Prospectus Directive II: The FSMA Decides to Apply the Rules Despite Lack of Implementing Legislation in Belgium

On 24 November 2010, a new directive was adopted, amending the Prospectus Directive of 2003. The deadline for transposition of the Prospectus Directive II[1] into national law was 1 July 2012. Transposition will require certain modifications to the Prospectus Act of 16 June 2006.[2] Thus far, however, Belgium has not taken any steps in this regard; in fact, there is not even a draft text available.

FSMA communication

To this end, the FSMA released in June 2012 a communication[3] on the policy it will apply insofar as the treatment of files relating to "public offers and admissions to trading on a regulated market" are concerned. This communication follows from that released upon the entry into force of the Prospectus Directive on 16 June 2005.[4]

The FSMA recalls that the Prospectus Directive II is a so-called "maximum harmonisation" directive, meaning it sets down mandatory rules to harmonise, insofar as possible, the legislation of the Member States, which have little or no room to manoeuvre when transposing the directive. The Court of Justice of the European Union considers the provisions of a directive that have not been transposed on time by the Member States to have vertical direct effect, provided they are sufficiently clear, precise and unconditional.

In the FSMA's opinion, all provisions of the Prospectus Directive II that still need to be transposed into Belgian law are sufficiently clear, precise and unconditional to be capable of having vertical direct effect.

In view of this vertical direct effect, coupled with the principle of the primacy of EU law, the FSMA has decided, at its own initiative, to apply the provisions of the Prospectus Directive II as from 1 July 2012, unless they impose new constraints on issuers. Issuers may nonetheless apply the more stringent provisions of the new directive voluntarily.

This means that the following rules have been applicable since 1 July 2012:

- There is no obligation to publish a prospectus when securities are offered exclusively to qualified investors, such as credit institutions, investment companies and insurance companies, amongst others. The definition of qualified investor, which refers to the definitions of professional client, institutional client and eligible counterparty, within the meaning of Annex II to MiFID, shall apply without prejudice to the possibility for issuers to continue to use the register of qualified investors published on the FSMA's website, in accordance with the Royal Decree of 26 September 2006 extending the concepts of qualified investor and institutional or professional investor;

- Offers of transferable securities addressed to fewer than 150 people will not be considered public, meaning no prospectus will be required (this number was previously 100);

- Abbreviated prospectus schedules, drawn up for the benefit of SMEs[5] in particular, as set forth in the Prospectus Regulation (see below), will apply;

- Offers made to (current or former) directors or employees will be governed by the provisions of the new directive, which are less stringent;

- The summary of the prospectus must contain the "key information" provided for in the new directive. The purpose is for the summary to describe in a "simple and comprehensible way" the conditions of the offer as well as the rights attached to the offered securities and the risks associated with the investment in securities;

- In the event of resale of transferable securities by a financial intermediary, the latter may reuse a prospectus that is still valid, provided the issuer or the person responsible for drawing up the prospectus agrees to its reuse;

- Issuers or offerors that wish to benefit from Community-wide approval of the prospectus (an EU passport) must ensure that they include, in the prospectus summary, the "key information" mentioned in the new directive, presented in accordance with the schedules contained in the Prospectus Regulation.

Commission delegated regulations

The provisions of the Prospectus Directive on the concrete form and content of a prospectus are executed through Regulation (EC) No 809/2004 of 29 April 2004. This regulation has also been amended, effective 1 July 2012, by so-called delegated regulations adopted by the European Commission. The delegated regulations are based on technical advice provided by the European Securities and Markets Authority (ESMA).[6]

Thus far, two delegated regulations have entered into force:

- Commission Delegated Regulation (EU) No 311/2012 of 21 December 2011[7] amending the Prospectus Regulation as regards elements related to prospectuses and advertisements. The Prospectus Regulation provides that third-country issuers must prepare historical financial information contained in prospectuses in accordance with either IFRS or their national accounting standards, provided they are equivalent to IFRS. Pursuant to the new delegated regulation, third-country issuers may now present historical financial information in accordance with Generally Accepted Accounting Principles of the People’s Republic of China, Canada or the Republic of Korea, all of which are deemed equivalent to IFRS.

- Commission Delegated Regulation (EU) No 486/2012 of 30 March 2012[8] amending the Prospectus Regulation as regards the format and content of the prospectus, the base prospectus, the summary and the final terms and as regards the disclosure requirements. This delegated regulation covers (i) the mandatory format and content of key information to be included in the prospectus summary, which may not exceed the longer of seven percent of the length of the prospectus or 15 pages, and (ii) the new proportionate disclosure rules that will be available for prospectuses used in connection with rights issues by issuers with shares traded on a regulated market or multilateral trading facility or by small and medium-sized enterprises and companies with reduced capitalisation, i.e., average market capitalisation of less than €100 million.

These delegated regulations, like any other EU regulation, do not need to be transposed into national law and are immediately applicable.

A third Commission delegated regulation of 4 June 2012[9] amending the Prospectus Regulation as regards information on the consent to use of the prospectus, information on underlying indexes and the requirement for a report prepared by independent accountants or auditors is not yet final.[10]


[1] Directive 2010/73/EU of the European Parliament and of the Council of 24 November 2010 amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market.

[2] See the "New Directive Amending the Prospectus Directive Will Require Modification of the
Prospectus Act"
by the same authors, in the March 2011 issue of bTTP.

[3] FSMA Communication 2012_13 of 21/06/2012 - communication of the FSMA on the policy in effect as from 1 July 2012 for the treatment of dossiers relating to public offers and admissions to
trading on a regulated market, available at


[4] Belgium was also late in transposing the Prospectus Directive.

[5] The abbreviation SME stands for small and medium-sized enterprises, within the meaning of Commission Recommendation 2003/361/EC of 6 May 2003 (OJEU, L 142/36 of 20.05.2003). The main factors used to determine whether a company is an SME are the number of employees and either its turnover or balance sheet total.

[6] Final Report of the European Securities and Markets Authority (ESMA)'s Technical Advice on Possible Delegated Acts Concerning the Prospectus Directive as Amended by the Directive 2010/73/EU, 4 October 2011, ESMA/2011/323, available at


[7] OJEU, L103/13 of 13.04.2012.

[8] OJEU, L150/01 of 09.06.2012.

[9] C(2012) 3505 final.

[10] This delegated Regulation has not yet entered into force. It is subject to the right of the European Parliament and of the Council to express objections, in accordance with Article 290 (2) of the Treaty on the Functioning of the European Union and Article 24c of the Prospectus Directive II.