We have written previously on the European Commission's capital markets recovery package. On 26 February 2021, one of the proposed measures, the Regulation amending the Prospectus Regulation (2017/1129) (the “Regulation”) was published in the Official Journal of the EU.
The Regulation will come into force in all EU member states on 18 March 2021. It is intended to facilitate the recapitalisation of companies affected by the COVID-19 pandemic and will therefore have effect only until 31 December 2022.
EU Recovery Prospectus
The major initiative under the Regulation is the provision for a new short-form prospectus, available to any issuer whose shares have been admitted to trading on a regulated market or an SME growth market continuously for at least the last 18 months for the purpose of issuing shares fungible with previously issued and outstanding shares.
Extension of withdrawal rights for prospectus supplements
The Regulation also amends the rights of investors to withdraw their acceptances after publication of a supplement. Currently, investors have two working days from the publication of the supplement (the issuer may permit a longer period); the Regulation extends this to three working days.
Financial intermediaries' obligations in relation to prospectus supplements
The Regulation specifies that the requirement for financial intermediaries to inform investors of the possibility of a prospectus supplement being published extends only to investors who agree to purchase securities through the financial intermediary between the time when the prospectus for those securities is approved and the closing of the initial offer period. The amending regulation extends the time available for a financial intermediary to contact investors when a supplement is published to the working day following publication.