Treasury creates “designated activities” regime for public offers

The Public Offers and Admissions to Trading Regulations 2024, which Treasury made on 29 January, replace the assimilated EU Prospectus Regulation and create UK regime to replace the former EU regime. In doing so, it uses powers under FSMA 2023 to create a number of new “designated activities” in relation to which FCA will make rules. The new designated activities are:

• offering relevant securities to the public in the UK
• communicating an advertisement relating to an offer of relevant securities to the public in the UK
• disclosing, otherwise than in an advertisement, information relating to such an offer
• requesting or obtaining the admission of transferable securities to trading on a regulated market or on a primary MTF
• communicating an advertisement relating to the admission, or proposed admission, of transferable securities to trading on a regulated market or a primary MTF
• disclosing, otherwise than in an advertisement, information relating to the admission, or proposed admission, of transferable securities to trading on a regulated market
• admitting transferable securities to trading on a primary MTF

The Regulations also create a new regulated activity, in article 25DA RAO, of “operating an electronic system for public offers of relevant securities”, and noting that the existing regulated activities of operating an MTF or OTF do not apply where the new regulated activity does apply.

The Regulations ban offering relevant securities (including expanding the scope of relevant securities to include some non-transferable securities such as mini-bonds) to the public in the UK unless it is exempt. Exemptions include offers of low or high values specified in the schedule to the Regulations, offers only to qualified investors or fewer than 150 investors in the UK apart from qualified investors, offers to existing shareholders, offers to certain persons already connected with the company, certain offers in relation to takeovers and offers to directors and employees.

As well as giving FCA rule-making powers over prospectus requirements for regulated markets and over MTFs, the Regulations also amend various legislation, including the provisions of FSMA that relate to public offers.

Although the definitions, designation of activities, the ability to apply for approvals, permissions and VOPs and FCA’s rulemaking powers are already in force, the rest of the requirements will not take effect until FCA has made its relevant rules.