

that are calculated (in full or in part) based on profit/loss measures.

The statement ‘contains data from which a calculation of such a figure for future profits and

losses may be made’ clarifies that the scope of the profit forecast definition encompasses forms

of words from which profits or losses can be derived even if no particular figure is mentioned and

the word ‘profit’ is not used. With this in mind, it follows that information may be considered a profit

forecast if, in combination with other information in the prospectus, it is possible to calculate a

figure or a minimum or a maximum for the likely levels of future profit or loss.

Examples of profit forecasts:

• “Turnover for Q4 as well as costs are expected to remain the same as last year.”

• “We are expecting this year’s turnover to remain the same and this year’s EBITDA margin

to rise by 5%.”

Information does not need to relate to the entirety of the issuer’s results to be a profit forecast.

Where one or more segments of the issuer’s business generates the vast majority of the issuer’s

profit / loss, and predictions are made about the level of the segment’s profit / loss, this can also

constitute a profit forecast for the issuer as a whole. Likewise, where a proposed acquisition is

expected to generate the vast majority of the issuer’s profit / loss, and predictions are made about

the level of the target’s profit / loss, that can also constitute a profit forecast for the issuer if this

information is included in a prospectus

‘…expressly states or by implication indicates’- if the purpose of the wording is to provide

information about expected future profit / loss for a specific financial period, it is considered a profit

forecast, regardless of the verb used. Particularly if a specific figure is stated.

Examples of profit forecasts:

• “We hope to reach a profit of €10 million this year.”

• “We aim to reach a profit of €10-12 million earnings before taxes next year.”

• “Our target is to become profitable by the end of Q3 this year.”

Long term financial objectives or forecasts

Long term financial objectives, for several future periods (aggregated or not) or for a distant future

period may be considered profit forecasts depending on facts and circumstances, such as the

context and the way they are presented.

Wording that is not considered to be a profit forecast

To constitute a profit forecast, a statement must be specific with respect to (i) level of profit / loss

or other measure of profitability (a number / range / floor/ ceiling) and (ii) a specific financial period.

Profit forecasts differ from trend information required by item 12 of Annex 1 of the Prospectus

Regulation No 809/2004. As set out in paragraph 49 of the ESMA update of the CESR

recommendations (ESMA/2013/319), in practice there is often a fine line between what constitutes

a profit forecast and what constitutes trend information. A general discussion about future

prospects of the issuer under trend information will not normally constitute a profit forecast.

Depending on the context and whether a profit forecast can be derived when combined with other

information in the prospectus, the following are examples of disclosures that are not, by

themselves, profit forecasts:

• “We expect our sales/revenue to decline to €560 million.”

• “Turnover is expected to rise by 5 % compared to last year.”

• “Our target is to maintain an operating margin of 7% in the medium to long term.”

• “Announcement of an amount of dividend per share.”

• “Description of the issuer’s dividend policy.”

Disclaimers

It is not possible to remove information from the scope of the definition of profit forecast by merely

stating that it is not a profit forecast.

Examples:

• “No profit forecast or estimate is included in this prospectus.”

• “Nothing in this document is intended to be, nor should be construed as a profit forecast.”

• “The foregoing statement should not be interpreted to mean X’s future earnings per share

will necessarily be the same or greater than its historic earnings per share.”

Identification of profit/loss forecasts in the prospectus

Profit forecasts and related assumptions should be clearly identified in the prospectus as such. It

is important for the investor to be able to easily differentiate between a “profit/loss forecast” and

other information, such as “objectives” or “trend information”.

In case the UK withdraws from the EU without a withdrawal agreement

103. Choice of PD home Member State

for third country issuers *modified*

Date last updated: April 2019

This Q&A is prepared for the eventuality that the UK withdraws from the EU on 29 March

2019 with no withdrawal agreement in place. If a withdrawal agreement is in place at the

time of the UK’s withdrawal, this Q&A will not be applicable.

Q) In case the UK withdraws from the EU without a withdrawal agreement, current third

country issuers who have chosen the UK as their home Member State for prospectus

approval, and issuers who currently have the UK as their home Member State for

prospectus approval due to their registered office being in the UK, will have to choose a

new home Member State when they wish to offer securities to the public or be admitted to

trading in the EU27 / EEA EFTA.

