Entry into force of the Prospectus Regulation Implementation Act

On 21 July 2019, the Prospectus Regulation Implementation Act (the "Act") entered into force. The Act implements Regulation (EU) 2017/1129) (the "Prospectus Regulation") and repeals Directive 2003/71/EC (OJEU 2017, L 168) (the "Prospectus Directive").

The Prospectus Regulation should contribute to a harmonised prospectus regime within the EU. The use of a Regulation, which is directly applicable without requiring implementation into national legislation, should limit the possibility of divergent measures being taken at national level. It should ensure more consistency and greater legal certainty. The Prospectus Regulation should also facilitate the raising of money on the capital market, in particular by SMEs, while protecting investors.

Due to the direct effect of the Prospectus Regulation, the national provisions implementing the Prospectus Directive that are included in Chapter 5.1 of the Financial Supervision Act (Wet op het financieel toezicht (Wft)) will lapse. The Act re-establishes chapter 5.1 of the Financial Supervision Act.

One of the amendments concerns the exemption from the obligation to publish a prospectus. Offering securities to the public in the EU or admitting securities to trading on a regulated market in the EU is in principle subject to an obligation to publish a prospectus. However, there are a number of exceptions to this obligation. Under the Prospectus Directive, securities with a total value of up to EUR 5 million were exempted. Under the Prospectus Regulation, this threshold has been increased to EUR 8 million, calculated over a 12-month period. Member States may apply a lower limit with a lower limit of EUR 1 million. With the entry into force of the Act, the threshold in the Netherlands has been raised from EUR 2.5 million to EUR 5 million in order to facilitate access to the capital market for SMEs. Issues with a total value below the lower limit of EUR 1 million are not covered by the Prospectus Regulation. Such issues are subject to a national regime.

Under the amended Wft, the Dutch Authority for the Financial Markets (AFM), the competent supervisory authority, is given more powers. For example, the AFM can suspend or prohibit an offer of securities if there are good reasons to believe that the Prospectus Regulation has been infringed and the AFM can suspend or prohibit trading in securities or trading on a trading platform under certain conditions.