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Chapter X Supervision of Securities Markets Supervision of Securities Markets CHAPTER X SUPERVISION OF SECURITIES MARKETS SUPERVISION OF SECURITIES MARKETS 1. Approval of prospectuses for securities relating to offers to the public or admissions to trading on a regulated market 2. Takeover bids 3. Mandatory squeeze-out and sell-out of securities 4. Supervision of issuers of securities of which the CSSF is the competent authority 5. Enforcement of financial information 6. Supervision of markets and market operators 7. Investigations and cooperation SUPERVISION OF SECURITIES MARKETS 1. APPROVAL OF PROSPECTUSES FOR SECURITIES RELATING TO OFFERS TO THE PUBLIC OR ADMISSIONS TO TRADING ON A REGULATED MARKET 1.1. Application of the Prospectus Law Unlike in 2012, there were no great changes in the regulation applicable to prospectuses for securities in 2013. Indeed, only the Commission Delegated Regulation (EU) No 759/2013 of 30 April 2013 amending Regulation (EC) No 809/2004 as regards the disclosure requirements for convertible and exchangeable debt securities was published. Following the entry into force of the law of 3 July 2012 transposing Directive 2010/73/EU and amending the law of 10 July 2005 on prospectuses for securities (Prospectus Law), some issuers have benefited from a grandfathering clause in relation to the adaptation of the update of their base prospectus to the new regulation until the end of June 2013. A lot of these issuers did not wait until the end date of June 2013 to submit their first base prospectus under the new regulation but had already submitted their draft base prospectus in March 2013 so as to avoid being under pressure if an unexpected event occurs due to the changes to be made pursuant to the new regulation. However, issuers which are less active in issues decided to delay the introduction of their documents until the summer period. Hence, the requests for approval of base prospectuses were, unlike in 2012, more spread in time which allowed the CSSF to manage the related additional workload well. It was also noted that while many issuers, which, at first, chose to group all their products likely to be issued by them in one single base prospectus, finally decided in 2013 to divide it into several documents so as to better take into account the new regulatory provisions. This shift happened because the drawing-up of base prospectuses that encompass all possible products of an issuer has become much more complicated under the new regulation. In practice, these divisions provide investors with a better readability and understanding of the base prospectuses. Moreover, it should be pointed out that the number of base prospectuses relating to the issues of asset-backed securities decreased by half. The requirements as regards the presentation of the documents being much more stringent since the implementation of the new regulation, many issuers gave up using this type of prospectus for securitisation issues. Still, with regard to base prospectuses, the CSSF, like several other competent authorities, accepted the tripartite base prospectuses while waiting for a clear decision by ESMA on the compliance of this structure with the regulation on prospectuses. However, on 18 December 2013, ESMA published an opinion which specifies that the drawing-up of a base prospectus which consists of separate documents is not compliant with the regulation on prospectuses. Consequently, the CSSF informed the issuers concerned that the tripartite base prospectuses will no longer be accepted for approval and that those which were already approved could not be notified in other Member States any more. The efforts in relation to the recruitment and training of agents in charge of prospectus approvals continued in 2013, thus contributing to controlling the workload which is getting greater. Therefore, and due to joint commitments of all the readers, the deadlines for processing the prospectuses and base prospectuses were reduced again so that they are now at a satisfying level for the market players and correspond to the situation as it was before the entry into force of the new regulation in 2012. Throughout 2013, the department “Supervision of securities markets” together with the IT department of the CSSF actively worked on the “Register” project launched by ESMA pursuant to the requirements defined by Directive 2010/78/EU. Since 24 February 2014, ESMA is publishing the list of prospectuses approved by the competent authorities of the Member States as well as possible related supplements or notifications on its website for a minimum period of 12 months. In order to fulfil this obligation, ESMA developed an IT tool via which the competent authorities of the Member States must notify the requested information. In this context, the CSSF has identified and transmitted all the data required by ESMA which represented a significant volume of information due to the increased approval activity in 2013. The same trend as for the deposits of prospectuses was recorded for requests for an opinion which increased considerably (253 in 2013 against 166 in 2012, i.e. an increase of 52.41%). A great portion of these requests concerned the circumstances under which a supplement is required according to Article 13 of the Prospectus Law and the financial information regarding issuers or guarantors to be submitted. Many questions relating to the new regulation were also asked, particularly on the manner in which to structure base prospectuses. 