Securities to be offered to the public and harmonisation of transparency requirements (debate) 
President
The next item is the report by Wolf Klinz, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a directive of the European Parliament and of the Council amending Directives 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market - C7-0170/2009 -.
Wolf Klinz
Mr President, Commissioner, if I take a little more than four minutes, I will make my concluding remarks shorter so that I do not overrun my six minutes.
The Prospectus Directive was originally put together in 2003 with the condition that it be reviewed in September 2009. That has been the case. The Prospectus Directive concerns the completion, approval and publication of prospectuses as a prerequisite for the public offering of securities or their emission into a regulated market within the European Union. In general, the current review concerns technical aspects and is intended to eliminate legal uncertainties and unjustifiably onerous requirements.
First of all, I would very much like to thank all the Members who have worked together with us on this, as well as all the shadow rapporteurs. We have had very good cooperation, and that includes with the Commission. Without such good cooperation, we would not actually have been able to see this package through to a successful conclusion at first reading in less than ten months. I would now like to present briefly the agreement we have forged - and this includes the tripartite talks - in the form of eight principal points on which we were able to reach agreement.
Firstly, one of our objectives was to facilitate access to capital in the market for small and medium-sized enterprises. You know that in the US, there is a much higher percentage of companies, including SMEs, that obtain finance through the market, whereas in Europe, the common practice, especially amongst small businesses, is to obtain finance through bank loans. What we want to do here is open up the opportunity for small businesses to use the market more often than before. We have therefore raised the threshold for exemption from the threshold requirements, which ultimately saddle SMEs with red tape and costs, from EUR 2.5 million to EUR 5 million.
My second point concerns investor protection: we want to make sure that, in the course of such facilitation, we can provide sufficient safeguards to the small private investor. This is why we have raised the threshold for exemption from the prospectus requirements for securities denominated in 50 000 to a denomination of 100 000.
The third point I would like to raise concerns the issue of how to enable employees to participate in a company's share capital without that company needing to bear the relatively high costs of launching a prospectus. So, this is about relaxing the prospectus requirement when offering employee participation programmes. Here, we have introduced a proportionality clause in that we have eliminated the unnecessary disclosure requirement. At the same time, however, we have made sure that we have a document detailing basic information so that those employees who benefit from this form of participation can have an idea about what it is they are getting. We have also made sure that companies listed in a third country, that is, a country outside the European Union, be exempted from the prospectus requirement as well - just like European companies - where they offer their employees shares, on the condition that they are able to prove equivalence with the disclosure requirements.
The fourth area we discussed and on which we have reached agreement concerns what is commonly known as a 'prospectus summary'. You can look at it this way: typically, a prospectus is a thick and voluminous document frequently containing several hundred pages. However, there is also the summary which frequently contains another 50, 60 or 70 pages. What we want Parliament to do is to shorten this to what is known as 'key investor information' or a document with essential information for investors of the kind provided by traditional investment funds, the UCITS. The Commission did not, in fact, consider this, wanting merely to ensure that key information really is contained in the summary.
We have now agreed that, while keeping the summary in its present form, we should also ensure that it does indeed contain key information which will eventually be set out through directive requirements and a level 2 elaboration. This will help shorten the summary considerably, cutting it down from the current 60, 70 or 80 pages to some 20 or 30, perhaps, and help make it an easy read, especially for the small investor. This is important, because we do not want to leave the small investor out of the picture.
Fifthly, the issue of liability: when a prospectus is drawn up, who is it that guarantees the accuracy of the contents? In particular, if an intermediary uses this prospectus, if he makes arbitrary changes to the contents, then the liable party is the intermediary. The prospectus requirement expires either when the offer period has expired or when the trading has begun, whichever is the later date.
Seventhly, the review clause: as with the previous one, this directive will also be reviewed in five years' time.
My last point is that, in this document, we have the first piece of legislation that has been brought into line with the provisions of the Treaty of Lisbon. Last but not least, allow me to point out that the Chair of the Committee on Economic and Monetary Affairs has managed to ensure that Parliament is given sufficient time. We have three months to respond to the Commission and another extension of three months, if necessary. Having said that, we have undertaken, in the event that all other options fail, to grant early approval, that is, to push this piece of legislation through within the shortest time.
This satisfies all parties.
