Employee share offers: latest draft of the Prospectus Directive published

The latest draft of the Prospectus Directive has recently been published. Although there is no complete exemption from the requirement to produce a prospectus for employee share offers in all cases, the good news is that a proposed amendment will significantly widen the current employee share schemes exemption across the EU for those not already able to benefit from other exemptions (e.g. using free shares or options, offers below €2.5 million or to fewer than 100 people).

All EU companies (whether quoted or private) and any non-EU company, whose securities are admitted to trading either on a regulated market or a market which has standards equivalent to those which apply within the EU, will now be able to offer employee share schemes at a proportionate expense without having to worry about the excessive cost and effort of producing a prospectus.

The draft wording is currently going though final formalities in the European Parliament and is likely to come into effect by the end of October this year. It is unlikely that there will be any further changes. Member states then have 18 months to transpose the European Directive into national law. Accordingly, the UK Government has until May 2012 to implement the revised Prospectus Directive, although relevant bodies are currently lobbying the UK Government to ensure it is transposed into UK law before then as other amendments to the Prospectus Directive include even more favourable terms for companies like raising the threshold for offers not requiring prospectuses to €5 million and increasing the 100 person per member state exemption to 150.

For background information on the changes to the employee share schemes exemption and their impact, please read our previous article “Employee Share Offer: update on proposed changes to the Prospectus Directive regime” which is available here.

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