As we communicated in our article last month, the new EU Prospectus Regulation (the Regulation) has applied in full across the EU since 21 July 2019. At a domestic level, the European Union (Prospectus) Regulations 2019 (S.I. No. 380/2019) came into force on 21 July 2019 (the 2019 Regulations). The 2019 Regulations revoke the Prospectus (Directive 2003/71/EC) Regulations 2005 (S.I. No. 324/2005) (the 2005 Regulations) in their entirety.
The 2019 Regulations are more compact than their 2005 counterparts and are designed to give further effect to the Regulation.
The key changes introduced by the 2019 Regulations include:
A new sanction to pay to the Central Bank a monetary penalty not exceeding "twice the amount of the profits gained or losses avoided" as a result of the contravention where that amount can be determined (previously capped at €2.5m)
A monetary penalty not exceeding €5m in the case of contravention by a natural person versus a penalty not exceeding €20m or 3% of total annual turnover for a legal person
New factors which the assessor must take into account when determining the appropriate sanction, including the gravity and duration of the contravention, the financial strength or annual income of the natural/legal person, the impact of the contravention on the retail investor's interests and the level of cooperation with assessors
New guidelines on publication of decisions by the Central Bank, including specifications on what details may be published (information on the type and nature of the prescribed contravention and the identity of the natural/legal person)
A greater array of options in determining the appropriate manner of publication, including deferring publication until the reasons for deferral have ceased to exist, or publishing details of the decision on an anonymous basis
A new offence where a person provides information to the Central Bank or the assessor which a person "knows is false or misleading in a material particular, or does not believe to be true";
A new power for authorised officers of the Central Bank to "summon" a person to give information, answer questions and make a declaration verifying their truthfulness in monitoring compliance with the Regulation and the 2019 Regulations.
The true effect of the new prospectus regime will only emerge in practice. Practitioners will need to be particularly mindful of the new sanctions that may be imposed and the new power of authorised officers to summon individuals in relation to compliance with the regime.
For more information please contact Julie Murray, Knowledge Lawyer, or any member of the Corporate and M&A team.