Prospecting the future - Shaping prospectus provisions for the benefit of SMEs

Abstract

The European Commission has started the review of the prospectus regulation scheme in 2013 in order to facilitate the development of the Capital Markets Union. One of the aims of the reforms intends to give access to small-medium sized enterprises (SMEs) to the capital markets throughout Europe. The reason behind that is to make those companies less dependent on loans and other debt-based capital raising methods to unlock their full potential. Studies have shown that the European SME sector is heavily dependent on banks for financing, which actually hurts their prospects in the long run. Gaining access to the public capital markets can be mainly achieved by getting listed. Unfortunately, there are many regulatory hurdles which a company must face in order to successfully launch themselves on stock exchanges. One of such is the preparation of the so-called prospectus document. The aim of the paper is to explore the mandatory content requirements for prospectuses in Europe for SMEs and through that to find out if the current provisions are adequate.