Huhne promises to stand up for markets in prospectus row

Date: 06/09/01

European capital markets demanding a radical overhaul of draft rules on sale prospectuses have been promised help from the MEP in charge of scrutinising the proposals for the European Parliament.

Chris Huhne, rapporteur for the economic and monetary affairs committee, agrees that the proposed rules will have to be changed in response to criticism from exchanges specialising in small companies and start-ups. These include London's Alternative Investment Market (AIM), Paris' Nouveau Marche and Frankfurt's Neuer Markt.

They warn that small companies wanting to go public would be forced to meet similar costly prospectus requirements as multinationals listed on the main stock exchanges. This would cripple the specialised 'second tier' markets that have set out to capture this business. "We read that the AIM, Nouveau Marche and the Neuer Markt are all going to go out of business. That suggests to me that it [the current package of draft rules] ain't going to happen. We are going to have to fix it. It will clearly have to be tweaked. One of the objectives is to make it easier for young companies and start-ups to raise money. The one thing we don't want and the Commission does not want is to make it harder."

Huhne was speaking ahead of a meeting of EU diplomats on the issue today (6 September) and tomorrow.

The proposals tabled in June were touted as a step towards a pan-EU capital market which would reduce restrictions on companies seeking investors across the bloc. For example, they would be able to issue prospectuses for share offerings anywhere in the Union in English, provided a brief translation was made in the local language.

But aside from wrapping small firms in red tape, experts say they would also hinder bond market sales and would hamper the sale of stocks of US-listed companies on EU markets.

Tim Ward, head of issuer services at the London Stock Exchange (LSE), which runs the AIM market, welcomed Huhne's comments. He said the LSE had already tabled possible amendments to Brussels that would make the draft law "both acceptable and workable".

European capital markets demanding a radical overhaul of draft rules on sale prospectuses have been promised help from Chris Huhne, the MEP in charge of scrutinising the proposals for the European Parliament.