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Part II The New EU Prospectus Rules, 12 The Summary and Risk Factors

Robert ten Have

From: Prospectus Regulation and Prospectus Liability

Edited By: Danny Busch, Guido Ferrarini, Jan Paul Franx

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 28 March 2023

Prospectus liability — Financial regulation

This chapter addresses the prospectus summary and risk factors. Based on the aim of the new Prospectus Regulation to further harmonize prospectuses across Member States, the new format for the summary is highly prescriptive and standardized, with a strong focus on accessibility. The summary format includes the entitlement of the sub-sections in the form of questions. A separate Commission delegated regulation contains regulatory technical standards to specify the content and format of presentation of the key financial information to be included in the summary. From an issuer's perspective, when drawing up the prospectus, there may be a tension between on the one hand the (new) requirement that the summary shall be ‘accurate, fair and not misleading’, and on the other that the summary needs to be ‘concise’ and is bound to a maximum length. In addition, the new Prospectus Regulation applies an overall cap of 15 for the number of risk factors that may be included in the summary. In view of the maximum length requirement and the capped number of risk factors, issuers and their advisers will need to make choices as to what to include or not include in the summary, which may bring concerns about ensuing liability.

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