The review seeks views on the following measures to streamline the requirement for a prospectus:

General exemptions. Market participants are invited to comment on whether the thresholds to qualify for an exemption from the requirement to produce a prospectus need adjusting to allow more offers to be carried out without a prospectus.

Secondary issues exemptions. The Commission invites views on options for extending the exemption from the requirement to produce a prospectus for the admission of securities to trading on a regulated market.

The options put forward include: extending the exemption for issues over 12 months of up to 10% of securities of a class already admitted to trading to 20%, or even more; or even a complete exemption for all secondary issues of securities fungible with securities already listed.

An alternative proposal is that the prospectus requirement be removed for all secondary issuances of this type where a prospectus has been approved within a certain period of time, with the Commission suggesting three years, but asking whether it might even be appropriate for there to be no time limit.

These measures are an attempt to recognise that issuers with securities admitted to trading on a regulated market already have to make significant continuing compulsory disclosure and filings under other EU legislative regimes, in particular, the Transparency Directive (2004/109/EC) and the Market Abuse Directive (2003/6/EC). Consequently, a considerable amount of information about these companies is already in the public domain.

This approach assumes that the continuing disclosure regime results in information disclosed by issuers to the market being of the same quality as the information required to be disclosed in a prospectus. Given the requirements of the continuing disclosure regime, this should largely be the case, but there are differences. For instance, the requirements for the operating and financial review (OFR) in an annual report are less exacting than those for the OFR in a prospectus.

Issues of 20% or more of new equity by a larger FTSE 350 company will often involve a distribution into the US. If so, depending on the size of the distribution into the US, the bookrunners may require a disclosure document produced to a standard that will allow US counsel to issue a disclosure letter under Rule 10b-5 of the US Securities and Exchange Act of 1934.

If the issue is in connection with a Class 1 acquisition, a circular to shareholders will be required. In any case, if the issue is by way of a rights issue or open offer, a prospectus will be required for the offer to the public.

Extending the prospectus requirement. Paradoxically, the Commission suggests extending the prospectus requirement beyond securities admitted to a regulated market to securities admitted to trading on multilateral trading facilities (MTF), for example, AIM. Arguably, this suggestion runs counter to the concept of an MTF as a junior market.

The review contains proposals on the following issues:

Maximum length. The review invites views on whether a length limit should be imposed on the prospectus, or specific parts of it, to stop the perceived drift towards overly long prospectuses.

The length of prospectuses is mainly driven by the EU requirement to disclose all material information in the prospectus and, where relevant, the need to comply with US market practice for offerings to US qualified institutional buyers under Rule 144A of the US Securities Act of 1933. Prospectus length is also linked to the nature of the issuer and the complexity of its business.

Proportionate disclosure. The Commission invites views for improving the proportionate disclosure regime, which allows short-form disclosure for prospectuses for rights issues and those produced by SMEs or certain credit institutions. In our experience, there has been relatively little take-up of the proportionate disclosure regime, owing in part to the number of rights issues that include distributions into the US.

In addition, the dispensations offered by the proportionate disclosure regime only remove some of the more mechanical requirements.

Reduced disclosure by SMEs. The review discusses an option for allowing SMEs to access the capital markets with reduced disclosure in the prospectus. Regulators and market participants will need to balance the need to reduce the disclosure burden and cost against adequately protecting those investing in SMEs. The Commission's suggestion of abolishing the concept of the prospectus summary may be unhelpful to these investors.

Prospectus summary. The review asks whether there is room for improvement in relation to the prospectus summary. The purpose of the summary is to provide key information about the issuer and the securities in a concise, non-technical way.

Views are sought in the review on the material differences in the way that national competent authorities (NCAs) review and approve prospectuses:

Accelerated publication. The Commission suggests making public the first draft of the prospectus that is filed for review with the NCA, and allowing the issuer to use it in marketing.

The adoption of this system could have the undesirable effect of lengthening the typical UK initial public offering (IPO) timetable as we anticipate issuers would wish to have completed the eligibility process before a first public filing. In addition, it would remove what, in our experience, many issuers consider to be the benefit of a confidential regulatory review period.

Shelf registration. The Commission suggests a number of options to extend the shelf registration facility, for example, by making it available for all types of securities and issues. The system offers the flexibility of allowing an issuer to draw up a base prospectus, which would be approved by the NCA and published. Only issue-specific terms would be required for capital raising.

It is doubtful whether shelf registration would be widely adopted unless the compulsory disclosure and filings required of issuers under other EU legislative regimes can serve a double purpose of also forming part of the registration document for securities issuance.

Third-country equivalence. The Commission suggests a framework for approval of a non-EU third-country prospectus, solely by the addition to it of a cover wrap. This would require recognition by the Commission of the prospectus regimes of non-EU states as equivalent to the EU regime, which is an issue that has been under examination at least since the introduction of the Prospectus Directive (2003/71/EC), but has not yet been resolved.

The consultation and the review close on 13 May 2015. The Commission is expected to report back on the review by July 2015.

The Commission's green paper and the consultation are at http://ec.europa.eu/finance/consultations/2015/capital-markets-union/docs/green-paper_en.pdf and the review is at http://ec.europa.eu/finance/consultations/2015/prospectus-directive/docs/consultation-document_en.pdf.