UK prospectus regime reform: potential impact on securities litigation

Herbert Smith Freehills LLP have published an article in Butterworths Journal of International Banking and Financial Law on the UK's prospectus regime reform and its potential impact on securities litigation.

Following the recommendations of the Hill Review of the UK Listing Regime and certain consequential legislative changes, the Financial Conduct Authority (FCA) has now published its proposed new prospectus rules CP 24/12, Appendix 1 as part of the UK’s new public offers and admissions to trading regime – the biggest shake-up to the disclosure framework since 2005. While the driver of the rule changes is the desire to attract and retain more listed companies in London, they are likely to have an impact on securities litigation.

The most interesting changes under the new prospectus rules from a litigation perspective are the following: (i) for further issuances of securities already admitted to trading on a regulated market, the proposed increase in the threshold for triggering the requirement for a prospectus from 20% to 75% of existing share capital; (ii) the option for issuers to produce a voluntary prospectus approved by the FCA for issuances below the 75% threshold; and (iii) the information required in a prospectus, in particular climate-related disclosures and protected forward-looking statements. 

In this article, we consider the potential impact of the proposed new prospectus rules on claims brought by shareholders.

The article can be found here: UK prospectus regime reform: potential impact on securities litigation. This article first appeared in the December 2024 edition of JIBFL.