'Not A Public Offer' - Where Does the European Commission's Draft Prospectus Proposal Leave Small Issuers

摘要

The draft Prospectus Proposal, by providing for an exclusion of offers up to 2.5 million Euros from the definition of "public offer", has opened up a range of possibilities in how the offer may be treated. This writer is of the view that this exclusion does not intend to create a carve-out regime for small offers over retail markets from the regulatory regime. Small offers are likely to be funnelled into reliance upon private placements. Although empirical evidence shows that small issuers do tend to rely heavily on private placements, it is another thing altogether to channel small issues into this avenue and virtually close the option of them accessing public retail markets. It is also argued that small issuers could hitherto rely on private placements because private placees find that they could dispose of their shares on a second tier market without much hassle. This situation may change with the draft Prospectus Proposal as it is uncertain if private placees could so easily admit these shares to trading on a second tier market under the Proposal. It should be reconsidered as to whether the effect of draft Article 2(2) on the exclusion of small offers of up to 2.5 million Euros from the definition of "public offer" should be clarified further and would actually be in small issuers' interests.