The issue prospectus – what’s new ?

Published 14 July 2016

Source: Parkiet, 2016-06-13
Author: Krzysztof Marczuk attorney, partner
Przemysław Krzemieniecki trainee advocate

25 March witnessed the coming into force of Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements (“the Regulation”) and amending Commission Regulation (EC) No 809/2004.

Application for prospectus approval

The first amendment to the Regulation as hereuntil known concerns the means of application for prospectus approval. Until now, such an application along with its accompanying documents was submitted to the Polish Financial Supervision Authority (KNF) in paper form, and any subsequent versions likewise had to be submitted in writing, with signatures of all the parties to the proceedings and of the advisors. Now that the new Regulation is in force, the KNF has adopted the position that documentation ought to be filed in paper form as well as in the form of searchable electronic files.

Significantly enough, failure to submit an electronic version of the documents, and likewise submission of electronic documents not concordant with their paper versions, are now regarded by the KNF as formal defects which preclude consideration of the application on its merits. Each and every new version of the prospectus – whether submitted at the request of the KNF, or as a correction of the applicant’s own initiative – should be filed in an electronic version along with a summary of the changes signed by all the parties whom those changes concern (and not by all the parties to the proceedings as well as their advisors, as was hereto the case). The summary of the changes should be signed using a trusted ePUAP profile or a secure electronic signature verified using a qualifying, valid certificate. The summary may be signed by an attorney only. As for the final version of the prospectus, it must – as was previously the case – be submitted in its paper version, with signatures by all the parties to the proceedings. Our assessment of these changes is positive – all in all, they should have the effect of simplifying and facilitating the prospectus proceedings on the issuer’s side.

Publication of the prospectus

The prevailing form for publishing issue prospectuses is that of an electronic file which may be posted on a website. As a general rule, most Polish issuers carry out their IPOs in Poland only. If the “prospectus passport” procedure is not followed and the shares are not registered with competent authorities in other jurisdictions, a Polish prospectus may not be published – or taken as an offer to purchase, or subscribe for, shares – in any other country. In order to avoid the risk of running afoul of restrictions on offering or promoting shares in foreign jurisdictions, issuers publishing their prospectuses on their websites (and likewise their brokers) have resorted to internet “gateways” in the form of appropriate disclaimers which must be acknowledged and accepted before accessing the actual prospectus. For some reason, the European Commission has taken a sceptical view of this solution. The Regulation provides that prospective investors may not be required to accept legal disclaimers before perusing the electronic version of an issue prospectus posted online. At the same time, the category of “disclaimers” as distinguished by the Regulation does not encompass filters with warnings specifying the national jurisdictions in which the offer is being made and obligating website visitors to specify their country of residence or, alternatively, to state that they do not reside in a certain country. Analysis of a sample of recent prospectuses drawn up under the new regime indicates that, for the moment being, regulatory oversight practice with respect to internet “gateways” is not consistent.

Dissemination of advertisements and of alternative indicators of the issuer’s results

Under the amended Regulation, in the event that an IPO is advertised to the general public and, subsequently, an annex to the issue prospectus is published, revealing a new material factor, a material error, or an inaccuracy of the original prospectus, the original advertisement must likewise be supplemented with a new one, clearly amending the previous one.

Under a new provision, issuers may not publish (before or after publishing the prospectus) information setting out alternative result indicators other than those published – or, as the case may be, to be published – in the prospectus. For these purposes, alternative indicators include past or present financial indicators concerning the financial results, financial situation, or cash flow other than those employed in the issuer’s financial reports. Under the previous rules, the selling issuer and entities acting on its behalf or on its instructions were barred from publishing information inconsistent with the issue prospectus. The Regulation includes no details as to the addressees of the proscription on publishing alternative indicators. If we were to presume that this proscription is addressed to entities other than those referred to above, this would have extensive implications as regards drawing up and distributing reports and analyses by independent market analysts – and, indeed, on offering practice. If these restrictions were to be applied on a blanket basis, the significance of analyst reports as an alternative source of independent knowledge about the issuer might be undermined.