Regulation (EU) 2021/337 of the European Parliament and of the Council of 16 February 2021 amending Regulation (EU) 2017/1129 as regards the EU Recovery prospectus and targeted adjustments for financial intermediaries and Directive 2004/109/EC as regards the use of the single electronic reporting format for annual financial reports, to support the recovery from the COVID-19 crisis (Text with EEA relevance)

• CELEX: Regulation (EU) 2021/337
• Articles: 4

Article 1 Amendments to Regulation (EU) 2017/1129

Regulation (EU) 2017/1129 is amended as follows:

(1)

in Article 1(4), the following point is added:

‘(l)

from 18 March 2021 to 31 December 2022, non-equity securities issued in a continuous or repeated manner by a credit institution, where the total aggregated consideration in the Union for the securities offered is less than EUR 150 000 000 per credit institution calculated over a period of 12 months, provided that those securities:

(i)

are not subordinated, convertible or exchangeable; and

(ii)

do not give a right to subscribe for or acquire other types of securities and are not linked to a derivative instrument.’;

(2)

in Article 1(5), first subparagraph, the following point is added:

‘(k)

from 18 March 2021 to 31 December 2022, non-equity securities issued in a continuous or repeated manner by a credit institution, where the total aggregated consideration in the Union for the securities offered is less than EUR 150 000 000 per credit institution calculated over a period of 12 months, provided that those securities:

(i)

are not subordinated, convertible or exchangeable; and

(ii)

do not give a right to subscribe for or acquire other types of securities and are not linked to a derivative instrument.’;

(3)

in Article 6(1), the introductory part of the first subparagraph is replaced by the following:

‘1.   Without prejudice to Articles 14(2), 14a(2) and 18(1), a prospectus shall contain the necessary information which is material to an investor for making an informed assessment of:’;

(4)

in Article 7, the following paragraph is inserted:

‘12a.   By way of derogation from paragraphs 3 to 12 of this Article, an EU Recovery prospectus drawn up in accordance with Article 14a shall include a summary drawn up in accordance with this paragraph.

The summary of an EU Recovery prospectus shall be drawn up as a short document written in a concise manner and of a maximum length of two sides of A4-sized paper when printed.

The summary of an EU Recovery prospectus shall not contain cross-references to other parts of the prospectus or incorporate information by reference and shall:

(a)

be presented and laid out in a way that is easy to read, using characters of readable size;

(b)

be written in a language and a style that facilitate the understanding of the information, in particular, in language that is clear, non-technical, concise and comprehensible for investors;

(c)

be made up of the following four sections:

(i)

an introduction, containing all of the information referred to in paragraph 5 of this Article, including warnings and the date of approval of the EU Recovery prospectus;

(ii)

key information on the issuer, including, if applicable, a specific reference of not less than 200 words to the business and financial impact on the issuer of the COVID-19 pandemic;

(iii)

key information on the shares, including the rights attached to those shares and any limitations on those rights;

(iv)

key information on the offer of shares to the public and/or the admission to trading on a regulated market.’;

(5)

the following Article is inserted:

‘Article 14a

EU Recovery prospectus

1.   The following persons may choose to draw up an EU Recovery prospectus under the simplified disclosure regime set out in this Article in the case of an offer of shares to the public or of an admission to trading of shares on a regulated market:

(a)

issuers whose shares have been admitted to trading on a regulated market continuously for at least the last 18 months and who issue shares fungible with existing shares which have been previously issued;

(b)

issuers whose shares have already been traded on an SME growth market continuously for at least the last 18 months, provided that a prospectus has been published for the offer of those shares, and who issue shares fungible with existing shares which have been previously issued;

(c)

offerors of shares admitted to trading on a regulated market or an SME growth market continuously for at least the last 18 months.

Issuers may only draw up an EU Recovery prospectus provided that the number of shares intended to be offered represents, together with the number of shares already offered via an EU Recovery prospectus over a period of 12 months, if any, no more than 150 % of the number of shares already admitted to trading on a regulated market or an SME growth market, as the case may be, on the date of approval of the EU Recovery prospectus.

