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PR 1.1 Preliminary

Application

Note: ESMA has also issued guidelines under article 16(3) of the ESMA Regulation covering ‘Alternative Performance Measures’. See https://www.esma.europa.eu/sites/default/files/library/2015/10/2015-esma-1415en.pdf
PR 1.1.1 R RP
  1. (1)

    1PR 2, PR 3, PR 4.2, PR 5.1, PR 5.3.1 UK to PR 5.3.3 G and PR 5.5 only apply (subject to paragraph (2)) in relation to:

    1. (a)

      an offer, or a request for admission to trading of transferable securities, in respect of which section 85 of the Act applies (other than an exempt offer under section 86 of the Act) and in relation to which the United Kingdom is the Home State;

    2. (b)

      an offer, or a request for admission to trading of transferable securities, where under section 87 of the Act a person has elected to have a prospectus in relation to the transferable securities; and

    3. (c)

      an offer, or a request for admission to trading of transferable securities, not referred to in paragraphs (a) or (b), in relation to which the United Kingdom is the Home State.

  2. (2)

    PR 2, PR 3, PR 4.2 , PR 5.3.1 UK to PR 5.3.3 G also apply in relation to an offer, or a request for admission to trading of transferable securities, where another competent authority of an EEA State has transferred the function of approving the prospectus to the FCA.

PR 1.1.2 G

Note: When exercising its functions under Part 6 of the Act, the FCA may use the name the UK Listing Authority.

Persons responsible for complying with rules

PR 1.1.3 R RP

A person must comply with all rules that are specified as being applicable to them.

PR 1.1.4 R RP

If a rule does not specify who is responsible for complying with it, then the following persons must comply with it:

  1. (1)

    in relation to an offer:

    1. (a)

      the issuer; and

    2. (b)

      the offeror (if this is a person other than the issuer);

  2. (2)

    in relation to a request for the admission to trading of transferable securities:

    1. (a)

      the issuer; and

    2. (b)

      the person requesting admission to trading (if this is a person other than the issuer).

PR 1.1.5 R RP

An issuer is not responsible under PR 1.1.4R (1)(a) or (2)(a) if it has not authorised or made the offer or the request for the admission to trading.

Provisions implementing the Prospectus Directive

PR 1.1.6 G RP

The FCA considers that the 4following documents together 4determine the effect of the Prospectus Directive6:

4
  1. (1)

    Part 6 of the Act;

  2. (2)

    the PD Regulation;

  3. (3)

    these rules;

    4
  4. (4)

    the ESMA Prospectus Recommendations4

    34
  5. (5)

    the ESMA Prospectus Questions and Answers;4

  6. (6)

    the ESMA Prospectus Opinions6; and4

  7. (7)

    the Prospectus RTS Regulations5.

    4
PR 1.1.7 G RP

To assist readers, extracts from the Act ,4the PD Regulation and the Prospectus RTS Regulations5are reproduced in the text of these rules. Readers should however consult those documents themselves to see the full text.

4 4

4ESMA materials

PR 1.1.8 G RP

In determining whether Part 6 of the Act, these rules ,4the PD Regulation and the Prospectus RTS Regulations5have2 been complied with, the FCA will consider whether a person has acted in accordance with the4ESMA Prospectus Recommendations, the ESMA Prospectus Questions and Answers and the ESMA Prospectus Opinions6.

4 4 2 4 2 4 4

Application of rules to supplementary prospectuses

PR 1.1.9 R RP

Unless the context otherwise requires, a reference in these rules to a prospectus includes a supplementary prospectus.

PRIIPs Regulation

PR 1.1.10 G RP

7An issuer, offeror or person requesting admission to trading should also consider whether the requirements of the PRIIPs Regulation apply.

PR 1.2 Requirement for a prospectus and exemptions

Requirement for a prospectus

PR 1.2.1 UK RP

Sections 85 and 86 of the Act provide for when a prospectus approved by the FCA will be required:

85

(1)

It is unlawful for transferable securities to which this subsection applies to be offered to the public in the United Kingdom unless an approved prospectus has been made available to the public before the offer is made.

(2)

It is unlawful to request the admission of transferable securities to which this subsection applies to trading on a regulated market situated or operating in the United Kingdom unless an approved prospectus has been made available to the public before the request is made.

(3)

A person who contravenes subsection (1) or (2) is guilty of an offence and liable –

(a)

on summary conviction, to imprisonment for a term not exceeding 3 months or a fine not exceeding the statutory maximum or both;

(b)

on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine or both.

