Prospectus, KID & PPM under EU law

Anyone making a public offer to purchase securities in an EU/EEA member state, or seeking admission to trading on a regulated market within the EU, must prepare a prospectus and have it approved by the competent national authority in their home member state — unless an exemption applies.

The meaning of public offer is broad, but there are significant exceptions. Under Art. 1(4) of Regulation (EU) 2017/1129, no prospectus has to be issued if one of the following criteria is met (these requirements are alternative, not cumulative):

• The offer is addressed only to qualified investors.
• The offer is addressed to fewer than 150 persons per member state (other than qualified investors).
• The minimum investment per investor is EUR 100,000.
• The total consideration of the offering is below EUR 8 million across the EU within 12 months.

Note: Member states may set their own national threshold up to this ceiling, so the exact figure varies by country.

‘Securities’ are, for example, shares and bonds, but also security tokens or other standardised capital market instruments that are available for mass trading. However, there are also various exempted types of securities, e.g. employee participation plans or short-term money market instruments.

The EU Growth Prospectus is a lighter-touch disclosure regime available to SMEs and certain non-SMEs for eligible offerings up to EUR 20 million. It offers reduced content requirements compared to a full prospectus while still requiring approval by a competent authority — making it particularly relevant for startup and growth-stage companies accessing EU capital markets. LEXR can advise on whether this regime applies to your offering.

Under the PRIIPs Regulation (EU) 1286/2014, a KID is a short, standardised document informing retail investors about the key features of a packaged retail or insurance-based investment product (PRIIP). It is required when offering PRIIPs to retail clients. Unlike a prospectus, a KID does not require approval by a competent authority. Approval by a prospectus review office is not required.

A PPM is a comprehensive description of an investment opportunity in the context of a private placement of securities and financial instruments. The PPM is not regulated under EU law and is generally not a legal obligation, but is often expected as the basis for an investment when selling to professional investors. A well-drafted PPM also reduces prospectus liability risk where the offering falls within an exemption.

Civil liability under the EU Prospectus Regulation applies to persons — such as the issuer, its directors or offerors — who provide incorrect, misleading, or incomplete information in a prospectus or KID. Member states apply their own civil liability frameworks, but the obligation is harmonised at EU level. Criminal liability may additionally arise under national law for intentional misrepresentation or non-disclosure of material facts. Even in the case of PPMs or other exempt offerings, investors may be able to claim damages in the event of a loss. Accordingly, it is important that a prospectus, a KID, a PPM, and similar documents are carefully drafted.

Once a prospectus is approved by the competent authority in the home member state, it can be passported to any other EU/EEA member state via a notification mechanism coordinated by ESMA. This means a single approved prospectus can cover public offerings across all 30 EEA states — no re-approval required in each country. LEXR handles the passporting notification process on your behalf.

A Swiss FinSA prospectus is not automatically valid in the EU, and an EU-approved prospectus is not automatically valid in Switzerland. A separate assessment is required for cross-border use. Under certain conditions, however, a prospectus or Key Information Document approved in one EU member state may also be recognised for use in Switzerland and vice versa. LEXR advises on both Swiss and EU offerings from a single team and can coordinate a combined Swiss/EU offering efficiently.