The Prospectus Regulation, which has applied since 21 July 2019,
introduced various amendments to the risk factor regime in
prospectuses. Building on that, the European Markets and Securities
Authority (“ESMA”) has now issued guidelines (the “Guidelines”) on
risk factors, which will take effect from 4 December 2019.
The Guidelines are directed at the competent authorities and aim
to implement the goals of the reforms under the Prospectus
Regulation.
Specificity
One of the most important goals of the Prospectus Regulation
(Article 16(1)), was to replace generic risk factors with
transaction-specific ones. To this end, the Guidelines specify that
risk factors must describe a relevant risk and not consist of
standard risk factors or recycle those from other prospectuses. The
materiality and specificity of the risk factor must be demonstrated
by either specific corresponding information or disclosed elsewhere
in the prospectus.
