FCA takes an innovative approach to obtain feedback from industry and stakeholder groups.
In May 2023, the FCA launched a process of engagement and dialogue on how the UK’s future prospectus regime could operate. The FCA’s first thematic engagement papers, published on 18 May, aim to solicit discussion and feedback on: (i) whether or how to set prospectus requirements for issuers seeking admission to trading on UK regulated markets; (ii) whether or how to set prospectus requirements for issuers raising further capital; and (iii) how forward-looking information should be covered in prospectuses.
- Admission to trading on a UK regulated market: The FCA’s starting assumption is that it would stick broadly with the existing prospectus requirement for new admissions. However, it is considering small changes to the requirements around the exemptions, the form and content of a prospectus, responsibility for a prospectus, and the approval process.
- Further issuances: The FCA is looking to take an ambitious approach in significantly scaling back the current prospectus requirements for further issuances by already-listed issuers. The engagement paper sets out a list of non-exhaustive possible ways to reduce the current requirements (to be calibrated across different permutations of the scale of issuance, conditions the FCA may set on issuers, and the type of document or prospectus required), including:
- Setting a threshold (i.e., size of the further issuance as a percentage of existing share capital) above which a prospectus would be required, and whether to allow issuers to only publish a simplified prospectus above this threshold or allow them to voluntarily publish a full prospectus.
- Requiring different offer type documents below the threshold (e.g., no requirement to publish an additional document, or requirement to publish an alternative form of document such as a transaction announcement).
- Forward-looking information in a prospectus: The engagement paper sets out the FCA’s initial considerations regarding the definition, preparation, and presentation of “protected forward-looking statements” (PFLS), which would be subject to a “recklessness and dishonesty” liability standard to encourage issuers to include PFLS in their prospectuses by reducing the risk of investor claims.
This engagement process follows HM Treasury’s publication of a draft statutory instrument setting out a new regime for public offers and admission to trading on UK regulated markets. This statutory instrument would delegate to the FCA the rulemaking powers regarding (amongst other things) admissions of securities to trading on UK regulated markets and the categories of PFLS.
Feedback to the engagement papers should be sent by email to the FCA by 29 September 2023. Following the engagement process, the FCA intends to provide feedback on key points raised and publish consultation papers in 2024 to develop the specific rule proposals.