According to the Prospectus Directive (PD) Article 2(1)(m)(iii), third country issuers not

mentioned in PD Article 2(1)(m)(ii) may choose as their home Member State the Member

State where the securities are intended to be offered to the public for the first time after the

date of entry into force of the amended Transparency Directive (TD) or the Member State

where the first application for admission to trading on a regulated market is made.

How should issuers who had the UK as their PD home Member State before the UK’s

withdrawal from the EU apply PD Article 2(1)(m)(iii) following the UK’s withdrawal without

a withdrawal agreement?

A) The PD provisions regarding the choice of the home Member State do not directly take into

account a situation in which a Member State withdraws from the Union. However, PD Article

2(1)(m)(iii) lays down the principle that third country issuers should be afforded a choice when

determining their home Member State and that this choice should be limited to Member States in

which the issuer first undertakes an offer or an admission to trading.

ESMA is of the view that applying these principles to issuers having to choose a new home

Member State due to the UK withdrawing from the EU would entail allowing such issuers to choose

as if for the first time, i.e. resetting their choice at the time of the UK’s withdrawal.

As such, for the purpose of applying PD Article 2(1)(m)(iii), these issuers should choose between

the EU27 Member States / EEA EFTA States in which they have activities after the UK’s

withdrawal, either offers/admissions made after the withdrawal or admissions made before the

withdrawal which continue after the withdrawal. Offers which opened and closed before the UK’s

withdrawal should be disregarded, meaning that issuers would not be able to choose the Member

State(s) in which such offers took place as their new home.

ESMA describes two scenarios below to illustrate this approach to applying PD Article 2(1)(m)(iii):

- Scenario A:

An issuer has the UK as its home Member State before the UK’s withdrawal from the EU

and has previously offered securities to the public in Austria, an offer which is now closed.

In case the UK withdraws from the EU without a withdrawal agreement, the choice of a home Member State under the Prospectus

Directive will consist of the EU27 Member States and the three EEA EFTA States Iceland, Liechtenstein and Norway.

After the UK’s withdrawal, the issuer wishes to offer securities to the public in Germany

and to apply for admission to trading in Netherlands.

As the issuer’s choice of home Member State was reset at the time of the UK’s withdrawal,

it can choose between Germany (since it will make an offer there after the withdrawal) and

Netherlands (since it will be admitted to trading there after the withdrawal). The issuer

cannot choose Austria as its new home Member State since its offer there closed before

the withdrawal.

- Scenario B:

An issuer has the UK as its home Member State before the UK’s withdrawal from the EU

and is admitted to trading in the UK, France and Belgium. After the UK’s withdrawal, it

wishes to offer securities to the public in Germany.

As the issuer’s choice of home Member State was reset at the time of the UK’s withdrawal,

it can choose between France and Belgium (since it has an ongoing admission to trading

there after the withdrawal) and Germany (since it will make an offer there after the

withdrawal).

In ESMA’s view, the choice of home Member State under PD Article 2(1)(m)(iii) should be made

only once. As such, except where the specific circumstances described in that provision arise, a

third country issuer’s choice of home Member State under that provision is definitive.

In case the UK withdraws from the EU without a withdrawal agreement

104. Use of prospectuses approved by the UK *modified*

Date last updated: April 2019

This Q&A is prepared for the eventuality that the UK withdraws from the EU on 29 March

2019 with no withdrawal agreement in place. If a withdrawal agreement is in place at the

time of the UK’s withdrawal, this Q&A will not be applicable.

Qa) In case the UK withdraws from the EU without a withdrawal agreement, what is the

status within EU27 / EEA EFTA

of prospectuses approved by the UK FCA while the UK

was a Member State?

Aa) In case the UK withdraws from the EU without a withdrawal agreement, ESMA considers that

the following approach should apply to prospectuses which were approved by the UK FCA while

the UK was an EU Member State:

(i) These prospectuses can no longer be passported to EU27 Member States / EEA EFTA

States.

As the UK will be a third country, it will no longer be covered by the passporting mechanism

set out in Article 18 of the Prospectus Directive (PD). For the same reason, supplements

The EEA EFTA States comprise Iceland, Liechtenstein and Norway.

approved in the UK before its withdrawal from the EU can no longer be passported to EU27

Member States / EEA EFTA States after its withdrawal.

(ii) These prospectuses, if passported to one or several EU27 Member States / EEA EFTA

States before the UK’s withdrawal, can no longer be supplemented.

