Changes to prospectus obligations from Summer 2017

The Association of Investment Companies (“AIC”) has confirmed that this summer, the rules concerning the publication of prospectuses when listed investment companies wish to issue further shares will be liberalised.

Currently, companies trading on public markets are obliged to prepare a prospectus when issuing shares representing more than 10% of the number of shares in that particular class (measured over previous 12 months). Following intense lobbying from the AIC, the prospectus rules will be amended so as to increase the threshold to 20%.

The AIC had been concerned that the benefits of this liberalisation would not be available until 2 years after the new Prospectus Regulation is fully implemented (summer 2019). However the AIC successfully argued that the higher threshold should be introduced at an earlier date and has received confirmation that this will be available from May or June 2017.

This is a very positive development which gives companies more flexibility to issue greater amounts of shares without the costs involved in the publication of a prospectus.  

Although shareholder approval is still required for the issue of further shares, we understand the AIC is considering what options may be available to secure shareholder approval for issues over 10% on a non-preemptive basis so as to maximise the advantages given by the new rules.

The Heritage team has a strong track record in the listed sector across multiple jurisdictions and continues to assist clients in their IPO’s and secondary issues. A further update will be provided in due course but in the meantime, do not hesitate to contact us if you have any queries in this regard.


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