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The Government has brought two deregulatory amendments to the EU Prospectus Directive into effect a year early which may help small businesses access equity finance more easily.
By implementing the amendments on 31 July 2011 fewer small issuers are caught by the prospectus regime; SMEs should now be able to raise equity finance of up to €5 million (doubled from €2.5 million) before a costly prospectus must be produced. They will also be able to target a larger pool of investors (up to 150 investors, up from 100).
The EU Prospectus Directive 2003 provides a framework for the preparation of prospectuses (which must be published when securities are offered to the public, or are admitted to trading on a regulated market). The Directive established a series of thresholds, which dictate when a prospectus must be produced. In 2010, the European Commission identified a number of amendments to simplify and clarify the regime which led to the deregulation. All Member States must make the same changes by 1 July 2012.