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Lexis®PSL Corporate and Market Tracker have conducted research to examine current market trends in respect of equity capital markets (ECM) transactions in 2019.
Background and approach
For this review of risk factor disclosure, we looked at 38 prospectuses in relation to 2019 Main Market IPOs or new admissions and ten AIM admission documents published in 2019. It forms part of our annual trend report which aims to provide insight into the current dynamics of ECM activity in the UK. The other parts of our 2019 trend report comprise:
• IPOs in 2019—Main Market and AIM
• Secondary Offers in 2019—Main Market and AIM
• Standard listings in 2019
• Legal and regulatory developments in Equity Capital Markets 2019
Prospectus Regulation risk factor disclosure requirements
The Prospectus Regulation (EU) 2017/1129 introduced more prescriptive requirements relating to risk factor disclosure in prospectuses from 21 July 2019. The primary purpose of the new requirements is to ensure that investors can assess all relevant risks and make an informed decision about investing in the issuer’s securities.
Article 7 of the Prospectus Regulation provides that for an equity prospectus, the summary should contain no more than 15 risk factors grouped into two sections:
• a brief description of the most material risk factors specific to the issuer under a heading ‘What are the key risks that are specific to the issuer?’ (Article 7(6)(c))
• a brief description of the most material risk factors specific to the securities under a heading ‘What are the key risks that are specific to the securities?’ (Article 7(7)(d))
Article 16 of the Prospectus Regulation provides that risk factors should be:
• specific to the issuer and/or the securities
• material for making an informed investment decision
• corroborated by the content of the prospectus, and
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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