Michel Barnier
Mr President, ladies and gentlemen, when I had the honour of being heard by the European Parliament on 13 January, before being appointed as European Commissioner, I undertook to improve protection for investors and to reduce administrative costs to enterprises, especially small and medium-sized enterprises which, as we know, account for 80-90% of the economic fabric within the single market. I am therefore delighted that Parliament has adopted this revised directive on prospectuses at first reading. This is a modified directive, which simplifies and clarifies the rules for issuing securities, which supports small and medium-sized enterprises, as Mr Klinz just very properly reminded us, in accessing the capital markets, and which will help to reinforce the internal capital market. Negotiations on this directive benefited from close collaboration with Parliament and even more than that, given that important improvements were proposed by Parliament and the Council and, obviously, the Commission played its part.
I should therefore like, on behalf of the Commission, to extend my warmest thanks to your rapporteur, Mr Klinz, and to the Committee on Economic and Monetary Affairs for their efficient work and constructive cooperation. We are happy with this compromise text that we now have in our hands, which respects the spirit of the initial proposal.
The 2003 directive on prospectuses had very clear and undeniable merits. It laid down harmonised rules as to what European companies must publish when issuing securities, with one major innovation. Once a prospectus has been approved in one Member State, it is valid throughout the Union. However, the 2003 framework needed to be readjusted in order to improve the legal clarity and efficacy of the prospectus system and reduce administrative costs.
That is why, henceforth, thanks to you and thanks to this review, certain types of security issues will be subject to reduced declaration obligations for small enterprises, for small lenders and for rights issues and government guarantees. The form and content of the prospectus summary will be improved. Exemptions from the obligation to publish a prospectus have been clarified in cases where companies sell via intermediaries or retail chains or allot shares to staff. Finally, declaration obligations that currently overlap with the requirements of the transparency directive will be repealed.
Here is the result of our joint work. This revised directive will therefore provide a balanced tool adapted to the complex questions raised by investors and issuers on the capital markets, be they small and medium-sized enterprises or large, well-established companies. The adoption of this text at first reading will send out a strong signal that the Union respects its undertaking to simplify and reduce the administrative burden, while at the same time maintaining and even improving the level of protection for investors. That is why I should like once again to thank your rapporteur and to thank you for approving this dynamic compromise in favour of this simplification and, in particular, in favour of small and medium-sized enterprises throughout Europe.
Diogo Feio
I would like to begin by mentioning the good work that has been possible within the Committee on Economic and Monetary Affairs, thanks to proposals by its various members, and to highlight the role that the rapporteur, our colleague, Mr Klinz, played in bringing about a positive result. When we speak of prospectuses we are, of course, speaking about the idea of publicity, market security and better access to investment. For this very reason, I have sometimes felt that there is a distinct conflict between the protection which consumers need and the protection of investors, which is also necessary.
We were able to find a balance. Often, the solutions were not identical, but more importantly, it is worth emphasising that in the end, this review paid attention to the situation of small and medium-sized businesses, the need to respect small investors regarding the possibility of greater simplification, greater clarity on exemptions and lower costs for businesses by reducing what is often an excessive administrative burden.
Obviously, the respective positions of the Council, the Commission and Parliament are often not exactly the same in trialogue. However, it was possible to reach a balance on the future of market security at EU level, and I would like to stress here that this is a positive thing.
Catherine Stihler
on behalf of the S&D Group. - Mr President, I would like to thank the rapporteur and all the shadows for their cooperation.
I believe that the compromises reached are accepted by the S&D Group as they are fair and we believe will lead to greater investor protection, in particular, for small retail investors. I think, as the Commissioner said, it is in the spirit of the original directive.
If we look at the summary and the key information document - Dr Klinz has spoken about that and the need to have clarity - I think we have reached a wording which will ensure clarity, whilst being clear that civil liability remains with the base prospectus.
In addition, we have clarified the period when publication of a prospectus or supplementary information to it is required; we have also clarified the requirement for and liabilities of the prospectus when securities are sold via intermediaries and not directly by the issuer.
On threshold: I would say it was more a tweaking exercise than dramatic change, but the compromises reached were fair and balanced and the S&D Group supports these.
I think it is a welcome step to be clear about the definition of a qualified investor as is the effect of supervision of third country trading.
In line with better regulation, the decision that no prospectus will be required for employee share schemes would appear to be sensible. After all, if employees are not willing to invest in their own firm, maybe the management should take heed.
The work on delegated acts - Dr Klinz has mentioned this. The three months compromise is vitally important and is a move in Parliament's direction.