(4)

A contravention of subsection (1) or (2) is actionable, at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

(5)

Subsection (1) applies to all transferable securities other than –

(a)

those listed in Schedule 11A;

(b)

such other transferable securities as may be specified in prospectus rules [see PR 1.2.2 R].

(6)

Subsection (2) applies to all transferable securities other than –

(a)

those listed in Part 1 of Schedule 11A;

(b)

such other transferable securities as may be specified in prospectus rules [see PR 1.2.3 R].

(7)

"Approved prospectus" means, in relation to transferable securities to which this section applies, a prospectus approved by the competent authority of the home State in relation to the issuer of the securities.

86

Exempt offers to the public

(1)

A person does not contravene section 85(1) if –

(a)

the offer is made to or directed at qualified investors only;

(b)

the offer is made to or directed at fewer than 1502 persons, other than qualified investors, per EEA State;

(c)

the minimum consideration which may be paid by any person for transferable securities acquired by him pursuant to the offer is at least 100,0003 euros (or an equivalent amount);

3

(d)

the transferable securities being offered are denominated in amounts of at least 100,0003 euros (or equivalent amounts);

3 3

(e)

the total consideration for the transferable securities being offered in the EEA states3 cannot exceed 100,000 euros (or an equivalent amount); or3

3

3(f)

the offer falls within subsection (1A).

3(1A)

An offer (“the current offer”) falls within this subsection where transferable securities are resold or placed through a financial intermediary where:

3(a)

the transferable securities have previously been the subject of one or more offers to the public;

3(b)

in respect of one or more of those previous offers, any of paragraphs (a) to (e) of subsection (1) applied;

3(c)

a prospectus is available for the securities which has been approved by the FCA and meets either of the conditions in subsection (1B);4 and

4

3(d)

the issuer or other person who was responsible for drawing up the prospectus has given written consent to the use of the prospectus for the purpose of the current offer.4

4(1B)

The conditions referred to in subsection (1A)(c) are:

(a)

that the prospectus was approved by the FCA no earlier than 12 months before the date the current offer is made, and is supplemented by every supplementary prospectus which was required to be submitted under section 87G; or

(b)

in the case of non-equity transferable securities falling within article 5(4)(b) of the prospectus directive, that the securities concerned have not ceased to be issued in a continuous or repeated manner.

(2)

Where -

(a)

a person who is not a qualified investor ("the client") has engaged a qualified investor falling within point (1) of Section 1 of Annex II to the markets in financial instruments directive3 to act as his agent; and

3

(b)

the terms on which the qualified investor is engaged enable him to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client,

an offer made to or directed at the qualified investor is not to be regarded for the purposes of subsection (1) as also having been made to or directed at the client.

(3)

For the purposes of subsection (1)(b), the making of an offer of transferable securities to –

(a)

trustees of a trust,

(b)

members of a partnership in their capacity as such, or

(c)

two or more persons jointly,

is to be treated as the making of an offer to a single person.

(4)

In determining whether subsection (1)(e) is satisfied in relation to an offer ("offer A"), offer A is to be taken together with any other offer of transferable securities of the same class made by the same person which –

(a)

was open at any time within the period of 12 months ending with the date on which offer A is first made; and

(b)

had previously satisfied subsection (1)(e).

(5)

For the purposes of this section, an amount (in relation to an amount denominated in euros) is an "equivalent amount" if it is an amount of equal value denominated wholly or partly in another currency or unit of account.

(6)

The equivalent is to be calculated at the latest practicable date before (but in any event not more than 3 working days before) the date on which the offer is first made.

(7)

"Qualified investor",6 in relation to an offer of transferable securities,3 means –

(a)

a person described in points (1) to (4) of Section I of Annex II to the markets in financial instruments directive, other than a person who, before the making of the offer, has agreed in writing with the relevant firm (or each of the relevant firms) to be treated as a non-professional client in accordance with the final paragraph of Section I of Annex II to that directive;3

3

(b)

a person who has made a request to one or more relevant firms to be treated as a professional client in accordance with Section II of Annex II to that directive and has not subsequently, but before the making of the offer, agreed in writing with that relevant firm (or each of those relevant firms) to be treated as a non-professional client in accordance with the final paragraph of Section I of Annex II to that directive;3

3

(c)

a person who is recognised as an eligible counterparty in accordance with article 24 of that directive and has not, before the making of the offer, agreed in writing with the relevant firm (or each of the relevant firms) to be treated as a non-professional client in accordance with the final paragraph of Section I of Annex II of that directive;3

3

3(d)

a person whom –6

6(i)

any relevant firm was6 authorised to continue to treat as a professional client immediately before 3 January 2018 by virtue of article 71.6 (transitional provisions) of Directive 2004/39/EC on markets in financial instruments; and6

6(ii)

the firm may continue to treat as a professional client from 3 January 2018 by virtue of Section II.2 of Annex II to the markets in financial instruments directive.