The period of 12 months referred to in the second subparagraph shall begin on the date of approval of the EU Recovery prospectus.

2.   By way of derogation from Article 6(1), and without prejudice to Article 18(1), the EU Recovery prospectus shall contain the relevant reduced information which is necessary to enable investors to understand:

(a)

the prospects and financial performance of the issuer and the significant changes in the financial and business position of the issuer that have occurred since the end of the last financial year, if any, as well as its financial and non-financial long-term business strategy and objectives, including, if applicable, a specific reference of not less than 400 words to the business and financial impact of the COVID-19 pandemic on the issuer and the anticipated future impact of the same;

(b)

the essential information on the shares, including the rights attached to those shares and any limitations on those rights, the reasons for the issuance and its impact on the issuer, including on the overall capital structure of the issuer, as well as a disclosure of capitalisation and indebtedness, a working capital statement, and the use of proceeds.

3.   The information contained in the EU Recovery prospectus shall be written and presented in an easily analysable, concise and comprehensible form and shall enable investors, especially retail investors, to make an informed investment decision, taking into account the regulated information that has already been disclosed to the public pursuant to Directive 2004/109/EC, where applicable, Regulation (EU) No 596/2014 and, where applicable, information referred to in Commission Delegated Regulation (EU) 2017/565  ( *1 ) .

4.   The EU Recovery prospectus shall be drawn up as a single document containing the minimum information set out in Annex Va. It shall be of a maximum length of 30 sides of A4-sized paper when printed and shall be presented and laid out in a way that is easy to read, using characters of readable size.

5.   Neither the summary nor the information incorporated by reference in accordance with Article 19 shall be taken into account as regards the maximum length referred to in paragraph 4 of this Article.

6.   Issuers may decide the order in which the information set out in Annex Va is set out in the EU Recovery prospectus.

( *1 )   Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive ( OJ L 87, 31.3.2017, p. 1 ).’;"

(6)

in Article 20, the following paragraph is inserted:

‘6a.   By way of derogation from paragraphs 2 and 4, the time limits set out in the first subparagraph of paragraph 2 and paragraph 4 shall be reduced to seven working days for an EU Recovery prospectus. The issuer shall inform the competent authority at least five working days before the date envisaged for the submission of an application for approval.’;

(7)

in Article 21, the following paragraph is inserted:

‘5a.   An EU Recovery prospectus shall be classified in the storage mechanism referred to in paragraph 6 of this Article. The data used for the classification of prospectuses drawn up in accordance with Article 14 may be used for the classification of EU Recovery prospectuses drawn up in accordance with Article 14a, provided that the two types of prospectuses are differentiated in that storage mechanism.’;

(8)

Article 23 is amended as follows:

(a)

the following paragraph is inserted:

‘2a.   By way of derogation from paragraph 2, from 18 March 2021 to 31 December 2022, where the prospectus relates to an offer of securities to the public, investors who have already agreed to purchase or subscribe for the securities before the supplement is published shall have the right, exercisable within three working days after the publication of the supplement, to withdraw their acceptances, provided that the significant new factor, material mistake or material inaccuracy referred to in paragraph 1 arose or was noted before the closing of the offer period or the delivery of the securities, whichever occurs first. That period may be extended by the issuer or the offeror. The final date of the right of withdrawal shall be stated in the supplement.

The supplement shall contain a prominent statement concerning the right of withdrawal, which clearly states:

(a)

that a right of withdrawal is only granted to those investors who had already agreed to purchase or subscribe for the securities before the supplement was published and where the securities had not yet been delivered to the investors at the time when the significant new factor, material mistake or material inaccuracy arose or was noted;

(b)

the period in which investors can exercise their right of withdrawal; and

(c)

whom investors may contact should they wish to exercise the right of withdrawal.’;

(b)

the following paragraph is inserted:

‘3a.   By way of derogation from paragraph 3, from 18 March 2021 to 31 December 2022, where investors purchase or subscribe securities through a financial intermediary between the time when the prospectus for those securities is approved and the closing of the initial offer period, that financial intermediary shall inform those investors of the possibility of a supplement being published, where and when it would be published and that the financial intermediary would assist them in exercising their right to withdraw acceptances in such a case.

