Next step in reform of the prospectus regime

The Financial Conduct Authority (FCA) has published a series of engagement papers on the new prospectus and public offers regime in the UK, as trailed by the government in December 2022.

This follows the Hill Review of the UK listing regime published in March 2021, whose recommendations included an overhaul of the prospectus regime, in particular for further issuances by companies that are already listed.

Responses to the engagement papers will inform the new prospectus rules that will be made by the FCA using new powers under the Financial Services and Markets Bill 2022-23 (once passed). The FCA asks for responses to the questions raised by the engagement papers by 29 September 2023 and then plans to consult on specific rule proposals in 2024.

The matters on which the FCA is currently seeking views are:

• Admission to trading on a regulated market (Engagement Paper 1) – The FCA says that the requirement for a prospectus on an IPO will remain and it will continue to need to contain sufficient detail to meet the “necessary information” test. It is asking for views on when exemptions to this requirement should apply, the required content and format of a prospectus in this context, and the responsibility for, and approval of, such a prospectus.
• Further issuances of equity on regulated markets (Engagement Paper 2) – The FCA says there will be no requirement for a listed company to publish a prospectus when it issues further equity securities unless there is a clear need for one. It asks whether there should be a threshold (set by reference to the percentage of existing share capital that the issuance represents) above which a prospectus would be required and what document (if any) should be required if/where a prospectus is not required.
• Protected forward-looking statements (PFLS) (Engagement Paper 3) – The FCA seeks views on how PFLS, which will be subject to the lower recklessness liability standard, should be defined. It also asks whether the FCA should set certain minimum criteria for the production of PFLS, how they should be presented and labelled in prospectuses, and whether sustainability-related disclosures should be PFLS.

The FCA is also interested in views (Engagement Paper 4) on where the current UK prospectus regime could be improved in the context of wholesale debt capital markets.

For more details on the plans for prospectus regime reform, read our full briefing here.