An Analysis of the Prospectus Regime: The EU Reforms and the 'Brexit' Factor

Abstract

‘Brexit’ creates significant new challenges; it risks placing the UK’s position as a leading capital markets centre in jeopardy, and it places existing, long-established market access arrangements in doubt. Yet, it also creates opportunities. In particular, the UK could have the ability going forward, should it so wish, to extricate itself from the EU’s prospectus regime. Indeed, the UK is especially well-equipped in this regard, given the dominant role it plays in global and EU capital markets, and given that, historically, the UK has been closely involved with, and a key influence in the design of EU regulations, both with respect to capital markets, and more generally in relation to financial regulation.

Via an analysis of the existing prospectus framework, and the recently revamped EU rules, this paper contributes to the existing scholarship on prospectuses and considers what could, or should, happen to the UK’s prospectus regime following Brexit. It examines three possibilities and it advocates an ‘equivalence-plus’ approach. It speculates that this option is most likely to guarantee the prospectus serves as a valuable investor protection device, as well as providing an attractive fundraising vehicle for firms.

Keywords: Prospectus, EU Law, Capital Markets Regulation

JEL Classification: K22