Where the investors referred to in the first subparagraph of this paragraph have the right of withdrawal referred to in paragraph 2a, the financial intermediary shall contact those investors by the end of the first working day following that on which the supplement is published.

Where the securities are purchased or subscribed directly from the issuer, that issuer shall inform investors of the possibility of a supplement being published and where it would be published and that, in such a case, they could have a right to withdraw the acceptance.’;

(9)

the following Article is inserted:

‘Article 47a

Time limitation of the EU Recovery prospectus regime

The EU Recovery prospectus regime set out in Article 7(12a), Article 14a, Article 20(6a) and Article 21(5a) expires on 31 December 2022.

EU Recovery prospectuses approved between 18 March 2021 and 31 December 2022 shall continue to be governed in accordance with Article 14a until the end of their validity or until 12 months have elapsed after 31 December 2022, whichever occurs first.’;

(10)

in Article 48, paragraph 2 is replaced by the following:

‘2.   The report shall assess, inter alia, whether the prospectus summary, the disclosure regimes set out in Articles 14, 14a and 15 and the universal registration document referred to in Article 9 remain appropriate in light of their pursued objectives. In particular, the report shall include the following:

(a)

the number of EU Growth prospectuses of persons in each of the categories referred to in points (a) to (d) of Article 15(1) and an analysis of the evolution of each such number and of the trends in the choice of trading venues by the persons entitled to use the EU Growth prospectus;

(b)

an analysis of whether the EU Growth prospectus strikes a proper balance between investor protection and the reduction of administrative burdens for the persons entitled to use it;

(c)

the number of EU Recovery prospectuses approved and an analysis of the evolution of such number, as well as an estimate of the actual additional market capitalisation mobilised by EU Recovery prospectuses at the date of issue in order to gather experience about the EU Recovery prospectus for post-evaluation;

(d)

the cost of preparing and having an EU Recovery prospectus approved compared to the current costs for the preparation and approval of a standard prospectus, a secondary issuance prospectus and an EU Growth prospectus, together with an indication of the overall financial savings achieved and of which costs could be further reduced, and the total costs of complying with this Regulation for issuers, offerors and financial intermediaries together with a calculation of those costs as a percentage of operational costs;

(e)

an analysis of whether the EU Recovery prospectus strikes the proper balance between investor protection and the reduction of administrative burden for the persons entitled to use it, and of the accessibility of essential information for investments;

(f)

an analysis of whether it would be appropriate to extend the duration of the EU Recovery prospectus regime, including whether the threshold referred to in the second subparagraph of Article 14a(1), beyond which an EU Recovery prospectus may not be used, is appropriate;

(g)

an analysis of whether the measures laid down in Articles 23(2a) and 23(3a) achieved the objective of providing additional clarity and flexibility to both financial intermediaries and investors and whether it would be appropriate to make those measures permanent.’;

(11)

the text set out in the Annex to this Regulation is inserted as Annex Va.

Article 2 Amendment to Directive 2004/109/EC

In Article 4(7), the first subparagraph is replaced by the following:

‘7.   For financial years beginning on or after 1 January 2020, all annual financial reports shall be prepared in a single electronic reporting format provided that a cost-benefit analysis has been undertaken by the European Supervisory Authority (European Securities and Markets Authority) (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council  ( *2 ) . However, a Member State may allow issuers to apply that reporting requirement for financial years beginning on or after 1 January 2021, provided that that Member State notifies the Commission of its intention to allow such a delay by 19 March 2021, and that its intention is duly justified.

Article 3 Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union .

Schedules & Appendices

ANNEX

ANNEX

‘ANNEX Va

MINIMUM INFORMATION TO BE INCLUDED IN THE EU RECOVERY PROSPECTUS

I.   Summary

The EU Recovery prospectus must include a summary drawn up in accordance with Article 7(12a).

