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ESMA draft technical advice consultation - Law Society response

28 November 2017

The European Securities and Markets Authority (ESMA) published a consultation seeking views on its draft technical advice in relation to the format and content of the prospectus, base prospectus and final terms.

The joint working party of the Company Law Committees of the City of London Law Society (CLLS) and the Law Society of England and Wales has responded to the consultation.

It welcomed the fact that ESMA has given significant thought to the consultation, and noted that while the new regime will bring numerous changes to the prospectus format and content, most of these changes are incremental improvements (as a matter of law).

It stated that it would be very helpful if there was a clear statement in the level 2 text that ESMA’s general position is that specific prospectus contents requirements, including for simplified prospectuses under Article 14 of level 1, represent a floor or minimum level of content rather than a maximum level of content.

It stated that greater alignment with the requirements of the Alternative Investment Fund Directive (AIFMD) is not necessary, but recognised that a balance is needed between investor protection and the need for companies to be able to offer and raise capital easily. It also stated that the prospectus is only one of a number of means of protecting investors, other means being regulation under the AIFMD, the Takeover Directive and Market Abuse Regulation, as well as the specific laws and regulations of individual member states.

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