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German regulator BaFin publishes guidance note on scrutiny of prospectuses for comprehensibility under PDIII

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Scharnke Martin
Martin Scharnke

Partner

Frankfurt am Main

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Christian Klöpfer

Counsel

Frankfurt am Main

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Memic Amar
Amar Memic

Associate

Frankfurt am Main

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17 September 2019

Overview and context

  • BaFin has published a guidance note on 10 September 2019 setting out criteria it intends to apply when scrutinising prospectuses for compliance with the requirements of comprehensibility set out under Article 37 of Commission Delegated Regulation (EU) 2019/980 (Delegated Regulation). The guidance note, which is currently only available in German, can be found here. An English convenience translation of BaFin’s guidance note is linked below.
  • Article 37 of the Delegated Regulation, one of the central provisions of the new EU prospectus regime in force since 21 July 2019, contains a detailed but non-exhaustive list of criteria which competent authorities need to consider as part of the prospectus review for comprehensibility. The criteria, inter alia, include aspects such as whether the prospectus has a clear and detailed table of contents, whether it has a structure that enables investors to understand its contents and whether it is written in plain language.
  • The guidance note sets out BaFin’s current administrative practice regarding the comprehensibility scrutiny of prospectuses filed with it for approval. BaFin clarifies in this respect that it reserves the right to further develop its administrative practice in this respect in the future.
  • BaFin’s guidance represents one of the first official statements of a competent regulatory authority covering a critical aspect of the new EU prospectus regime. It remains to be seen how other regulatory authorities will apply these criteria and whether ESMA considers that additional Level 3 guidance on this topic is warranted.

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