Critical analysis of the Prospectus Directive

It is universally considered nowadays that investors find it difficult to choose the right business transaction because there is no appropriate system of disclosure and they lack proper financial knowledge. In this context, the European Commission has issued the Directive No 2003/71/CE on Prospectus regulation that aims to enhance investor protection by requiring harmonised high standards of disclosure for issues of securities that are offered to the public or admitted to trading on a regulated market. In particular, the ‘Prospectus Directive’ seeks to improve market efficiency through the issue of a single approved prospectus and enables issuers to raise capital across the EU without further approval. More precisely, this directive applies to public offers of securities and admission of securities to trading on a regulated market; also, the ‘Prospectus Directive’ only applies to transferable securities, defined by reference to the MiFID Directive. Specifically, the European Commission has introduced a new regime of ‘private placements’ concerning the exemptions on issuers making a public offer of securities or seeking an admission to trading on a regulated market. Finally, the ‘Prospectus Directive’ aims to ensure that investors are provided with clear and comprehensive information when making investment decisions.