The European Commission's green paper was not just welcome news for the securitisation industry, it also hinted at a better way forward for the equity capital markets in Europe. The green paper held out the prospect of a review of the EC's Prospectus Directive with a view to making it easier for companies to issue equity. One proposal is that base prospectuses, as used in debt markets, should be extended to equity issuance. At present, such documents can be used for multiple transactions, but are only valid for 12 months. That makes sense in DCM, but not for equity issuance, which is not an annual affair even for the most acquisitive or impoverished companies. Instead, the EC would be wise to look to one of the more radical proposals contained in the document: a waiver from preparing a new prospectus if one has been approved in the previous three years, with the threshold requiring a prospectus also being raised from 10% to 20% of outstanding equity.
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