The European Securities and Markets Authority ("ESMA") has published a new version of its "Questions and Answers - prospectuses" (click here to view) which confirms at Question 77 that EU regulators should take a pragmatic approach to approving GDR prospectuses under the EU Prospectus Directive (Directive 2003/71/EC as amended by Directive 2010/73/EU) regime. Market participants will be aware that the UK Listing Authority had previously taken the view that a new prospectus should be prepared if new shares were deposited into a listed GDR facility after the original listing, which market participants believe would have been unworkable in practice.
ESMA has now clarified that "it is acceptable for a person applying for admission of GDRs to trading to produce a prospectus covering the admission of "up to" a specified number of GDRs". This will be the case so long as the number of GDRs in issue does not exceed the total issued share capital of the issuer at the date of the GDR prospectus approval. This will allow investors to exchange shares for GDRs (and vice versa) up to an agreed amount after the GDR facility is listed.
This is welcome news for GDR issuers and provides certainty for issuers who may have been planning a GDR issue. The UK Listing Authority does not appear to have made a comment on the new ESMA guidance but is expected to be bound by the guidance in practice.
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