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European Securities and Markets Authority consultation on the EU growth prospectus - Law Society response

9 November 2017

The European Securities and Markets Authority (ESMA) published a consultation seeking views on its draft technical advice in relation to the measures specifying the reduced content and standardised format and sequence for the EU growth prospectus.

The EU Growth prospectus will be available for certain entities including Small and Medium-sized Entities (SMEs) and would contain potentially less onerous rules on preparing prospectuses.

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 stated that issuers will require guidance on the new disclosure of financial and non-financial objectives and what test would need to be met to require their inclusion in the prospectus, for example where those objectives may not be formal or specific or where objectives may be commercially sensitive.

It stated that it the prospectus would be more comprehensible if risk factors were placed towards the end of the document rather than at the beginning, and that this should not be a concern for investor protection if the risk factors are clearly highlighted in the contents and referred to in the warnings.

It did not agree that the inclusion, format or content of a cover note should be mandated, as this is not required under Level 1 and would increase costs to issuers, and reduce flexibility and the ability to produce more comprehensible documents. It noted that issuers should be free to continue to include a cover page, but this should not be mandated.

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