170 Some positions adopted by the CSSF within the context of these requests for an opinion are detailed under item 1.3. of this chapter. In 2013, the CSSF received six requests for the omission of information pursuant to Article 10 of the Prospectus Law. Detailed justifications in relation to these requests allowed the CSSF to grant them. Moreover, in accordance with Article 23(4) of the Prospectus Regulation, the CSSF approved three prospectuses, each including an omission of information due to non-pertinence. 1.2. Approvals and notifications in 2013 1.2.1. Documents approved by the CSSF in 2013 The number of documents approved by the CSSF slightly increased compared to 2012, amounting to a total of 1,630 approved documents in 2013 (of which 402 prospectuses, 335 base prospectuses, 15 registration documents and 878 supplements) against 1,493 the previous year (+9.18%). This increase mainly results from the number of approved prospectuses (+46.18%). Development in the number of documents approved by the CSSF Number 240 220 200 180 160 140 10 120 100 80 60 40 20 0 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 2012 90 122 124 127 156 227 64 131 99 111 158 84 2013 57 95 153 123 191 165 126 160 142 158 160 100 Variation -36.67% -22.13% 23.39% -3.15% 22.44% -27.31% 96.88% 22.14% 43.43% 42.34% 1.27% 19.05% 171 SUPERVISION OF SECURITIES MARKETS Distribution of documents approved in 2013 Base prospectuses: 20.55% Prospectuses (other than base prospectuses): 24.66% Supplements: 53.87% Registration documents: 0.92% 1.2.2. Documents drawn up under the European passport regime in 2013 In 2013, the CSSF received 1,914 notifications (relating to 317 prospectuses and base prospectuses and 1,597 supplements) from the competent authorities of several EEA Member States against 1,913 notifications (relating to 295 prospectuses and base prospectuses and 1,618 supplements) in 2012. Development in the number of notifications (prospectuses and base prospectuses) received by the CSSF Number 90 80 70 60 50 40 30 20 10 0 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 2012 40 20 12 25 47 81 27 4 13 11 11 4 2013 25 5 12 20 35 74 40 21 26 17 26 16 Variation -37.50% -75.00% 0.00% -20.00% -25.53% -8.64% 48.15% 425.00% 100.00% 54.55% 136.36% 300.00% In 2013, the CSSF sent notifications for 883 CSSF-approved documents (360 prospectuses and base prospectuses and 523 supplements) to the competent authorities of the EEA Member States, against 799 documents (284 prospectuses and base prospectuses and 515 supplements) in 2012, representing a 10.51% increase. The number of notifications relating to prospectuses and base prospectuses alone significantly rose by 26.76%. 172 Development in the number of notifications (prospectuses and base prospectuses) sent by the CSSF Number 70 60 50 40 30 20 10 0 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 2012 18 16 21 36 49 60 6 13 13 19 24 9 2013 11 5 18 29 48 49 40 34 39 41 26 20 Variation -38.89% -68.75% -14.29% -19.44% -2.04% -18.33% 566.67% 161.54% 200.00% 115.79% 8.33% 122.22% 1.2.3. Approvals 10 By analysing the 2013 figures relating to the approved documents to be published in case of offers to the public or admissions to trading of securities on a regulated market, it appears that the CSSF managed to retain a great number of issuers which use base prospectuses. Thus, the number of base prospectuses and supplements approved by the CSSF remained stable. The approvals of prospectuses or standardised prospectuses recorded, however, a significant increase (+49.67%) due mainly to eight very active issuers which represented 44.78% of these approvals. Furthermore, German issuers, boosted by the strong growth of bond issues of SMEs, represented 18.4% of these approvals. In this context, it should be noted that the prospectuses relating to the issue of asset-backed securities recorded a significant increase, unlike the situation described under item 1.1. for base prospectuses relating to this category of issue. Indeed, some issuers of this type of securities preferred to use the stand alone documentation which is better adapted to securitisation than the base prospectuses.
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