New changes to the UK Prospectus Rules

On 29 June 2018, the Financial Services and Services Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018 No 786 were published.

These UK Regulations/Statutory Instruments amend the Financial Services and Markets Act 2000 (“FSMA 2000”) for the purposes of implementing the new EU Prospectus Regulation (Regulation (EU) 2017/1129).

The EU regulation is being introduced to replace the previous EU Prospectus Directive which was considered to have shortcomings which caused unnecessary costs and burdens for business.

The new FSMA rules amend the existing prospectus exemptions (which are based on the exemptions in the previous EU Prospectus Directive) contained in FSMA 2000 with effect from 21 July 2018 in two areas:

  1. Offers to the public (which can include offers of shares in the context of employee share schemes) will be exempt from the obligation to publish a prospectus where the total consideration in the European Economic Area is below 8 million Euros. This is effectively an increase (as the UK government is taking advantage of a national discretion afforded by the EU legislation) from the previously relevant figure of 100,000 Euros.
  2. Offers to the public will be exempt from the entire prospectus rules where the total consideration calculated over a period of 12 months is under 1 million Euros. This is a reduction from the previous limit of 5 million Euros.

However, particularly in relation to the limit reduction in the second area, it is noteworthy also that the main change to the actual exemption for employee share plans (for all companies regardless of listing or headquartering) will come into force with the remainder of the EU regulation on 21 July 2019 (i.e. one year’s time).

RM2 welcome the introduction of the 8 million Euros limit in the UK which will allow companies (UK or otherwise) to offer a greater value of securities without having to publish a prospectus (which is always a costly and time-intensive process). It is hoped that other EEA countries will follow suit in this regard.

Unsure what this may mean for you and your share schemes such as the Enterprise Management Incentive Scheme (EMI) or the Share Incentive Plan (SIP), contact us on 0208 949 5522 or email