SMEs now have (slightly) easier access to new funds

Opinion

SMEs now have (slightly) easier access to new funds

The Government has brought two deregulatory amendments to the EU Prospectus Directive into effect a year early which may help small businesses access equity finance more easily.

By implementing the amendments on 31 July 2011 fewer small issuers are caught by the prospectus regime; SMEs should now be able to raise equity finance of up to €5 million (doubled from €2.5 million) before a costly prospectus must be produced. They will also be able to target a larger pool of investors (up to 150 investors, up from 100).

The EU Prospectus Directive 2003 provides a framework for the preparation of prospectuses (which must be published when securities are offered to the public, or are admitted to trading on a regulated market). The Directive established a series of thresholds, which dictate when a prospectus must be produced. In 2010, the European Commission identified a number of amendments to simplify and clarify the regime which led to the deregulation. All Member States must make the same changes by 1 July 2012.

This was first published in August 2011

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