Market access after Brexit: Prospectus equivalence
Timing is everything. Before the UK referendum on exiting the European Union, the European Commission proposed a draft Prospectus Regulation as part of its Capital Market Union (CMU) initiative. The aim is to broaden the attractiveness of offering and listing securities across the EU. Among other things, the proposal contemplated an ‘equivalence’ regime for issuers in third countries that have a prospectus approved by a securities regulator outside of the European Economic Area. Since then, the European Parliament, Council and Commission agreed on a compromise draft that attaches further conditions to third country equivalence for prospectuses.
On January 30, 2017 we published on our CMU site an in-depth analysis of how the new prospectus equivalence rules compare to the existing Prospectus Directive regime. We may never know whether the referendum result inspired these added conditions. However, the new rules may still present opportunities for UK-based issuers after the UK departs the EU.
The Commission intends for the Prospectus Regulation to enter into force in the first half of 2017, but the majority of its provisions will not apply until the first half of 2019. While the timeline for Brexit is much less definite, the new rules should be relevant to UK issuers in any event.