In mid-July, the Bulgarian parliament adopted amendments to the Public Offering of Securities Act (POSA), thus introducing measures into national law for the implementation of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (the Regulation).
The main purpose of the Regulation is to facilitate the access of companies, especially small and medium-sized ones, to various forms of financing through the capital market . The Regulation also aims to ensure the necessary level of protection for investors in securities. This is achieved by improving the regulations with respect to the preparation, approval and distribution of the prospectus. The prospectus is published by issuers, bidders and other persons when publicly offering securities or when seeking the admission of securities to trading on a regulated market. As per the amendments in POSA, the prospectus has to be approved by the Financial Supervision Commission (FSC).
Pursuant to the explicitly provided possibility in Article 3, paragraph 2 of the Regulation, the amendments to the POSA introduce a national exemption from the obligation to publish a prospectus when publicly offering securities. The exemption refers to issues of securities with a total value of less than the BGN equivalent of EUR 3 000 000, calculated for a period of 12 months. Public offering of securities below this threshold without a published prospectus may be carried out only on the territory of Bulgaria and is not subject to certification under Regulation (EU) 2017/1129.
In case of public offering of a securities issue with a total value of less than the BGN equivalent of EUR 3 000 000, admission to trading of a multilateral trading facility is requested. Instead of a prospectus, the issuer or the offeror should prepare a document according to the rules of the multilateral trading facility and present it to the FSC no later than 5 working days before the securities are admitted to trading.
In case of public offering of a securities issue with a total value of less than the BGN equivalent of EUR 3 000 000, and when no admission is requested to trading on a regulated market or to a multilateral trading facility, instead of a prospectus, respectively a document for admission to trade, the issuer prepares and publishes a document for public offering with a simplified form and content.
For securities without public offering, but with request for admission to trading of a multilateral trading system, a document is prepared in accordance with the rules of the system. In these cases, the POSA and the Regulation do not apply to the admission to trading.
With the purpose of informing potential investors, disclosure requirements are introduced, which do not represent a disproportionate administrative burden for issuers.
When public offering of securities above the threshold of the BGN equivalent of EUR 3 000 000 requires the admission to trading of a multilateral trading facility, a prospectus should be prepared and approved. If the issuer meets the requirements of Article 15 of the Regulation, the issuer may draw up an EU growth prospectus with the content set out in Commission Delegated Regulation (EU) 2019/980 of 14 March 2019 supplementing Regulation (EU) 2017/1129.
In order to ensure the protection of the interests of investors, it is suggested that prior to publication, the public offering document be submitted to the FSC. In order to alleviate the administrative burden for issuers, the FSC does not provide for the deliberate approval of the public offering document, but at the same time mechanisms and powers are provided for the FSC to intervene if the information needs to be supplemented.