Illustrative framework for the new UK prospectus regime published

HM Treasury has published a policy statement setting out its approach to the repeal of financial services retained EU law. As part of this, it has also published an illustrative statutory instrument on public offers and admissions to trading (SI) which demonstrates how it will make its proposed changes to the prospectus and public offers regime.

The policy statement forms part of the ‘Edinburgh reforms’ – a package of reforms which the government hopes will drive growth and competitiveness in the UK financial services sector. The key proposals of the Edinburgh Reforms, and their potential significance and impact, are discussed in our webcast series.

The SI covers the majority of the changes previously announced by the government in March 2022 in response to its consultation on the UK prospectus regime. Key points to note are:

• prospectuses will remain a key feature of an IPO in the UK;
• the FCA will be given discretion to determine when a prospectus is required but, for a listed issuer, a public offer to its existing shareholders would not of itself require a prospectus;
• the overarching requirement for a prospectus to contain ‘necessary information’ will be retained, but the FCA will be given power to make rules on the detailed disclosure requirements, opening the door to a more proportionate disclosure regime for secondary issues (if a prospectus is required at all); and
• liability for forward-looking information in a prospectus will be aligned with liability for other listed company published information: liability will only be incurred when those involved are reckless.

Our detailed briefing on the UK prospectus regime reform proposals is available here.

Next steps

The Treasury intends to deliver the Edinburgh reforms by splitting the work into tranches. The prospectus regime will be among the first tranche of rules to be reformed using the new powers in the Financial Services and Markets Bill.

The Treasury has stressed that the exact drafting, design and format of the SI is not final and will continue to develop before the final legislation is laid before Parliament once the Financial Services and Markets Bill has received Royal Assent (expected in spring 2023). The Treasury says it expects to make significant progress on Tranches 1 and 2 by the end of 2023.