Minister Ahern announces Signing into law of the Prospectus Directive.

Designation of a single administrative competent authority

The Directive requires that each member State designates a central competent administrative authority responsible for carrying out the obligations provided for in the Directive and for ensuring that the provisions adopted pursuant to the directive are applied. The Directive also requires that that authority be independent in the performance of its functions.

Requirement for prospectus

The Directive determines the circumstances in which a prospectus must be produced and the manner in which a prospectus needs to be approved by the competent authority. Member States will not be able to allow a public offer or admission to a regulated market within their territories without prior publication of a properly approved prospectus. The Directive also sets out how the prospectus must be made available/published.

Approval of Prospectus - single passport

Central to the Directive is the concept that the competent authority of a single Member State is responsible for the approval of a prospectus. The objective of this approach is to provide a single "passport" for issuers, whereby a prospectus approved by one competent authority is available for use throughout the EU, without additional approval or administrative arrangements from competent authorities of other Member States. The effect of this means that once the competent authority in one relevant Member State has approved the prospectus, it will then be accepted elsewhere in the EU.

The relevant Member State is determined by the issuer's home (or host) Member State. Once this has been determined in accordance with the provisions of the directive, the competent authority for that Member State is responsible for vetting the prospectus and for ensuring that the obligations for issuers and others under the Directive are met. The host member state is identified when an offer to the public or admission to trading is sought outside the home member state.

A supplementary document must be filed with the competent authority if a significant new factor, mistake or inaccuracy in the information included in the prospectus, which is capable of affecting the assessment of the securities, arises between the time when the prospectus is approved and the final closing of the offer or commencement of trading.

Disclosure requirements

Apart from the single "passport", the Directive seeks to improve the efficiency of the capital raising process in a number of other ways. For example, by introducing a new procedure for a more flexible, tripartite format of a prospectus and by applying differing disclosure requirements for equity and non-equity securities. In addition, the Directive seeks to enhance investor protection by requiring harmonised high standards of disclosure and requiring competent authorities' approval of prospectuses in all circumstances.

Definition of offer to the Public

Under the existing prospectus regime, there are differing definitions across the

EU as to what constitutes a `public offer'. This situation was viewed as discouraging

firms from raising capital on an EU-wide basis as a transaction might be considered as a public offer in one Member State (and therefore requiring a prospectus) but as a private placement in another Member State. The Directive introduces for the first time, a pan-European definition of an offer of securities to the public

Responsibility Statement/Civil Liability

The Directive prescribes that Member States shall ensure the responsibility for the information given in a prospectus attaches to at least one of the following: the issuer; or the Board of the issuer, or the offeror, the person asking for the admission to trading on a regulated market or the guarantor, as the case may be.

The Directive requires Member States to ensure that their laws, regulations and

administrative provisions on civil liability apply to those persons responsible for the

information given in a prospectus.

Sanctions

Without prejudice to the right of Member States to impose criminal sanctions and without prejudice to their civil liability regime Member states are required to put in place administrative sanctions for breaches of the Directive.

Languages

The Directive provides for a more flexible language regime than is currently required. For example to encourage cross border offers, where the prospectus is drawn up in a language that is customary in the sphere of international finance, the host or home member state is only entitled to require a summary in its official language(s).

Offers of securities outside the scope of the directive.

The Directive lists the offers in question. The most significant change introduced by the Directive in relation to public offers is that any offer of securities to the public where the consideration is less than €2.5 million, calculated over a 12-month period, is outside the scope of the Directive. This is designed to benefit SME's where the costs associated with production of a prospectus are recognised as a notable disincentive to capital raising.

The arrangements which will apply to offers below €2.5m. at national level are set out at Part 5 of the Investment Funds, Companies and Miscellaneous Provisions Act, 2005

Offers of securities exempted from the requirement to publish a prospectus

The directive identifies several exemptions from the obligation to publish a prospectus. For example, an offer of securities whose denomination per unit amounts to at least €50,000 is exempted. A number of the exemptions provided for are similar to those which exist under the current regime.

Main Provisions

Format and contents of prospectus

Detailed measures regarding the format and contents of prospectuses are not contained in the Directive. Instead, the EU Level 2 implementing Regulation, approved by Member States in accordance with the terms of the Directive, prescribes in detail the information that will need to be contained in a prospectus. This includes historical financial information and risk factors, as well as the format and publication requirements for the documents.

The Directive does not propose a "one-size fits all" model for prospectuses.

Instead, the Regulation sets out different minimum disclosure requirements for

different products being offered or admitted to trading, depending on the type of

information needed by investors in each case.

Historical Financial Information

An important requirement of this Level 2 regulation is that all EU issuers, and

(post 1 January 2007) all non-EU issuers, will have to present their historical financial

information in accordance with International Accounting Standards or "equivalent"

accounting standards. The Committee of European Securities Regulators, CESR, has

been charged by the Commission with providing advice on the issue of equivalence to

International Accounting Standards of US, Canadian and Japanese accounting

standards.

The Regulation is directly applicable in the Member States.

Main provisions in Part 5 of the Investment, Companies and Miscellaneous Provisions Act 2005 -

Provides for criminal and civil liability sanctions, gives rule making powers to IFSRA and sets out the arrangements which will apply at national level to offers of securities to the public where the consideration is less than €2.5m, calculated over a 12 month period, and which are outside the scope of the Directive. The exclusion of these offers from the requirement to publish a prospectus is designed to benefit SME's where the costs associated with production of a prospectus are recognised as a notable disincentive to capital raising.

ENDS