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Growth prospectus is for SMEs (small and medium-sized enterprises) who are looking to raise capital via public offerings. Growth prospectus is a new term introduced in the new Prospectus Regulation (coming into force 21st of July, 2019), and it will simplify prospectus requirements for the SMEs in Europe. There are still plenty of requirements, and we’ll try to highlight some of the ESMA guidelines here.

The prospectus is a document which contains all the information about the public offering, including information about the issuer of securities (security tokens) and enables the investor to do an informed decision on whether to invest into particular offering or not. Prospectus usually contains registration document (information about the issuer), securities note (description of the issued security), and conclusion (warnings, main information, risks etc).

The investor should get all the necessary information from the prospectus, however, the requirements of the prospectus shouldn’t be overly burdensome for the issuer, which may cause the issuer to cancel the plans of doing any sort of public offering at all. The goal of the growth prospectus is just that — to optimize the requirements so they reflect the needs of the issuer and would be proportional to the offering.

Who will be able to use growth prospectus?

SMEs will be able to draft a growth prospectus, which is a simplified prospectus for smaller companies and smaller offerings. SME is a company with a maximum market capitalisation of 200m euros (under new rules, the current rule is 100m). That’s definitely sufficient for most of the companies issuing security tokens. Additionally, the growth prospectus will be allowed to be used by companies which trade on SME growth market with a market cap up to 500m euros and with maximum 499 employees, with a public offering up to 20m euros. However, SMEs which are traded on the regulated markets cannot use the growth prospectus to raise capital. The goal is to avoid creating a double regime for prospectuses (i.e some companies on the stock exchange have to create a standard prospectus while the other can create a growth prospectus).

Content of the prospectus

Below you can find considerations of content drafted by ESMA (European Securities and Markets Authority) in the Consultation Paper ( Draft technical advice on content and format of the EU Growth prospectus). I will highlight some of the points that allow the reader to understand the proposed requirements in more detail. Please note that the following text is taken out of the context of a longer document and this may cause some confusion.

Considerations on content

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