3(8)

In subsection (7) “relevant firm” means an investment firm or credit institution acting in connection with the offer.

3(9)

Investment firms and credit institutions which are authorised persons7 must communicate their classification of their clients as being or not being qualified investors on request to an issuer, subject to complying with data protection legislation7.

3(10)

In subsections (8) and (9) -

“credit institution” means -

(a) a credit institution authorised under the banking consolidation directive; or

(b) an institution which would satisfy the requirements for authorisation as a credit institution under that directive if it had its registered office (or if it does not have one, its head office) in an EEA State.

Exempt securities – offers of securities to the public

PR 1.2.2 R RP

In accordance with section 85(5)(b) of the Act, section 85(1) of the Act does not apply to offers of the following types of transferable securities:

  1. (1)

    shares issued in substitution for shares of the same class already issued, if the issue of the new shares does not involve any increase in the issued capital;

  2. (2)

    transferable securities offered in connection with a takeover by means of an exchange offer, if a document is available containing information which is regarded by the FCA as being equivalent to that of the prospectus, taking into account the requirements of EU1 legislation;

    1
  3. (3)

    transferable securities offered, allotted or to be allotted in connection with a merger or division3, if a document is available containing information which is regarded by the FCA as being equivalent to that of the prospectus, taking into account the requirements of EU1 legislation;

    1
  4. (4)

    dividends paid out to existing shareholders3 in the form of shares of the same class as the shares in respect of which the dividends are paid, if a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;3

    33
  5. (5)

    transferable securities offered, allotted or to be allotted to existing or former directors or employees by their employer or by an affiliated undertaking if:3

    33
    1. (a)

      the company has its head office or registered office in the EU, provided a document is made available containing information on the number and nature of the transferable securities and the reasons for and details of the offer; or3

    2. (b)

      the company is established outside the EU and has transferable securities that are admitted to trading, provided a document is made available containing information on the number and nature of the transferable securities and the reasons for and details of the offer; or3

    3. (c)

      the company is established outside the EU and has transferable securitiesadmitted to trading on a third country market provided that:3

      1. (i)

        a document is made available containing adequate information, including the number and nature of the transferable securities; and 3

      2. (ii)

        the reasons for and details of the offer in a language customary in the sphere of international finance; and 3

      3. (iii)

        the European Commission has adopted an equivalence decision for the purpose of article 4(1) of the PD regarding the third country market concerned.3

[Note: article 4(1) PD]

Exempt securities – admission to trading on a regulated market

PR 1.2.3 R RP

In accordance with section 85(6)(b) of the Act, section 85(2) of the Act does not apply to the admission to trading of the following types of transferable securities:

  1. (1)

    transferable securities referred to in article 1(5)(a) of the Prospectus Regulation5;

  2. (2)

    shares issued in substitution for shares of the same class already admitted to trading on the same regulated market, if the issue of the shares does not involve any increase in the issued capital;

  3. (3)

    transferable securities offered in connection with a takeover by means of an exchange offer, if a document is available containing information which is regarded by the FCA as being equivalent to that of the prospectus, taking into account the requirements of EU1 legislation;

    1
  4. (4)

    transferable securities offered, allotted or to be allotted in connection with a merger or a division3, if a document is available containing information which is regarded by the FCA as being equivalent to that of the prospectus, taking into account the requirements of EU1 legislation;

    1
  5. (5)

    shares offered, allotted or to be allotted free of charge to existing shareholders, and dividends paid out in the form of shares of the same class as the shares in respect of which the dividends are paid, if the shares are of the same class as the shares already admitted to trading on the same regulated market and if a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;

  6. (6)

    transferable securities offered, allotted or to be allotted to existing or former directors or employees by their employer or an affiliated undertaking, if the transferable securities are of the same class as the transferable securities already admitted to trading on the same regulated market and if a document is made available containing information on the number and nature of the transferable securities and the reasons for and detail of the offer;

