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Primary Market Technical Note: Exemptions from the requirement to produce a prospectus (Financial Conduct Authority)

ReportFinancial Conduct AuthorityJanuary 20265 pages8 min readOriginal source
Key number
75%
Fungible securities prospectus exemption limit p.2
Key number
100%
Closed-ended investment fund exemption limit p.2
Key number
48 hours
Listing hearing advance submission notification requirement p.3

Summary

  • The FCA sets out rules and guidance under PRM 1.4.3 to 1.4.13 regarding exemptions from producing a prospectus when admitting securities to trading on a regulated market.p.1
  • Issuers admitting transferable securities fungible with existing securities are exempt if they represent less than 75% of existing securities over a rolling 12-month period.p.2
  • For equity securities issued by closed-ended investment funds, the rolling 12-month prospectus exemption threshold is set at 100%.p.2
  • In calculating the 75% or 100% cap, securities that qualified under another exemption during the rolling 12 months are excluded from the numerator.p.2
  • Issuers reclassifying securities must submit an ESS Portal case and notify the Recognised Investment Exchange at least 48 hours before the requested listing hearing date.p.3
  • Documents prepared for dividend share offers or employee share schemes under PRM 1.4.11R and PRM 1.4.12R do not require FCA approval or filing.p.3
  • Director share allotment exemptions under PRM 1.4.12R cannot be used if the allotment is structured for an onward transfer to a third party to raise new funds.p.4

Key insights

  1. The 75% prospectus exemption limit applies cumulatively over a rolling 12-month period regardless of the number of individual transactions.p.2
  2. Closed-ended investment funds benefit from a higher 100% rolling exemption threshold for fungible equity securities.p.2
  3. Securities issued under other exemptions, such as employee share schemes, are discounted from the numerator when calculating the 75% or 100% threshold.p.2
  4. Redenomination and share reclassification procedures require notifying the Recognised Investment Exchange at least 48 hours prior to the listing hearing date.p.3
  5. Information documents for employee or dividend share exemptions under PRM 1.4.11R and PRM 1.4.12R are abbreviated and exempt from FCA filing or approval.p.3
  6. Exemptions for director share allotments do not require the director to hold the securities for any minimum period.p.4
  7. The FCA prohibits using director share allotment exemptions as a conduit for raising new funds via onward transfers to third parties.p.4

Topics and entities

UKRegulationFinancial Conduct Authority

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