Near-final prospectus regulations published and further FCA engagement papers

HM Treasury has published a near-final version of the regulations on public offers and admissions to trading (statutory instrument or SI), which demonstrates how it will make its proposed changes to the prospectus and public offers regime in the UK post-Brexit. This follows publication of the “illustrative” SI in December 2022 (read more in our blog post here).

Key points to note on the new UK prospectus regime are:

• prospectuses will remain a key feature of an IPO in the UK;
• the Financial Conduct Authority (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; 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.

Changes made between the illustrative version of the SI and the near-final version include:

• the definition of “relevant securities” has been amended to clarify that certain securities (for example, over-the-counter derivatives, the shares of building societies, credit unions, and cooperative and mutual benefits societies) are outside of the scope of the UK prospectus regime; and
• amendments to the drafting of several of the proposed exceptions to the prospectus regime have been made to ensure their scope is appropriate.

Comments on the SI should be submitted by 21 August 2023. The Government plans to legislate for the new regime by the end of the year.

Further FCA engagement papers

The SI provides the framework for the new UK prospectus regime and will be supplemented by new, detailed FCA rules. The FCA has already begun consulting on the exercise of its rule making powers under the SI through its four May 2023 engagement papers (read more in our blog post here).

The FCA has now published its final two engagement papers on exercising its new powers under the SI:

• Engagement Paper 5 outlines the FCA’s proposed approach to a new regulated activity of operating a public offer platform, covering public offers of securities made outside of regulated markets or venues, including larger crowdfunding offers; and
• Engagement Paper 6 discusses the FCA’s potential approach to primary multilateral trading facilities (which includes growth markets such as AIM) where it will have powers to determine when an admission prospectus is required (but not its contents) and set rules for responsibility relating to such documents.

This represents the full complement of engagement papers from the FCA on the new UK public offers and admissions to trading regime, which can be accessed here. The deadline for responses on all of the engagement papers is 29 September 2023. Following assessment of the feedback received, the FCA plans to issue a full consultation paper on its draft new prospectus rules in the first half of 2024.