  7. (7)

    shares referred to in article 1(5)(b) of the Prospectus Regulation;5

  8. (8)

    transferable securities already admitted to trading on another regulated market, on the following conditions:

    1. (a)

      that these transferable securities, or transferable securities of the same class, have been admitted to trading on that other regulated market for more than 18 months;

    2. (b)

      that, for transferable securities first admitted to trading after the 31 December 2003, the admission to trading on that other regulated market was associated with an approved prospectus made available to the public in accordance with Article 14 of the prospectus directive;

    3. (c)

      that, except where (b) applies, for transferable securities first admitted to listing after 30 June 1983, listing particulars were approved in accordance with the requirements of Directive 80/390/EEC or Directive 2001/34/EC;

    4. (d)

      that the ongoing obligations for trading on that other regulated market have been fulfilled;

    5. (e)

      that the person requesting the admission to trading under this exemption makes a summary document available to the public in a language accepted by the competent authority of the EEA State of the regulated market where admission is sought;

    6. (f)

      that the summary document referred to in paragraph (e) is made available to the public in the EEA State of the regulated market where admission to trading is sought in the manner set out in Article 14 of the prospectus directive; and

    7. (g)

      that the contents of the summary document comply with article 5(2) of the prospectus directive. Also the document must state where the most recent prospectus can be obtained and where the financial information published by the issuer pursuant to its ongoing disclosure obligations is available;5

  9. (9)

    transferable securities referred to in article 1(5)(c) of the Prospectus Regulation.5

[Note: article 4(2) of the PD, points (a), (b) and (c) of the first subparagraph of article 1(5) of the Prospectus Regulation and the second subparagraph of article 1(5) of the Prospectus Regulation]5

PR 1.2.3A EU RP

5Points (a), (b) and (c) of the first subparagraph of Article 1(5) of the Prospectus Regulation and the second subparagraph of Article 1(5) of the Prospectus Regulation provide that:

Article 1

Subject matter, scope and exemptions

…

5. The obligation to publish a prospectus set out in Article 3(3) shall not apply to the admission to trading on a regulated market of any of the following:

  1. (a) securities fungible with securities already admitted to trading on the same regulated market, provided that they represent, over a period of 12 months, less than 20 % of the number of securities already admitted to trading on the same regulated market;

  2. (b) shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, where the resulting shares are of the same class as the shares already admitted to trading on the same regulated market, provided that the resulting shares represent, over a period of 12 months, less than 20 % of the number of shares of the same class already admitted to trading on the same regulated market, subject to the second subparagraph of this paragraph;

  3. (c) securities resulting from the conversion or exchange of other securities, own funds or eligible liabilities by a resolution authority due to the exercise of a power referred to in Article 53(2), 59(2) or Article 63(1) or (2) of Directive 2014/59/EU;

  4. …

The requirement that the resulting shares represent, over a period of 12 months, less than 20 % of the number of shares of the same class already admitted to trading on the same regulated market as referred to in point (b) of the first subparagraph shall not apply in any of the following cases:

(a) where a prospectus was drawn up in accordance with either this Regulation or Directive 2003/71/EC upon the offer to the public or admission to trading on a regulated market of the securities giving access to the shares;

(b) where the securities giving access to the shares were issued before 20 July 2017;

(c) where the shares qualify as Common Equity Tier 1 items as laid down in Article 26 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of an institution as defined in point (3) of Article 4(1) of that Regulation and result from the conversion of Additional Tier 1 instruments issued by that institution due to the occurrence of a trigger event as laid down in point (a) of Article 54(1) of that Regulation;

(d) where the shares qualify as eligible own funds or eligible basic own funds as defined in Section 3 of Chapter VI of Title I of Directive 2009/138/EC of the European Parliament and of the Council, and result from the conversion of other securities which was triggered for the purposes of fulfilling the obligations to comply with the Solvency Capital Requirement or Minimum Capital Requirement as laid down in Sections 4 and 5 of Chapter VI of Title I of Directive 2009/138/EC or the group solvency requirement as laid down in Title III of Directive 2009/138/EC.

PR 1.2.4 G RP
  1. (1)

    The summary document referred to in PR 1.2.3R (8) should at least contain the information that would be required in a summary if the summary were being produced at the date of the summary document.

  2. (2)

    The content of the summary document may be obtained from publicly available information on the issuer.

  3. (3)

    If the information is obtained from publicly available information on the issuer, the information should be accurately reproduced from publicly available information and no facts should be omitted which would make the reproduced information misleading.