The new EU Prospectus Regulation ("Prospectus Regulation") came into full force on 21st July 2019 and provides, among other things, a simplified access to the capital market for small and medium-sized companies. After this EU Regulation has been adopted into the EEA, it is directly applicable in Liechtenstein together with its implementing provisions. In national law, only supplementary provisions, such as those concerning the competence of the Liechtenstein Financial Market Authority ("FMA"), had to be regulated. Therefore, Liechtenstein companies may also benefit from these regulations. 

Obligation to publish a prospectus

In principle, a public offer of securities in Liechtenstein may only be made after publication of a prospectus approved by the FMA.

However, there are mainly the following exceptions of the duty to issue a prospectus:

  • the total equivalent value of the public offer within the EU/EEA is less than EUR 1,000,000 within 12 months;
  • the total equivalent value of the public offer within Liechtenstein is less than EUR 8,000,000 or the equivalent in Swiss Francs within 12 months;
  • the public offer is addressed exclusively to qualified investors;
  • the public offer is addressed to fewer than 150 non-qualified investors per Member State;
  • minimum amount of EUR 100,000 per offer and investor; or
  • Minimum denomination of EUR 100,000. 

In case that none of the above exceptions apply, the issuer has to publish a prospectus before issuing the securities. In doing so, he/she has the choice of drawing up either an "ordinary" prospectus or an EU growth prospectus.

Who can benefit from the possibility of an EU growth prospectus?

In order to benefit from the possibility to draw up an EU prospectus instead of an "ordinary" prospectus, two requirements have to be met:

  • the company must not have previously issued securities admitted to trading on a regulated market; and
  • the company must be a "privileged" company.

"Privileged" company according to the prospectus regulation are:

  • Small and medium enterprises ("SMEs");
  • issuers, other than SMEs, whose securities are traded or are to be traded on an SME growth market, provided that those issuers had an average market capitalisation of less than EUR 500,000,000 on the basis of end-year quotes for the previous three calendar years;
  • issuers, other than those referred to above, where the offer of securities to the public is of a total consideration in the Union that does not exceed EUR 20,000,000 calculated over a period of 12 months, and provided that such issuers have no securities traded on an MTF and have an average number of employees during the previous financial year of up to 499;
  • offerors of securities issued by issuers referred to in the first two indents.

According to the Prospectus Regulation, an SME is a company that fulfils at least two of the following three characteristics:

  • an average number of employees in the last financial year of less than 250;
  • a total balance sheet not exceeding EUR 43 million; and
  • an annual net turnover not exceeding EUR 50 million

Furthermore, SMEs include companies whose average market capitalisation in the last three calendar years was less than EUR 200 million.

Structure of the EU Growth Prospectus

The EU growth prospectus is intended to facilitate the preparation of the prospectus by means of an abbreviated content and a standardised sequence of the prospectus contents. It is a document with a shortened content in a standardised format, written in easily understandable language and easy for issuers to complete.

The content of the EU growth prospectus is essentially based on the "old" SME prospectus, but has been further streamlined so that, for example, information on employees, company history, competitors and management practices is no longer necessary. There are also simplifications in the presentation of the business and financial situation including tangible assets, licenses and patents. In principle, only financial information including key performance indicators (KPIs) and financial statements for one year (bonds) and two years (shares) will be included. Further information on working capital, capital resources and debt is only required in the case of the issue of shares by issuers with a market capitalisation of more than EUR 200 million.

The structure of the EU growth prospectus is specified in the Annexes to Delegate Regulation (EU) 2019/980. The requirements for the content of the EU growth prospectus are listed in detail in tabular form. All information contained therein must be listed in this specified standardised order. The components of the prospectus follow a "question-and-answer" style in order to (i) ensure comprehensibility and accessibility for investors and (ii) keep the effort for the issuer to prepare the prospectus within reasonable limits.

  • The EU growth prospectus is basically divided into the following three sections:
  • special summary;
  • special registration document; and
  • special securities note.

Special summary

The special summary shall be subjected to the same rules as any summary of the prospectus. Thus, it must be accurate, fair, clear and not misleading. It must not contain cross-references to other parts of the prospectus and must, of course, be consistent with the rest of the prospectus. Unlike previous prospectus summaries, however, the special summary may only be a maximum of 6 A4 pages.

The structure of the special summary is concretised by Annex 23 of Delegate Regulation (EU) 2019/980 as follows:

  • basic information about the issuer (e.g. contact details, main activity, financial information with key performance indicators (KPIs) or key risks);
  • basic information on the specific securities (e.g. type, currency, denomination, related rights, information on guarantees or main risks, if applicable);
  • basic information on the public offering of the securities; and
  • reasons for drawing up the EU Growth Prospectus.

Risk factors

The Prospectus Regulation clarified that the risk factors should be limited to the material risks for the issuer and the securities and should be confirmed by the content of the prospectus. A prospectus may therefore not contain risk factors that are of a general nature and serve only to exclude liability.

It should also be noted that the risk factors must be rated (light - medium - heavy).

Approval of the prospectus

The Liechtenstein Financial Market Authority ("FMA") is responsible for the approval of prospectuses. In doing so, it reviews the prospectus for completeness, coherence (consistency), and comprehensibility of the information contained in the prospectus. The FMA does not verify the accuracy of the information contained in a securities prospectus, in particular warranted characteristics (e.g., trust security, high earnings potential, maximum security, low volatility).

The following documents must be submitted to the FMA as part of the approval procedure:

  • Written application to the FMA with justification of the applied Annex of Delegated Regulation (EU) 2019/980;
  • Original of the securities prospectus signed by the issuer, including the special summary;
  • Table of concordance with the annex used (the table of concordance should indicate where in the prospectus the respective information required by the annexes can be found);
  • Metadata File;
  • Legal opinion on the delimitation of the possible relevance of other special laws (in particular regarding funds) - if there are indications for this.

Upon receipt of all original documents, the FMA will take a decision within 20 working days.

Passporting

If an approved securities prospectus is available, the issuer can apply for the FMA to notify the securities prospectus to another EU/EEA country ("EU passporting"). The notification of a securities prospectus enables a public offering of the securities covered by the prospectus in the country in which the notification was made.

In Liechtenstein, such a "notification request" must be sent to the FMA or may already be included in the application for approval of the prospectus. The FMA transmits this application to the competent authorities of the host Member States (e.g., BaFin for Germany) and to the European Securities and Markets Authority (ESMA) within one working day of receipt or approval.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.