The Prospectus Directive was developed to harmonise capital raising across the European Union and seeks to ensure that adequate and equivalent disclosure standards are in place in all Member States when securities are made available for all European investors, either through a public offer procedure or because they are admitted to trading on regulated markets.

The Directive has introduced a new "single passport for issuers". This means that once approved by the authority in one Member State, a prospectus has to be accepted everywhere else in the EU. It is a centrepiece of the EU’s Financial Services Action Plan.

The affect on companies looking to raise funds is wide reaching as there is a requirement for companies issuing securities to the public, or on a recognisied exchange, to create a prospectus that is then submiteed to their host state regulator for approval.

The rules governing the creation of a prospectus for those in the UK are simlar to the Public Offer of Securities Regulations that were in place prior to the Prospectus Directive coming into place. These rules, and the new ones, may seem onerous to those contemplating raising funds, however, the format is standard and can (depending on who you hire) be a simple and quick process.

There are three basic rules that you should adhere to; disclosure, disclosure, disclosure. It seem simple but the 'POS Reg' rules sought to stick to this as do the Prospectus Directive rules. Anything at all that could be deemed to be material to the fund raising or information an investor should know for them to make an informed decision, should be in the prospectus.

Examples would be bankruptcies of directors, contigent liabilities of the firm even previously failed business enterprises of the directors. All of the disclosures should be made to avoid problems after the fund raising is complete.

One of the most important parts of the directive for small companies is the exemptions that area available from creating a prospectuis that would need to be submitted to authorities such as the FSA in the UK.

The main one being small transactions below €2.5mn. This exemption is extremly important for companies who are looking to raise pre-IPO or expansion finance when private and is an huge increase from the previous exemption levels.

As a company we still advise corporate clients to create a prospectus that is in line with the prospectus directive and the previous POS Regs because disclosure is still an issue, however, not having to submit such a prospectus to the regulatory authorities reduces costs and makes the process more efficient and speedy.

With the cooperation of the directors of a company such a prospectus can be written and available for investors within 2 - 4 weeks. Having developed many prospectuses to this level we have the in-house expertise to help your company create a professional, investor ready, prospectus in a short space of time and at a much lower cost than most brokers or corporate finance houses.

Should your company require a regulated prospectus we are happy to work with you on the original drafting and work with you to select a suitable brokerage coampny that can aid you in raising funds for your operation.

If you would like further information please get in touch.