Cross-Border Offers of Securities in the EU: The Standard Life Flotation

Abstract

This article reviews the use in the flotation of Standard Life plc of the prospectus passport for cross-border offers of securities within the EU that was introduced by the Prospectus Directive (2003). The Standard Life flotation was a major test for the new law on prospectuses and, overall, it came through it well. The prospectus was approved in the UK and the passport mechanism worked smoothly in facilitating the offer of securities into Ireland, Germany and Austria. The Standard Life transaction suggests that national regulatory agencies are willing to make the regime work effectively and to find pragmatic, case-by-case solutions where experience reveals shortcomings in its design. The Committee of European Securities Regulators (CESR) has also played a constructive role. The article notes that simplification of the passporting regime does not extend as far as civil liability, which remains a complex area. Those contemplating passported share issuance activity within Europe must still take account of multiple, potentially quite divergent, prospectus liability regimes. Jurisdiction and choice of law rules mean that they could be sued in more than one country and liability could be determined under different national laws. The article provides examples of differences between British, Irish and German law on prospectuses that could be relevant to companies that are considering making a passported offer. This article also considers the role of private enforcement and its interrelationship with public enforcement in the European context. These are particularly hard questions to address from a European perspective because of the nationally fragmented nature of the mechanisms of both public and private enforcement. The article's review of (the lack of) modern British cases on civil liability to investors for prospectus or other disclosures supports the view that levels of private enforcement in Europe are low but the article cautions against attaching too much significance to this finding.