I will certainly be using the prospectus directive decision as a benchmark for the work I will be doing as the rapporteur on construction products, while the benchmark that is being used by the Council is the Pets Directive rather than the Prospectus Directive.
On the electronic publication of the prospectus: I think that is welcome too. The review clause of five years is also welcome.
So all in all, Mr President and rapporteur, the S&D Group supports the compromise reached and we look forward to supporting the first reading deal in tomorrow's vote.
Olle Schmidt
Mr President, in the wake of the financial crisis, justified demands are being made for greater transparency and better regulation of the financial market. I have no problem with this, but, as always when new regulations are to be introduced, it must be done in a balanced way. The capacity of the European economy for growth will not be increased by ill-thought-out proposals, even if they have legitimate purposes.
I would therefore like to thank the rapporteur, my colleague, Dr Klinz, for his excellent work, which takes a stand against these excessively detailed rules and regulations. His proposal increases legal certainty and removes unjustifiably stringent requirements in order to reduce companies' administrative burdens by 25% by 2012. My group and I are, of course, happy with the compromise that has been negotiated by Dr Klinz and others. The proposal reduces the administrative burden on small and medium-sized enterprises, but - and I think it is important to say this - it does this without reducing investor protection. This is also something that Mr Barnier mentioned.
The discussion has, of course, centred on the thresholds that are to be applied on publication of prospectuses, in connection with rights issues, for example. I think they are well-balanced and will enable the internal market to function better. The proposal will, of course, mean that small and medium-sized enterprises will not need to produce a prospectus and it will therefore be easier for them to attract capital. The threshold is being raised from EUR 2.5 million to EUR 5 million. This is a well-balanced proposal. It will also make it easier for regional banks to take out bonds, as the thresholds are being raised from EUR 50 million to EUR 75 million for non-equity securities, such as interest-bearing debt and structured products.
Overall, like my fellow Member from the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, I would like to thank Dr Klinz for a truly excellent piece of work. This report is an important step towards improving conditions for millions of small businesses in Europe.
Vicky Ford
on behalf of the ECR Group. - Mr President, I know that this is not one of our most headline-grabbing reports, but it deserves to be, because this Prospectus Directive has actually been crucial to regulating European firms' access to capital. That, in itself, is vital for Europe's potential for economic growth in the future.
It has been a delight to work with the shadow rapporteurs but most delightful under Mr Klinz's guidance. He has added real value to the original Commission proposal and the Council's position. I believe the resulting text is not only technically workable, but is a good balance between investor protection and easing the access to capital markets for enterprises in Europe. We have worked hard to get legal certainty and there is a clear process for updating and supplementing prospectuses. We have tried to help investors with the contents of the summary and the concept of key information.
I am particularly pleased that there will be a lighter disclosure regime for rights issues. I think that this will help not only larger companies, but smaller ones too. At a time when markets are volatile, it can be the cost of a prospectus that would put someone off even trying to raise additional capital. We do need to especially bear that in mind at this moment.
It is a very welcome precedent. I look forward to further analysis of the sector when we look at the MiFID Directive later on this year. As I said, this is an example of a concrete measure we are taking to improve Europe's environment for entrepreneurs and for investing in our future.
José Manuel García-Margallo y Marfil
(ES) Mr President, Commissioner, we know a number of things. We know that this crisis has been like a mutating virus: it began as a property crisis, later becoming a banking crisis, then an economic crisis, and ended up as a sovereign debt crisis that could bring other crises in the sector in its wake.
We also know that this crisis has been very expensive. According to your services, aid commitments to the financial sector total EUR 3.5 billion: in other words, one third of the EU's gross domestic product. We also know that one of the root causes of the crisis was the lack of transparency in products, institutions and markets.
That is why the report that we are discussing at the moment is so important. However, if you want a statistic, I would remind you that in the United States alone, in the years 2000-2006, asset-backed securities increased by a factor of four and mortgage-backed securities by a factor of seven; moreover, in a very recent court appearance, the advisors of a reputable bank said that they did not have a very good idea of what they were selling.
We also know - and this is the third statement - that many of the commitments that we made at the G20 have not gone, to quote a Spanish poet, 'from the Muses to the theatre' - they have not gone from imagination to the written word.
We also know that throughout this remodelling of the financial sector, there are three principles which I see as key: Pan-European entities must be supervised by pan-European authorities; we must have the necessary measures at our disposal to detect the virus and avoid infection; and, finally, we must prevent the public from having to pay by itself for those infections that it has not caused.
