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PD III – the Prospectus Regulation

The Prospectus Regulation, known as PD III, is intended to improve the functioning of the internal capital markets and guarantee investor protection. Whilst PD III is now in application, it remains to be seen whether the intended enhancements will achieve these aims.

The Prospectus Regulation (2017/1129, known as PD III), which came into effect on 21 July 2019, is intended to minimise variation in the interpretation and application of legislation across the EEA with a view to improving the functioning of the internal capital markets and guaranteeing investor protection. It remains to be seen whether the intended enhancements will achieve these aims, but what is clear is that the changes have practical implications for issuers and other market participants.

PD III applies to prospectuses where securities are being offered to the public in the EEA and/or traded on an EEA regulated market. The PD III regime introduced significant changes to risk factors and summaries, a range of changes to disclosure requirements more generally and changes to the “advertisements” requirements (which have been the subject of industry discussions). PD III has resulted in a number of practical changes to the process of conducting and documenting offerings and admissions to trading in both the debt and equity capital markets space.