Swedish regulator supports prospectus requirement of €2.5m
Finansinspektionen (FI), the Swedish Financial Supervisory Authority, has responded positively to a proposal by the Ministry of Finance for a higher cutoff level above which prospectuses would be required from those seeking funding from Sweden’s capital market.
The Ministry’s proposal would see the currently level of €1m raised to €2.5m. This is still only half the €5m cutoff level allowed under proposed adjustments to existing rules in EU legislation covering prospectuses. The EU’s objective is to create a more competitive environment in which firms can raise money by issuing securities on capital markets.
FI said that the proposed €2.5m level for raising capital in the Swedish market struck the right balance between the costs associated with developing and delivering prospectuses, and the benefits of having insight into smaller companies that may be seeking to raise smaller amounts. Setting the level higher risks reducing the insight into smaller companies, which could increase the risk to investors of not getting enough information before investing, FI said.
Other Nordic markets – Norway, Denmark and Finland – as well as bigger markets in the EU, such as France, the UK and Germany, already have a cutoff level of €2.5m, and are set to raise it to €5m as a result of the proposed EU regulatory changes. This means that Sweden, even after its own change, will retain a much lower cutoff level than other countries in the European Economic Area (EEA), FI said.
Norway, Denmark, and Finland also apply national rules for prospectuses only offered to their domestic markets of between €100,00 to €2.5m. However, FI said it did not believe that Sweden should apply similar national rules.
FI also commented on proposals to allow greater use of foreign languages in prospectuses offered to Swedish investors.
It said that ensuring the Swedish language is used remained important. However, it added that to support the competitiveness of the Swedish capital market, and in mind of associated costs of replicating prospectuses in multiple languages, then foreign issuers of securities into the local market should be given more leeway to issue prospectuses solely in English.