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Stand:updated on 18.01.2021 Brexit: Guidance on prospectuses for securities

The departure of the United Kingdom of Great Britain and Northern Ireland (UK) from the EU and the EEA is now complete, and the transition period in which most of the European provisions were still applicable, has expired.

This has implications for the cross-border validity of approved securities prospectuses and for the UK’s status as a “home Member State” within the meaning of Article 2(m) of the EU Prospectus Regulation (Regulation (EU) 2017/1129).

(1) UK now a third country

For the approval of share prospectuses, the “home country” principle applies to issuers domiciled in the EEA. This means that the supervisory authority of the EEA state in which the issuer is domiciled is responsible for approving prospectuses.

Issuers domiciled outside the EEA are referred to as issuers from third countries. Such issuers generally have a one-off option to choose an EEA state for the approval of their prospectuses. They can choose between the EEA state in which they intend to offer the securities to the public for the first time and the EEA state in which they intend to make the first application for admission to trading on a regulated market. Once this option has been exercised, the supervisory authority of the selected EEA state is also responsible for subsequent issuances.

By deciding to leave both the EU and the EEA, the UK has become a third country. Issuers from the UK and issuers from third countries that previously selected the UK as their EEA state can no longer have their prospectuses approved by an authority in the UK for the purpose of offering securities within the EEA. For subsequent issuances within the EEA, such issuers must (again) exercise their option to select an EEA state and supervisory authority for the prospectus approval process.

(2) Loss of cross-border validity of approved securities prospectuses

Approved securities prospectuses may, upon application, be used in other EEA states for offers to the public or for the admission of securities to trading on a regulated market. For this purpose, the authority approving the prospectuses notifies its approval to other European supervisory authorities. This notification procedure enables issuers to offer securities to the public and/or have securities admitted to trading on a regulated market in multiple EEA countries without having to go through an additional prospectus approval process in each case.

The UK’s departure from the EU and the EEA has the following consequences for the cross-border validity of securities prospectuses:

  • Prospectuses approved in the UK can no longer be notified by the UK authorities to other authorities for use in an EEA state or vice versa.
  • Prospectuses previously notified by the UK authorities to authorities in other EEA states no longer have cross-border validity. Ongoing offers to the public must therefore be discontinued.
  • New offers to the public and new admissions to trading on regulated markets can no longer take place on the basis of notified prospectuses.
  • Securities already admitted to trading retain their admission both in Germany and in the UK.
  • Issuers from the UK and from third countries that previously selected the UK as their EEA state must now have new prospectuses approved by an authority in the EEA in order to continue being able to offer securities to the public in the EEA and/or have them admitted to trading on a regulated market there.

(3) Discontinuation of prospectus-free secondary listings

For secondary listings, issuers from EEA states can make use of the exemption provision under Article (1)(5)(j) of the EU Prospectus Regulation. This provision does not require issuers to have a prospectus in order to obtain a secondary listing of securities already admitted to trading on a regulated market. As a result of Brexit, this alleviation no longer applies to issuers from EEA states seeking a secondary listing in the UK or to issuers from the UK wishing to obtain a secondary listing in the EEA.

ESMA’s Brexit Q&As

The European Securities and Markets Authority (ESMAhttps://www.esma.europa.eu/) has published additional information on Brexit in the form of Q&As. This information can be found in the “Questions and Answers on the Prospectus Regulation” (ESMA31-62-1258) under points 16.1 and 16.2.

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