UK Secondary Legislation Published to Implement the Prospectus Regulation

The Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 have been formally published and will come into force on July 21, 2019.
 
The Regulations make amendments to certain pieces of existing U.K. legislation to provide for consistency with the new EU Prospectus Regulation, which comes into force on July 21, 2019. In particular, changes will be made to the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2013, with consequential changes made to the Financial Services Act 2012 and the Data Protection Act 2018.
 
The new EU Prospectus Regulation will replace the existing Prospectus Directive, which set out the requirements for a prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. The Prospectus Regulation aims to make it cheaper and easier for smaller companies to access capital through the issuance of securities while maintaining a high level of investor protection. Although the Prospectus Regulation will apply directly across the EU, Member States may need to make changes to existing national legislation to ensure the Regulation is correctly implemented.
 
The changes made by the Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 include:

• Replacement of references to the Prospectus Directive with references to the Prospectus Regulation, where appropriate in U.K. legislation;
• Granting of additional powers to the FCA to: (i) suspend scrutiny of prospectuses if the issuer is either subject to prohibitions under the Markets in Financial Instruments Regulation or in breach of product intervention rules; and (ii) refuse the approval of a prospectus for up to five years if the applicant is in breach of prospectus legislation;
• Expansion of the FCA's powers to restrict the offer of securities to the public where the offeror is subject to prohibitions under MiFIR or the FCA has found the offeror to be in contravention of product intervention rules;
• Expansion of the FCA's powers to restrict admission of securities to trading on a regulated market where the applicant for admission to trading is subject to prohibitions under MiFIR or the FCA has found the applicant to be in contravention of the product intervention rules;
• Granting of additional powers to the FCA to: (i) require an entity proposing to admit its securities for trading to suspend trading of those securities on a trading facility for up to ten working days; or (ii) to require the operator of the facility to prohibit the trading of those securities, in the event the entity is in breach of legislation governing prospectuses.

The FCA has also published a Policy Statement containing near-final changes to the Prospectus Regulation Rules sourcebook section of the FCA Handbook, to ensure that the Handbook is consistent with the Prospectus Regulation. Applications for approval of a draft prospectus submitted to the FCA on or after July 21, 2019 must be in compliance with the new PRR sourcebook. Prospectuses submitted to, and approved by, the FCA before July 21, 2019, must be in compliance with the existing FCA sourcebook and will be governed by national law under the Prospectus Directive regime until the earlier of (i) 12 months after July 21, 2019, or (ii) the end of the prospectus' validity.
 
View the Financial Services and Markets Act 2000 (Prospectus) Regulations 2019.
 
View the Explanatory Memorandum to the Financial Services and Markets Act 2000 (Prospectus) Regulations 2019. 
 
View the FCA's Policy Statement on Changes to the FCA Handbook.

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