Government pushes ahead with UK prospectus reforms

In its Review Outcome paper, the UK government has set out its plans for the reform of prospectuses following its 2021 review of the prospectus regime as recommended by the Hill Review of the listing regime, which focused on ways to enhance the attractiveness of the UK capital markets and adopt a more flexible framework following Brexit.

The FCA will have responsibility for the rules for prospectuses for listings, including deciding when a prospectus should be required. For other public offerings, the requirement for approved prospectuses will be replaced by a new regime to encourage wider participation in the ownership of public companies and improve the quality of information received by investors.

Key features of the proposed new regime are that:

  • the FCA’s rules will define the circumstances in which a prospectus is required, the contents of prospectuses, and whether they need to be approved by the FCA before publication (to be consulted on by the FCA in due course);
  • there will be changes to the “necessary information” test to allow for differentiation between requirements for IPOs and rights issues; and  
  • liability for certain forward-looking statements will be restricted to those who knew or were reckless as to whether they were untrue or misleading, or knew an omission to be a dishonest concealment of a material fact, and
  • offers by unlisted companies (i.e. not admitted to any stock market) to the public will be permitted without a prospectus through a platform operated by an approved firm, with a new regime for regulating equity crowdfunding platforms, with the FCA being responsible for the detailed requirements (such as due diligence and disclosure requirements) that apply to such platforms and issues made on them.

It’s unlikely the new regime will be in force until 2023 at the earliest.

Review outcome paper

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Published 3 March, 2022

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