Prospectus Requirements For STOs In The European Union

Prospectus Requirements For STOs In The European Union

Tax and Legal Blockchain
6 November 2022

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship. This post was first published on our Medium channel. Please click here to read the full post.

In this post, we’ll outline some of the requirements that exist to prospectuses registered in the European Union today, and more precisely, in Estonia. Estonia is a Member State of the European Union, therefore, Estonian regulations are harmonized with the EU regulations. A lot of the text you’ll read below we’ve taken directly from the law, and if necessary, modified it. We have modified some parts in order to simplify and bring down the complexity. It means we’ve also deleted some parts which would require longer explanations and are not relevant in order to provide this general overview.

The goal of the prospectus is to provide sufficient information to the investor in order to make a decision whether he or she will invest in the offered securities. Therefore, it’s important that prospectuses comply with certain requirements.

A public offering prospectus (there are different types of prospectuses, like listing and admission to trade prospectus etc) of the securities shall contain all information which is presented in an easily analysable and comprehensible form and, according to the particular nature of the issuer and of the securities offered to the public, it has to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities.

A prospectus may consist of one document or several separate documents. The prospectus shall consist of a registration document which contains information on the issuer, a securities note which contains information concerning the securities to be offered to the public and a summary.

A prospectus consisting of one or several separate documents shall contain a summary in the same language as the prospectus, which shall provide the main information in a brief manner and in non-technical language. The summary together with the prospectus shall provide information concerning the main characteristics of the relevant securities helping the investors decide on investment in these securities. The summary of single format shall be prepared to facilitate the comparison between similar securities.

The summary shall contain the following warnings:

1) the warning that the summary should be read as an introduction to the prospectus and any decision to invest in the securities should be based on consideration of the prospectus as a whole by the investor;

2) the warning that in case a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might, under the national legislation of the home Contracting State (EU Member State) or host Contracting State, have to bear the costs of translating the prospectus before the legal proceedings are initiated;

3) the warning that no civil liability shall attach to any person solely on the basis of the summary or the translation thereof, unless it is misleading, inaccurate or contradicting the other parts of the prospectus, or together with the other parts of the prospectus it does not convey the main information, which would help the investor decide on investment in these securities.

Provided information

The following data shall be provided in the main information in regard to offers and securities:

Please click here to read the full post on Medium.

TokenizEU is a security token issuance platform managed by Comistar. We help to structure security token offerings and comply with the regulations in the European Union, as well as issue tokens and enable investors to participate in the offerings. To enable non-EU residents to participate in the offerings, we support creating SPVs (special purpose vehicle) in the European Union through Estonian e-residency program.