Pursuant to the Prospectus Law and, as applicable, the Prospectus Regulation, any issuer intending to make an offer of securities to the public or an admission to trading of securities (equity or debt) on a regulated market situated or operated within the territory of Luxembourg must, subject to certain exemptions listed in the Prospectus Law or, as applicable, the Prospectus Regulation, publish a prospectus. The issuer must notify the competent authorities (the CSSF or the LuxSE) of that intention in advance. An ‘offer of securities’ to the public is a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. Securities include shares in companies and their equivalent, but also bonds or other forms of securitised debt, depositary receipt in respect of such securities and other securities giving the rights to sell or acquire any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.
According to the Prospectus Law, certain types of offers are exempt from the obligation to publish a prospectus, and consequently the obligation to notify the CSSF or the LuxSE. These are offers of securities:
- addressed solely to qualified investors;
- addressed to fewer than 150 natural or legal persons other than qualified investors, per member state;
- addressed to investors who acquire securities for a total consideration of at least €100,000 per investor, for each separate offer; and
- whose denomination per unit amounts to at least €100,000.
Qualified investors are defined by article 2 of the Prospectus Law in a consistent manner with the definition of professional clients for purpose of the Directive 2014/65/EU (the MiFID II Directive), a similar approach has been adopted under the Prospectus Regulation. Qualified investors are the professional clients listed under category I of Annex II of the MiFID II Directive, including those persons or entities who may be treated as professional clients on request, in compliance with Annex II of the MiFID II Directive, or who are recognised as an eligible counterparty pursuant to article 30 of this directive, unless they have opted to be treated as non-professionals.
In addition, the offering of certain types of securities are exempt from the obligation to publish a prospectus. These types of securities are the following:
- shares issued in substitution for shares of the same class already issued, if the issuing of such new shares does not involve any increase in the issued capital;
- securities offered in connection with a takeover by means of an exchange offer, provided that a document is available containing information that is regarded by the CSSF as being equivalent to that of the prospectus, taking into account the requirements of Community legislation on exchange offers;
- securities offered, allotted or to be allotted in connection with a merger, provided that a document is available containing information that is regarded by the regulatory authority as being equivalent to that of the prospectus, taking into account the requirements of Community legislation on mergers;
- 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 such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer;
- securities offered, allotted or to be allotted to existing or former directors or employees by their employer whose securities are already admitted to trading on a regulated market or by an affiliated undertaking, provided that a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer;
- dividends paid out to existing shareholders in the form of shares of the same class as the shares in respect of which such dividends are paid, provided that a document is made available containing information on the number and nature of the shares and the reasons for and details of the offer; this obligation applies also to a company established outside the European Union whose securities are admitted to trading either on a regulated market or on a third-country market. In the latter case, the exemption applies provided that adequate information, including the document referred thereto, is available at least in a language customary in the sphere of international finance and provided that the European Commission has adopted an equivalence decision regarding the third-country market concerned; and
- securities offered, allotted or to be allotted to existing or former directors or employees by their employer or by an affiliated undertaking provided that the company has its head office or registered office in the European Union and provided that a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer.
As from 21 July 2019, the Prospectus Regulation will amend the above list and provide for more flexibility to benefit from the above exemptions. In particular:
- In respect of the exemptions relating to securities offered in connection with a takeover, and securities offered in connection with a merger, the document required to be exempted from the obligation to prepare a prospectus will only need to set out the respective transactions and their impacts on the relevant issuer.
- An additional exemption is laid down for non-equity securities issued in a continuous or repeated manner by a credit institution, where the total aggregated consideration in the EU for the securities offered is less than €75 million per credit institution calculated over a period of 12 months, provided that those securities: (i) are not subordinated, convertible or exchangeable; and (ii) do not give a right to subscribe for or acquire other types of securities and are not linked to a derivative instrument.
As regards information to be disclosed in prospectuses before 21 July 2019, the Prospectus Law refers explicitly to the Annexes of the Commission Regulation (EC) 809/2004/EC (the Regulation on the information to be contained in the Prospectus), which deal with the level of information required to be disclosed, depending on the prescribed category of issuer and the type of securities to be offered. In general, the prospectus must currently contain all information necessary for investors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and future prospects of the issuer and of any guarantor of the securities to be listed, as well as the rights attaching to such securities and any conditions under which they are issued. In particular, the prospectus should include disclosures of applicable risk factors, business and market descriptions, the financial statements of the issuer and a management discussion and analysis (MD&A) section. The prospectus must also include a summary section (key information), which conveys, in plain language, appropriate information relating to the securities offered, including risks associated with the issuer, any guarantor and the securities in order to aid investors when considering whether to invest in such securities. This summary must be drawn up in a common format, in order to facilitate comparability of the summaries of similar securities. This summary is not required for non-equity securities having a denomination of at least €100,000.
As of the full application of the Prospectus Regulation, prospectuses regulated by the First Regime will have to contain the necessary information that is material to an investor for making an informed assessment of:
- the assets and liabilities, profits and losses, financial position, and prospects of the issuer and of any guarantor;
- the rights attaching to the securities; and
- the reasons for the issuance and its impact on the issuer.
The issuer may decide to issue the prospectus as a single document or as separate documents. A prospectus composed of separate documents must split the required information into a registration document, a securities note and a summary note. The registration document contains the information relating to the issuer. The securities note contains the information concerning the securities offered to the public or to be admitted to trading on a regulated market.
Issuers who offer securities under the Second Regime are only required to publish a simplified prospectus. The compulsory content of the simplified prospectus is listed in Annexes I and III to VI of the LuxSE Rules and Regulations depending on the nature of the securities listed. Alternatively, reference may be made to the Annexes of the Regulation on the information to be contained in the Prospectus.
Issuers who offer securities intended to be traded on the LuxSE under the Second Regime are required to publish a prospectus, which must be approved by the LuxSE. The compulsory content of the simplified prospectus is listed under Part III of the Prospectus Law and in sub--chapter 1 of Chapter I of Part 2 of the LuxSE Rules and Regulations.
Issuers who offer securities on the Euro MTF under the Third Regime are required to file a prospectus with the LuxSE in accordance with the requirements laid down under sub-chapter 2 of Chapter I of Part 2 of the LuxSE Rules and Regulations.
Prospectuses can be drafted in Luxemburgish, French, German or English and other languages deemed acceptable by the CSSF or the LuxSE. Once approved the prospectus must be filed with the CSSF by email or through the CSSF secured internet platform (www.e-file.lu). Every significant new fact, material mistake or inaccuracy relating to the information included in the prospectus, which is capable of affecting the assessment of the securities and that arises or is noted between the time when the prospectus is approved and the final closing of the offer to the public or, as the case may be, the time when trading on a regulated market begins, must be mentioned in a supplement to the prospectus. Such a supplement must be approved in the same way within a maximum of seven working days (such delay being reduced to five working day as of 21 July 2019 as per the Prospectus Regulation) and published in accordance with at least the same arrangements as were applied when the original prospectus was published.
To the extent the securities offered to the public are also intended to be listed on the LuxSE, an additional request for being admitted to the LuxSE must be filed with the LuxSE. An application for admission to trading in securities on one of the securities markets operated by the LuxSE is also deemed to be an application for admission to the official list. Therefore, an application for admission to the official list without an application for admission to trading on one of the securities markets operated by the LuxSE will not be accepted. The decision of listing for any equity, debt or derivative issuance programme is effective for one year and may be renewed annually in order to allow new listings.
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