Risk Factor Guidelines

In any prospectus, risk factors have always been a way to mitigate liability for the information contained in it. This has been misused and manipulated for a layperson to thoroughly understand due to the lengthy description in addition to legal jargon and ambiguous phrases. On 1^st October 2019 European Securities and Markets Authority have proposed and finalized new guidelines on risk factors. Competent authorities in the EU are expected to comply with these guidelines to facilitate their review of risk factors. These guidelines are to be complied with from the 4^th of December 2019; however, many authorities have already been observing these guidelines referring to ESMA’s final report as guidance. The new guidelines provide guidance to both the content and the presentation of these risk factors.