Commissioner, you have a major job to do if we do not want the next crisis to catch us with our pants down.
I will end by saying in French that I recommend 'de l'audace, encore de l'audace et toujours de l'audace' in your mission - boldness, more boldness and forever boldness.
George Sabin Cutaş
(RO) Abolishing the double transparency obligations and reducing the disclosure requirements for companies with reduced market capitalisation will generate estimated overall savings of EUR 110 million per year. The review of the Prospectus Directive will therefore help boost the competitiveness of small and medium-sized businesses in the European Union. We must not forget that small and medium-sized companies are the driving force of the European Union's economy. They created 9.4 million jobs in the European Union between 2002 and 2008 and currently provide jobs for 90 million European citizens.
At the same time, financial transparency requirements need to be harmonised at European Union level in order to reduce the administrative burden on European companies. As a result, the newly created European Securities and Markets Authority will have to monitor the harmonisation of Member States' legislations with regard to examining and approving prospectuses.
David Casa
Madam President, we have seen a great deal of turbulence in the European markets in the last number of years, with many having suffered great losses. So, we must ensure that investors, especially retail investors, receive adequate protection within the European Union. Investors should be able to gain the information necessary to make informed decisions. Having a well-structured framework in place also makes the European market more secure and, therefore, attractive to serious investors.
The Prospective Directive has been fundamental in setting industry standards across the European Union, as has been the case with the UCITS Directive. Technical legislation that regulates this dynamic industry should frequently be reviewed, fine tuned and updated so as to ensure that it remains relevant and current. I agree that certain provisions within the directive were unnecessary and a number of obligations to which organisations must comply should be removed. The benefits that they give to the investor are negligible, while they place a significant burden on the business itself. The streamlining of definitions to avoid problems of interpretation in different Member States will also further streamline the sector.
Finally, I would like to congratulate our rapporteur, Mr Klinz, for his excellent work. I would also like to congratulate all the shadow rapporteurs. I believe that this report is well-balanced and proportionate.
Sari Essayah
(FI) Madam President, Commissioner, I think the report on the amendment to the Prospectus Directive is a positive one because many of these amendments reduce the administrative burden of companies, so the rapporteur and shadow rapporteurs have together done an excellent job.
As a counterweight to reducing the requirements of a prospectus, we must always take into account the matter of the investor's protection. The legal basis for the prospectus summary was clarified and the idea of a broad legal basis was dropped, which is good, because a long prospectus summary would have been difficult to understand, and the investor might have had the feeling that there was no need to read carefully though the actual prospectus itself. Now the prospectus summary must simply correspond to the summary; there cannot be a contradiction between the two. The actual legal responsibility lies with the truthfulness of the information in the prospectus proper. I also applaud the move that the requirements concerning the content of the prospectus are to be clarified, as having a uniform structure can only serve to promote the comprehensibility of these summaries.
In the second amendment that I tabled, I wanted to ensure that the prospectus requirement remained in place in the case of staff placements. This was based on the notion that all investors should be treated equally. It cannot always be assumed consistently that a small investor on the staff knows enough about the company and its securities. This is perhaps something we should return to and consider in the future.
This directive has an important purpose: that an investor can base his or her investment decisions on clear and comprehensible information that is easily accessible. I believe that amending the directive, despite the problem I mentioned, will bring its own contribution, with a change in the right direction.
Elena Băsescu
(RO) I would like to congratulate Mr Klinz for his exceptional efforts on this report and make the following clarifications. The Commission's proposal for simplifying and improving the Prospectus Directive provides a better level of protection to investors, giving them sufficient, suitable information. The unique passport is valid in any European Union market, once it has been registered and approved by the relevant authorities in a Member State.
With a view to cutting red tape, I think that an appropriate legal framework is required to remove the uncertainty regarding host Member State notification. In addition, by getting rid of superfluous tasks which impact on companies, we can achieve a reduction of 25% in the unjustifiably high costs involved and in the administrative burden by 2012. Finally, I wish to say that the new regulations will provide better protection for investors, offering them the chance to carry out a better analysis of the risks associated with a security prior to making an investment.
Franz Obermayr
(DE) Madam President, clear regulation of the liability issue is obviously part and parcel of a transparent securities market. In this respect, we must first and foremost pay attention to protecting the small investor. When it comes to the resale of securities, the investor needs to know who to hold accountable for the accuracy and currency of information. If we regard the investor as a consumer who is worth protecting, then it is vital that he or she is given access to the essential information needed in order to price the product, in this case, securities. Only then will he or she be able to make informed decisions.
