FCA Proposes Changes to the Prospectus Rules in its Quarterly Consultation Paper

In its quarterly consultation paper (CP17/6) published on 3 March 2017, the Financial Conduct Authority ("FCA") proposed specific amendments to the Prospectus Rules in anticipation of the entry into force of the new Prospectus Regulation (which is estimated to be in May or June 2017). The amendments to the Prospectus Rules are intended to accommodate the following provisions of the Prospectus Regulation:

• The existing exemption from the requirement to publish a prospectus where the annual increase of shares admitted to trading is less than 10 percent is to be increased to a higher threshold of 20 percent and apply to securities in general (as opposed to only shares).
• The existing exemption from the requirement to publish a prospectus for an admission of shares resulting from the conversion or exchange of other securities, where such shares are of the same class as the shares already admitted to trading, is to be limited to an increase of less than 20 percent of the shares already admitted to trading, over a period of 12 months (although that 20 percent limit is disapplied in prescribed circumstances).

The FCA proposes to amend the existing text of PR 1.2.3R(1) and (7) accordingly, and also to reproduce the relevant sections from the Prospectus Regulation as a new PR 1.2.3AEU. The FCA asked for responses to these proposals by 3 April 2017. If adopted, these rule changes will apply from the date the Prospectus Regulation comes into force.

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