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EU Prospectus and Transparency Directives: Impacts on Asian Issuers

Gain insights into the EU Prospectus and Transparency Directives and their implications for Asian issuers. Explore the three-phase process of Hong Kong's Securities Law Reform amidst the EU Financial Action Plan. Learn about the complexities, requirements, and exemptions under the Directives, and understand the strategic considerations for issuers. Stay informed on the latest developments and recommendations from the EU Parliamentary Committee. Get ready for the regulatory changes and reform in Hong Kong's securities landscape.

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EU Prospectus and Transparency Directives: Impacts on Asian Issuers

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Presentation Transcript

  1. HKCMA Spring Cocktail 2004 Andrew Malcolm

  2. The EU Prospectus and Transparency Directives - what they mean for Asian issuers • and • Hong Kong’s Securities Law Reform - the three-phase process

  3. EU Financial Action Plan • 42 new Directives • A pan-European securities market to rival the United States?

  4. EU PD and TD • Two major directives for our purposes • Prospectus Directive: new offers • Transparency Directive: continuing obligations

  5. EU PD and TD • The Directives will apply to • securities offered to the public • securities listed in EU (whether or not offered to the public)

  6. EU PD and TD • The Directives are complex and still incomplete. But the headline requirement is for • financial information under IFRS (IAS) • “true and fair view” audit under international auditing standards

  7. EU PD and TD • Surprisingly: no (useful) grandfathering

  8. EU PD and TD • Even more surprisingly: very limited exemptions for euromarket issues • for straight debt (and many exchangeables), exemption if in minimum denominations of €50,000 or equivalent • no exemptions for equity, convertible bonds or (effectively) GDRs

  9. EU PD and TD • Only “home-state lock-in” currently in force - for an issuer’s first EU listing after 31 December 2003 • Main provisions effective from sometime in 2005

  10. EU PD and TD • What to do? • For straight debt: use € 50k denominations? • A delist-and-relist right • List on Hong Kong or Singapore

  11. STOP PRESS • At end February, EU Parliamentary Committee on Economic and Monetary Affairs recommended: • US, Canadian, Australian GAAP “equivalent” to IAS • No quarterly reporting • Grandfathering for straight debt listed before 1 January 2006 EU Parliament/Council of Ministers reaction awaited

  12. Reform of Hong Kong Securities Law • Regime Change

  13. Guidelines Phase One Class Exemptions We are here! “Quick Fix” Legislation Phase Two Phase Three Radical Overhaul Overview

  14. Guidelines and Class Exemptions • Dual prospectuses • Offer awareness publicity • Prospectus contents for bonds

  15. Quick Fix Legislation • Embed the Guidelines and Exemptions • New offering safe harbours • Professional investors (like SFO) • Denominations of HK$500k • Private placements up to 50 offerees

  16. Quick Fix Legislation • Committee stage amendments • deletion of resale restrictions • transparency in waivers/exemptions • others • Expected timing for implementation

  17. Radical Overhaul • New Ordinance • “Debenture” • Transaction-based rather than document- based regime • Promotional advertising • Incorporation by reference, shelfs, passports

  18. Questions?

  19. A03898573

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