The latest piece of the Prospectus Regulation puzzle has arrived.
On 28 November, 2018, the European Commission published the Commission delegated regulation and Annexes on the format, content, scrutiny and approval of the prospectus (the Delegated Regulation). The Delegated Regulation largely follows the European Securities and Markets Authority's (ESMA) final report (published in March 2018), although there has been some reformatting of the annexes.
The European Commission intends to adopt this Delegated Regulation, which will apply, along with the Prospectus Regulation, from 21 July, 2019. Market participants need to start thinking now about how they are going to address these new requirements in their debt prospectuses, in particular the:
- more prescriptive approach to risk factors, which cannot be generic and must be categorised and restricted;
- modified requirements for the summary and interaction with the PRIIPs KID; and
- enhanced disclosure obligations for credit‑linked notes and securitizations.
Some of these changes, such as the categorization of risk factors, could lead to increased costs and liability for issuers.
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