CySEC Advanced Chapter 12 Flashcards: Prospectus Regulation | ExamPass CY

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What is the Prospectus Regulation, when did it take effect in Cyprus, and who is the competent authority?: Regulation (EU) 2017/1129, adopted 14 June 2017, fully implemented in Cyprus on 21 July 2019 (replacing Law 114(I)/2005). CySEC is the competent authority for the Republic of Cyprus.

What consideration thresholds affect the prospectus obligation?: The Regulation does not apply where total consideration in the Union is under €1,000,000 over 12 months. Offers under €5,000,000 over 12 months may be exempt, provided they are not subject to cross-border notification.

Name investor-based exemptions from the obligation to publish a prospectus.: Offers addressed solely to qualified investors; offers to fewer than 150 non-qualified persons per Member State; securities with a denomination of at least €100,000 per unit; and offers where each investor commits at least €100,000.
Name issuer-type exemptions from the prospectus obligation.: Non-equity securities issued by a Member State or its authorities; shares in Member State central banks; securities of recognised non-profit bodies; and non-equity securities issued continuously by a credit institution under €75 million over 12 months (if not subordinated, convertible or exchangeable).
What 20% exemption applies to admission to trading?: No prospectus is needed to admit shares resulting from conversion/exchange or the exercise of rights, or fungible with shares already admitted, where they represent less than 20% of shares already admitted over a rolling 12-month period.

In what formats may a prospectus be drawn up, and what are the three separate documents?: As a single document or as separate documents: the registration document (information on the issuer), the securities note (information on the securities), and the summary (key information for retail investors).
How many sections must the prospectus summary contain, and what standard must it meet?: Four sections (introduction/warnings, key information on the issuer, on the securities, and on the offer/admission). It must be accurate, fair, clear and not misleading.

When must a prospectus supplement be published, and how quickly is it approved?: Without undue delay when a significant new factor, material mistake or material inaccuracy arises after approval but before the offer closes. It must be approved within a maximum of 5 working days.

How long is a prospectus valid, and when does the period start for separate documents?: 12 months after approval. Where drawn up as separate documents, the period begins on approval of the securities note. A registration document or universal registration document (URD) is also valid for 12 months as a constituent.

What benefit does a URD give a 'frequent issuer'?: After having a URD approved for two consecutive financial years, the issuer may file subsequent URDs without prior approval, and benefits from an accelerated 5-working-day approval (versus the standard 10) for prospectuses made of separate documents.

What are the prospectus approval timelines, and how does passporting work?: The competent authority decides within 10 working days (20 for a first-time issuer) and notifies ESMA within 1 working day. Home Member State approval is valid EU-wide (passporting) on notification to ESMA and host authorities; supervision remains with the home authority. Approved prospectuses stay in ESMA's public database for 10 years.

Who must sign a prospectus, and what liability regime applies?: The issuer/offeror plus at least three executive members of the board (for admission to trading, the President of the Board and Managing Director(s)). Signatories bear a reverse burden of proof for accuracy; investor claims have a 2-year limitation period, which does not apply where malicious intent is proven.