Amended Prospectus Act

On 6 August 2013, the Act of 17 July 2013 (1) (the Amending Act) was published in the Belgian Official Journal. The Amending Act transposes Directive 2010/73/EU (amending the Prospectus Directive) and parts of Directive 2010/78/EU into Belgian law.

The aim of the new rules is (i) to optimise investor’s protection by amending certain thresholds determining when an offer qualifies as a public offer, (ii) to simplify and clarify the current Belgian Prospectus Act regime, and (iii) to reduce costs for issuers of securities.

The most important changes can be summarised as follows:

1. Thresholds, exceptions and exemptions

• The threshold to determine whether transactions qualify as harmonised transactions falling within the scope of the Prospectus Directive (in the harmonised prospectus format and with the benefit of the so-called European passport), has been increased to a total consideration for the offer in the European Union of at least EUR 5,000,000 (the previous threshold being EUR 2,500,000). However, the Prospectus Act still requires the publication of a prospectus and the approval by the FSMA for offers below that threshold when the total consideration for the offer is more than EUR 100,000 (the non-harmonised transactions);
• An offer of securities does not qualify as a public offer, if:

1. it is addressed to fewer than 150 natural or legal persons per Member State, other than qualified investors. The previous threshold was set at 100; or
2. the total consideration per investor and per offer is more than EUR 100,000, calculated over a period of 12 months. The previous threshold was set at EUR 50,000.

• The definition of “qualified investor” has been modified and is now aligned with the definition of professional clients and eligible counterparties under the MiFID Directive. From now on, any person or entity who submits a request to an investment service provider to be considered as a “qualified investor” (within the meaning of MiFID), will be deemed to qualify as such for the purposes of the Prospectus Act;
• The exception for the requirement to publish a prospectus in relation to employee share schemes will from now on apply, under certain conditions, to every company with its head or registered office in the European Union. It will also apply to every company with shares admitted to trading on a regulated market within the European Union or an equivalent third-country market, despite not having a head or registered office in the European Union.

2. Summary, supplement, publication and validity

• Stricter rules have been imposed regarding the content and presentation of the prospectus’ summary, as well as the civil liability for the summary. The summary must be written in a concise manner and in non-technical language. It must also provide at least the following key information, in accordance with the Prospectus Regulation’s mandatory schemes:

1. a short description of the risks associated with and essential characteristics of the issuer and any guarantor, including the assets, liabilities and financial position;
2. a short description of the risks associated with and essential characteristics of the investment in the relevant security, including any rights attached to the securities;
3. general terms of the offer, including estimated expenses charged to the investor by the issuer or the offeror;
4. details of the admission to trading;
5. reasons for the offer and use of proceeds.

• If a supplement to the prospectus is published, an individual warning to each investor that has already subscribed, or a warning to those investors through media channels in order to inform them about their right to withdraw their acceptance of the offer, will in principle be required;
• The prospectus’ electronic publication has been confirmed;
• The prospectus remains valid for public offers or for admission to trading on a regulated market for a period of twelve months as from its approval by the FSMA. Previously, the twelve-month period started from the prospectus’ date of publication.

3. Other amendments

• The intermediation monopoly, reserving certain services related to a public offer of securities to licensed financial intermediaries has been extended to certain non-public offers. As a consequence, some minor changes were made to the definition of “intermediation”;
• The provisions of the Prospectus Act regarding the mandatory publication of annual information (Art. 65 and 66 of the Prospectus Act) have been revoked following the conclusion that there was too much overlap with the Belgian transparency rules;
• The powers of the FSMA towards the issuer, the offeror, the intermediaries, etc. have been amended and extended;
• The UCITS Act was applicable to publicity as well as other documents and notifications relating to all types of CIU’s. It is more consistent to apply the rules regarding publicity and other documents and notifications laid down in the Prospectus Act to securities issued by closed-end CIU’s, since the rules on public offers laid down in the Prospectus Act are also applicable to those closed-end CIU’s. Therefore, the scope of the rules regarding publicity and other documents and notifications relating to public offers has been extended to transactions in securities issued by closed-end CIU’s (such as REITS).

4. Amendments made to other Acts

• The Belgian Act of 1 April 2007 on public takeover bids has been amended. The same thresholds as laid down by the Amending Act to determine whether or not a takeover bid qualifies as a public takeover have been introduced. As a consequence, takeover bids will no longer qualify as public takeover bids if addressed to less than 150 persons, whether or not they are qualified investors (previously 100) and if related to securities with a denomination of at least EUR 100,000 (previously EUR 50,000);
• The UCITS Act has been amended in the same way, in order to determine whether or not the collective investment undertaking should be qualified as public. Offers made by open-ended CIU’s will no longer qualify as public offers if (i) they are addressed to less than 150 persons, other than institutional or professional investors; (ii) they relate to offers of securities other than participation rights in open-ended CIU’s (i.e. other securities than shares) for a total consideration of at least EUR 100,000 per investor; or (iii) they relate to offers of securities other than participation rights in open-ended CIU’s with a denomination of at least EUR 100,000. These new criteria will only apply to open-ended CIU’s incorporated after the Amending Act’s entry into force (being 16 August 2013);
• Finally, some technical amendments have been made to the Act of 2 August 2002 (Supervision of the financial sector and the financial services) and the Act of 2 May 2007 (Transparency Act) as a consequence of the amended Prospectus Act.

5. Entry into force and transitory provision

The new rules are effective from 16 August 2013. However, they are not applicable to transactions already pending on that date. This grandfathering clause safeguards the legal certainty for those pending transactions.