As the UK will be a third country, it is no longer able to approve documents under the PD

and cannot in any case passport documents into EU27 / EEA EFTA, cf. item (i). For these

reasons, it will not be possible to complete an already passported prospectus by

supplement, as required by PD Articles 9 and 16.

(iii) Because of item (ii), these prospectuses, if passported to one or several EU27 Member

States / EEA EFTA States before the UK’s withdrawal, can no longer be used to offer

securities to the public or admit securities to trading on a regulated market within EU27 /

EEA EFTA.

As it will not be possible to supplement these prospectuses, they cannot be used since this

would entail a risk of a significant new factor, material mistake or inaccuracy arising without

the issuer being able to inform investors as required by PD Article 16. The absence of a

supplement would in turn deprive investors of their withdrawal rights. As such, UK

approved prospectuses passported into EU27 / EEA EFTA before the UK’s withdrawal

cannot be used after its withdrawal, whether for new offers and admissions to trading or

for offers which were commenced before the UK’s withdrawal and which the issuer wishes

to continue beyond the withdrawal date.

Qb) How should issuers with prospectuses approved by the UK before its withdrawal

from the EU proceed following the UK’s withdrawal?

Ab)

How to continue an offer to the public in EU27 / EEA EFTA

Scenario: The UK withdraws from the EU without a withdrawal agreement in place. An issuer has

an open offer to the public in Spain which is based on a prospectus approved by the UK FCA and

passported to Spain. The issuer wishes to continue this offer beyond the date on which the UK

withdraws.

Approach: ESMA is of the view that the issuer would need to have a prospectus approved in its

new EU27 / EEA EFTA home Member State for the part of the offer which will take place after the

UK’s withdrawal. However, as

- the issuer can only choose a new home Member State when its existing home Member

State, the UK, has withdrawn from the EU, it cannot formally seek approval of a prospectus

by its new home Member State before 30 March 2019 the day following the UK’s with-

drawal, and

- according to PD Article 3(1), an offer of securities may not be made without prior publica-

tion of a prospectus,

it is unlikely that the offer will be able to continue on 30 March 2019 the day following the UK’s

withdrawal as there will likely be time constraints connected with the approval by the new home

Member State. Instead, it is likely that the issuer will have to start a new offer once a prospectus

is approved within EU27 / EEA EFTA.

How to maintain an admission to trading on a regulated market in EU27 / EEA EFTA

Scenario: The UK withdraws from the EU without a withdrawal agreement in place. An issuer is

admitted to trading on a regulated market in Slovakia based on a prospectus approved by the UK

FCA and passported to Slovakia. The issuer wishes to continue to be admitted to this market

beyond the date on which the UK withdraws.

Approach: ESMA considers that the admission to trading on a regulated market in Slovakia

remains valid. The issuer does not need to apply for approval of a new prospectus within EU27 /

EEA EFTA in order to maintain the admission to trading.

How to make a new offer to the public in EU27 / EEA EFTA

Scenario: The UK withdraws from the EU without a withdrawal agreement in place. An issuer

wishes to make an offer of non-equity securities to the public in Sweden. It has a base prospectus,

approved by the UK FCA and passported to Sweden before the UK’s withdrawal, which still has a

number of months left of its validity under PD Article 9.

Approach: ESMA is of the view that the issuer would need to have a prospectus approved in its

new EU27 / EEA EFTA home Member State in order to make an offer to the public in Sweden.

How to seek a new admission to trading on a regulated market in EU27 / EEA EFTA

Scenario: The UK withdraws from the EU without a withdrawal agreement in place. An issuer

wishes to seek admission to trading on a regulated market in Poland. It has a prospectus,

approved by the UK FCA and passported to Poland before the UK’s withdrawal, which still has a

number of months left of its validity under PD Article 9.

Approach: ESMA considers that the issuer would need to have a prospectus approved in its new

EU27 / EEA EFTA home Member State in order to seek admission to trading on a regulated market

in Poland.

In relation to all four scenarios described above, ESMA considers that the issuer would be able to

submit the prospectus already approved by the UK FCA to the competent authority of its new

home Member State (after making sure the prospectus contains the information required

according to PD Article 5(1)). In other words, the issuer is not obliged to draw up an entirely new

prospectus for the new approval within EU27 / EEA EFTA.