Prospectus Regulation (EU)

Principles of the Prospectus Regulation

The Prospectus Regulation (EU) 2017/1129 is a key set of rules for companies wishing to offer securities to the public. It was developed with the strategic aim of improving investor protection and at the same time making it easier for small and medium-sized companies to access the capital market. For start-ups and self-employed persons in the areas of IT, IP law and media, the regulation offers important simplifications and exemptions. The regulation came into force on July 20, 2017 and became fully effective on July 21, 2019. It replaces the previous Prospectus Directive and creates uniform rules for securities offerings in the European Union. For young companies, this means a simplified way of acquiring capital while complying with legal requirements. The regulation defines precisely what information companies must disclose when offering securities to the public. It forms a complex legal framework that takes into account the interests of both investors and issuers. The regulations are designed to ensure transparency and legal certainty. For founders, this means an opportunity to design their financing strategies professionally. The regulation offers a comprehensive approach to the regulation of securities issues.

Relief for start-ups and founders

The most important simplifications for start-ups include several important aspects of the Prospectus Regulation. Offers of securities with a total volume of up to EUR 1 million over a period of twelve months are exempt from the prospectus requirement. Member states can make national exemptions for offers between 1 and 8 million euros. A particular highlight is the newly introduced “EU Growth Prospectus”, which is specially tailored to the needs of small and medium-sized enterprises. This type of prospectus applies to companies with fewer than 500 employees and an annual turnover of less than 500 million euros. The documentation requirements are significantly simplified, which considerably reduces the bureaucratic burden for young companies. Start-ups in the IT and media sector can thus raise capital on the market more quickly and easily. The regulation takes into account the specific challenges faced by young companies when raising capital. It creates flexible framework conditions that enable founders to design their financing strategies individually. The regulations are designed to support both small and medium-sized companies. For start-ups, this means an improved opportunity to attract and convince investors. The facilitations are aimed at promoting innovation and supporting growth potential.

Transparency and information obligations

The summary of the prospectus was deliberately designed to be understandable for retail investors. The regulation limits the summary to a maximum of seven A4 pages and does not allow more than 15 risk factors. For companies in the IT and media sector, this represents a clear opportunity to provide investors with precise and transparent information. The Prospectus Regulation requires that all information is presented sufficiently, objectively and in an easily understandable form. For start-ups, this is an opportunity to present their business idea and future prospects clearly and convincingly. The regulations aim to reduce information asymmetries between investors and issuers and at the same time strengthen the European single capital market. The transparency requirements are designed in such a way that they take into account the interests of both investors and companies. For founders, this means an opportunity to communicate their corporate strategy professionally. The regulation creates a framework that promotes trust and credibility. The information requirements are designed to enable an informed investment decision.

Practical implementation and opportunities

The practical implementation of the Prospectus Regulation offers opportunities for innovative companies in the digital sector. Companies that have already been admitted to stock markets or SME growth markets for at least 18 months benefit from simplified prospectus requirements. Special simplifications apply to secondary issuances, especially if the new securities are fungible with already admitted securities. The regulation creates a uniform legal framework for securities offerings in the EU, which simplifies international investments. For start-ups in the technology, media and legal sectors, this means improved opportunities to generate capital and attract investors. The harmonization of regulations reduces bureaucratic hurdles and makes securities offerings more transparent and accessible. Implementation requires careful planning and preparation. For founders, this means dealing with the requirements at an early stage. The regulation offers opportunities that can be used strategically. The regulations are designed to support innovation and growth.

Strategic importance for the European capital market

The Prospectus Regulation is part of the EU’s comprehensive strategy to create a Capital Markets Union. It aims to improve investor protection, increase market efficiency and facilitate access to capital for small companies. For start-ups in the IT and media sector, this means a unique opportunity to generate investment and grow. The regulation takes into account the specificities of different types of securities, issuers and offerings. It creates a flexible framework that allows young companies to tailor their financing strategies. The regulations are designed to both protect investors and support the innovative strength of young companies. For founders and start-ups in the digital sector, the Prospectus Regulation offers a balanced and future-oriented legal framework. The regulation contributes to strengthening the European single market. It promotes transparency and competitiveness. Its strategic importance goes far beyond individual financing aspects.