II.   Name of the issuer, country of incorporation, link to the issuer’s website

Identify the company issuing shares, including its legal entity identifier (LEI), its legal and commercial name, its country of incorporation and the website where investors can find information on the company’s business operations, the products it makes or the services it provides, the principal markets where it competes, its major shareholders, the composition of its administrative, management and supervisory bodies and of its senior management and, where applicable, information incorporated by reference (with a disclaimer that the information on the website does not form part of the prospectus unless that information is incorporated by reference into the prospectus).

III.   Responsibility statement and statement on the competent authority

1.   Responsibility statement

Identify the persons responsible for drawing up the EU Recovery prospectus and include a statement by those persons that, to the best of their knowledge, the information contained in the EU Recovery prospectus is in accordance with the facts and that the EU Recovery prospectus makes no omission likely to affect its import.

Where applicable, the statement must contain information sourced from third parties, including the source(s) of that information, and statements or reports attributed to a person as an expert and the following details of that person:

(a)

name;

(b)

business address;

(c)

qualifications; and

(d)

material interest (if any) in the issuer.

2.   Statement on the competent authority

The statement must indicate the competent authority that has approved, in accordance with this Regulation, the EU Recovery prospectus, specify that such approval is not an endorsement of the issuer nor of the quality of the shares to which the EU Recovery prospectus relates, that the competent authority has only approved the EU Recovery prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by this Regulation, and specify that the EU Recovery prospectus has been drawn up in accordance with Article 14a.

IV.   Risk factors

A description of the material risks that are specific to the issuer and a description of the material risks that are specific to the shares being offered to the public and/or admitted to trading on a regulated market, in a limited number of categories, in a section headed “Risk Factors”.

In each category, the most material risks, in the assessment undertaken by the issuer, offeror or person asking for admission to trading on a regulated market, taking into account the negative impact on the issuer as well as on the shares being offered to the public and/or admitted to trading on a regulated market and the probability of their occurrence, shall be set out first. The risks shall be corroborated by the content of the EU Recovery prospectus.

V.   Financial statements

The EU Recovery prospectus must include the financial statements (annual and half-yearly) published over the period of 12 months prior to the approval of the EU Recovery prospectus. Where both annual and half-yearly financial statements have been published, only the annual statements must be required where they postdate the half-yearly financial statements.

The annual financial statements must be independently audited. The audit report must be prepared in accordance with Directive 2006/43/EC of the European Parliament and of the Council  ( 1 ) and Regulation (EU) No 537/2014 of the European Parliament and of the Council  ( 2 ) .

Where Directive 2006/43/EC and Regulation (EU) No 537/2014 do not apply, the annual financial statements must be audited or reported on as to whether or not, for the purposes of the EU Recovery prospectus, they give a true and fair view in accordance with auditing standards applicable in a Member State or an equivalent standard. Otherwise, the following information must be included in the EU Recovery prospectus:

(a)

a prominent statement disclosing which auditing standards have been applied;

(b)

an explanation of any significant departures from International Standards on Auditing.

Where audit reports on the annual financial statements have been refused by the statutory auditors or where they contain qualifications, modifications of opinion, disclaimers or an emphasis of matter, the reason must be given, and such qualifications, modifications, disclaimers or emphasis of matter must be reproduced in full.

A description of any significant change in the financial position of the group which has occurred since the end of the last financial period for which either audited financial statements or interim financial information have been published, must also be included, or an appropriate negative statement must be included.

Where applicable, pro forma information must also be included.

VI.   Dividend policy

A description of the issuer’s policy on dividend distributions and any current restrictions thereon, as well as on share repurchases.

VII.   Trend information

A description of:

(a)

the most significant recent trends in production, sales and inventory, and costs and selling prices since the end of the last financial year to the date of the EU Recovery prospectus;

(b)

information on any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the issuer’s prospects for at least the current financial year;

(c)

information on the issuer’s short and long-term financial and non-financial business strategy and objectives, including, if applicable, a specific reference of not less than 400 words to the business and financial impact of the COVID-19 pandemic on the issuer and the anticipated future impact of the same.