Equally, in the EU's common capital market, it is important that we draw up a comparative list of differences between liability regulations of national civil law. In these times of crisis and uncertainty in particular, what this means is re-establishing for the investor a real sense of confidence through corresponding transparency in the securities market.
Angelika Werthmann
(DE) Madam President, ladies and gentlemen, the prospectus regulates the public offering of securities and their emission into a regulated market in the Community. It is a sort of passport which allows access to all EU markets. In the interests of scrutiny and transparency, I welcome the protection afforded to the small investor and, in particular, the notification requirement. I see improvement of access to securities for small and medium-sized enterprises through the elimination of administrative hurdles as an investment in the future.
Michel Barnier
Madam President, may I once again thank each and every speaker for their approval and additional remarks. Clearly, the text that will be passed is a dynamic compromise. As such, it cannot include every idea and every suggestion made but, at the same time, I think that Parliament, Mr Klinz, your committee, the Committee on Legal Affairs and others have good reason to be satisfied, because the current text has benefited greatly - and I speak as I find - from your comments, proposals and constructive criticism throughout the process of negotiation.
A large number of amendments that you introduced, together with other colleagues from the Committee on Economic and Monetary Affairs, have been integrated into the text; especially, and I repeat, ladies and gentlemen, regarding the scope of the directive, provision on key information to be included in the prospectus summary, the regime applicable to employees or even the 'lisbonisation' - to coin a phrase - of the Prospectus Directive.
Mr Feio mentioned the conflict between protection for investors and the needs of small and medium-sized enterprises. May I remind him that a proportionate prospectus will be developed for small and medium-sized enterprises. Mr Cutaş also raised this commitment, this particular treatment for small and medium-sized enterprises. A proportionate prospectus will therefore be developed, Mr Feio, for small and medium-sized enterprises, a level 2 prospectus, but which respects the need for investors to be protected.
Another point which Mrs Essayah raised just now was qualified investors and the treatment of private individuals. The directive takes full account of the difference between the two. I would remind you that the summary will be instrumental in safeguarding proper and fair protection for private individuals.
Ladies and gentlemen, the Commission is able to accept all the amendments and therefore supports the text, as do - I have noted - Mr Klinz, the various speakers from the groups, Mr Feio, Mrs Stihler, Mr Schmidt and Mrs Ford, who approved this excellent compromise on behalf of their groups. We are certain that this directive will make a difference in strengthening protection for investors and reducing the administrative costs for issuers, that it will make an even bigger contribution towards developing a real capital market in the European Union. We must not miss this opportunity.
I should like to finish by thanking Mr García-Margallo for his contribution because, over and above this text, which marks real progress, he has set this progress in a much more general context, on which, moreover, he is working very efficiently in the supervision package, the transparency package under discussion. May I remind you that this review will improve the elements of transparency and adapt it to issuers, especially small and medium-sized enterprise, while at the same time - I repeat - respecting protection for investors. The element of supervision was included in the supervision package, the omnibus text, and it is that text that Mr García-Margallo is working on, with other colleagues, while calling on us to demonstrate collective boldness.
You have demonstrated that in this text, which marks real progress, and I trust that, all together, we shall prove that, with the Council, in compromises that are just as dynamic, compromises that we shall need to find over coming days on other texts currently under discussion, on the regulation on hedge funds and private equity and, above all, on the major European supervision project that we need for this text, on the credit rating agencies we were talking about earlier and on numerous other questions of regulation, transparency and control, which are the lesson that we must learn from the crisis. It is our responsibility.
Wolf Klinz
Madam President, I will make just a few brief comments. First of all, I wish to thank the Commissioner and all the Members for their friendly comments. I am pleased that you share my views. Our cooperation has actually enabled us to balance out various objectives, namely easier access to capital for SMEs and the removal of administrative hurdles, on the one hand, and improvement and securing of investor protection and making progress in terms of creating a genuine European internal market, on the other.
I hope that, when this new version of the Prospectus Directive comes up for review in a few years' time, we will be able to establish a link between the Prospectus Directive and the Market Abuse and Transparency Directives, and that we might perhaps go so far as to choose, in terms of non-equity securities, not the home market, but another Member State of the European Union as a starting point for emission.
President
The debate is closed.
The vote will take place on Wednesday, 16 June 2010.
