On 12 June 2025, ESMA published its Final Report on the more detailed content requirements of the changes introduced by the EU Listing Act to the EU Prospectus Regulation, including in relation to the standardised format and ESG disclosure. ESMA seems to have taken onboard feedback received to its consultation in October 2024 and made several helpful changes. Set out below are the main changes that will be of interest to participants in the debt capital markets. In addition, ESMA has also published its technical advice on civil prospectus liability, proposing that no changes are necessary at this time.
The EU Listing Act1 (which entered into force on 4 December 2024) introduced several changes to the EU Prospectus2. Many of those changes required the European Securities and Markets Authority (ESMA) to set out the more detailed requirements in the form of technical standards, which will not come into effect until June 2026. ESMA has now published its Final Report setting out its technical advice and the updated annexes to the Commission Delegated Regulation (EU) 2019/9803 as well as the RTS concerning the CDR on metadata (the Final Report). This follows the Consultation Paper published on 28 October 2024 (the Consultation Paper). The Final Report covers several areas including the content and format of prospectuses and the new requirements around ESG disclosure. ESMA has responded to the feedback received to the Consultation Paper and has made several helpful changes. Set out below is a high level review of the changes that ESMA has made in its Final Report.
Cover note
ESMA notes that several respondents to the Consultation Paper raised concerns about the content requirements of the proposed cover note. The requirement for a cover note has therefore been dropped in order to avoid unnecessary burdens for issuers and also pre-empt the risk of divergent approaches emerging regarding the cover note.
Standardised format and sequencing
ESMA acknowledges that having a strict format and sequence requirement may be problematic and burdensome and would not work well for all types of securities. Accordingly, the strict format and sequence will not apply to debt base prospectuses but only standalone prospectuses relating to IPOs or “plain vanilla” debt prospectuses (registration documents) prepared by a single issuer. This change is to be particularly welcomed, because the strict order in Annexes to the Amending Regulation4 would have been difficult to apply to base prospectuses, particularly if other “linked” disclosure annexes would have been mandatory. The only exception is that Annex II to the Amending Regulation applies to the registration document if it is applied in a tripartite base prospectus. From a practical perspective this provides a pragmatic solution.
Streamlining the single non-equity disclosure framework
Following feedback received, ESMA has revised the single non-equity registration document (Annex 6) and non-equity securities note (Annex 13) and has flagged more clearly whether the provisions apply to retail only or wholesale only. This is something market participants have been quite concerned about but it is much clearer now, so this is helpful clarity. In addition, the duplicative disclosures has been deleted and certain requirements amended. ESMA has clarified that the cashflow statement will be required for retail issuances only. This is in accordance with current requirements. ESMA has further removed requirements around disclosing KPIs, clauses preventing a change of control and the wider tax disclosure. All of this is very positive.
ESG disclosure
ESMA has redrafted and amended several sections of the new Annex 21 on ESG disclosure following comments received. However, ESMA does not agree with concerns raised that the Annex should be limited to use of proceeds bonds and sustainability-linked bonds (SLBs) and that applying the Annex to a wider range of instruments including conventional issuances by green issuers, green bond repackaging would impact product innovation as the disclosure requirements are sufficiently broad. In addition, ESMA has made changes to the definitions of “use of proceeds” bonds and “sustainability-linked” bonds, although ESMA is of the view that it would be problematic to try to align the definitions with the EuGB Regulation5 given that “use of proceeds” is not defined in there and the definition of SLBs is already harmonised to the extent possible.
Responses to the consultation asked that the definitions should be aligned further with other regulations, such as the SFDR6, MiFID II7 and Taxonomy Regulation8. ESMA has rejected this due to the current plans to revise SFDR. It is a little disappointing that ESMA did not take up the question of what “non-equity securities advertised as taking into account ESG factors or pursuing ESG objectives” under Article 13 (1)(g) of the EU Prospectus Regulation means as this leaves some uncertainty, although ESMA has said it will consider providing further guidance in the form of Q&As.
The specific requirements regarding ESG risk factors, though, has been deleted given that this will already be covered by the general risk factor requirements.
Many of the disclosure requirements in Annex 21 are Category A or B information and therefore will need to be incorporated into an issuer’s base prospectus. ESMA has decided that where an issuer publishes a voluntary pre-issuance disclosure under the EuGB Regulation they will still need to comply with the Annex 21 disclosure requirements. However, ESMA may revisit this and will add the voluntary pre-issuance disclosure to the list of documents that can be incorporated by reference.
ESMA also changed the approach as regards information on the underlying. If ESG features are taken into account or ESG objectives pursued by the underlying then information needs to be provided, but only if the securities are advertised as having an ESG component or pursuing an ESG objective with an underlying material for the assessment of those ESG factors or ESG objectives. This is important for structured products with sustainability features. Presumably this approach is something the market can live with.
EuBG factsheets
As requested by many respondents, ESMA has clarified that issuers can incorporate by reference the EuGB factsheet into the prospectus under Article 13(1a)(a) of the EU Prospectus Regulation and will be exempt from having to apply the disclosure requirements in Annex 21 if:
- all information from the EuGB factsheet is incorporated by reference into the prospectus; and
- the EuGB factsheet cannot be incorporated by reference at the time the prospectus is approved, the prospectus contains a statement that the EuGB factsheet will be incorporated by reference via the final terms.
Plain language
Although ESMA states that it may explore work relating to the use of plain language at a future date, it notes that there are inherent challenges including the fact that what constitutes “plain language” may have a different meaning depending on the relevant EU language.
ESMA Final Report on technical advice concerning civil prospectus liability
Alongside the Final Report, ESMA also published its Final Report on Technical advice looking at reforming the current civil prospectus liability provisions, following a Call for Evidence published on 28 October 2024. ESMA is of the view that no changes are needed to the existing civil prospectus liability regime under Article 11 of the EU Prospectus Regulation as although there are differences between the rules on civil liability across EU Member States, responses to the consultation indicate that market participants do not see this as a barrier at this point. However, in case the European Commission would still like to reform this area ESMA suggests a couple of areas that could be looked at: the rules around safe harbours on immunity from liability for forward-looking statements and the aspects of private international law, especially Rome I and Rome II that are used to determine which laws apply to a liability case. The European Commission is now tasked with presenting a report to the European Parliament and to the Council by 31 December 2025 on this topic and assessing whether further harmonisation of prospectus liability in the EU is necessary.
Next steps
The European Commission has 3 months to adopt ESMA’s proposals. The new requirements will apply from 10 June 2026. Market participants now need to digest the new rules and take the time to ensure that they are ready to adhere to the new requirements in respect of any issuances of debt securities from that date.
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