If there is no significant change in either of the trends referred to in points (a) or (b) of this section, a statement to that effect is to be made.

VIII.   Terms and conditions of the offer, firm commitments and intentions to subscribe and key features of the underwriting and placement agreements

Set out the offer price, the number of shares offered, the amount of the issue/offer, the conditions to which the offer is subject, and the procedure for the exercise of any right of pre-emption.

To the extent known to the issuer, provide information on whether major shareholders or members of the issuer’s management, supervisory or administrative bodies intend to subscribe for the offer, or whether any person intends to subscribe for more than 5 % of the offer.

Present any firm commitments to subscribe for more than 5 % of the offer and all material features of the underwriting and placement agreements, including the name and address of the entities agreeing to underwrite or place the issue on a firm commitment basis or under “best efforts” arrangements and the quotas.

IX.   Essential information on the shares and on their subscription

Provide the following essential information about the shares offered to the public or admitted to trading on a regulated market:

(a)

the international security identification number (ISIN);

(b)

the rights attached to the shares, the procedure for the exercise of those rights and any limitations of those rights;

(c)

where the shares can be subscribed as well as on the time period, including any possible amendments, during which the offer will be open and a description of the application process together with the issue date of new shares.

X.   Reasons for the offer and use of proceeds

Provide information on the reasons for the offer and, where applicable, the estimated net amount of the proceeds broken into each principal intended use and presented in order of priority of such uses.

Where the issuer is aware that the anticipated proceeds will not be sufficient to fund all the proposed uses, it must state the amount and sources of other funds needed. Details must also be given with regard to the use of the proceeds, in particular where proceeds are being used to acquire assets, other than in the ordinary course of business, to finance announced acquisitions of other business, or to discharge, reduce or retire indebtedness.

XI.   Receipt of state aid support

Provide a statement with information as to whether the issuer has benefited from state aid in whatever form in the context of the recovery as well as the purpose of the aid, type of instrument and amount of the aid received and conditions attached to it, if any.

The statement as to whether the issuer received state aid must contain a declaration that the information is provided solely under the responsibility of the persons responsible for the prospectus, as referred to in Article 11(1), that the competent authority’s role in approving the prospectus is to scrutinise its completeness, comprehensibility and consistency, and that therefore in respect of the statement on state aid the competent authority is not obliged to independently verify that statement.

XII.   Working capital statement

Statement by the issuer that, in its opinion, the working capital is sufficient for the issuer’s present requirements or, if not, how the issuer proposes to provide the additional working capital needed.

XIII.   Capitalisation and indebtedness

A statement of capitalisation and indebtedness (distinguishing between guaranteed and unguaranteed, secured and unsecured indebtedness) as of a date no earlier than 90 days prior to the date of the EU Recovery prospectus. The term “indebtedness” also includes indirect and contingent indebtedness.

In the case of material changes in the capitalisation and indebtedness position of the issuer within the 90 day period, additional information must be given through the presentation of a narrative description of such changes or through the updating of those figures.

XIV.   Conflicts of interest

Provide information about any interests related to the issuance, including conflicts of interest, and details of the persons involved and the nature of the interests.

XV.   Dilution and shareholding after the issuance

Present a comparison of participation in share capital and voting rights for existing shareholders before and after the capital increase resulting from the public offer, with the assumption that existing shareholders do not subscribe for the new shares and, separately, with the assumption that existing shareholders do take up their entitlement.

XVI.   Documents available

A statement that for the term of the EU Recovery prospectus the following documents, where applicable, can be inspected:

(a)

the up to date memorandum and articles of association of the issuer;

(b)

all reports, letters, and other documents, valuations and statements prepared by an expert at the issuer’s request any part of which is included or referred to in the EU Recovery prospectus.

An indication of the website on which the documents may be inspected.

’

( 1 )   Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC ( OJ L 157, 9.6.2006, p. 87 ).

( 2 )   Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC ( OJ L 158, 27.5.2014, p. 77 ).