Offering of securities and prospectuses
How is the offering of securities regulated?
The Securities Markets Act applies to offerings of securities regardless of whether the issuer is a public or private company or whether there is an intention to list the securities. The Securities Markets Act defines securities as being transferable, negotiable and issued to the public together with several other securities with similar rights.
The following general principles under the Securities Markets Act must always be complied with when offering securities:
- prohibition of procedures in violation of sound securities market practice
- prohibition against providing untruthful or misleading information
- provision of fair access to adequate information.
In addition, a prospectus must be published where the aggregate consideration in the offerings is more than EUR 8 million over a period of 12 months. Before launching an offering, the prospectus must be approved by the FIN-FSA, and it must be kept available to investors throughout the offer period.
There are, however, several exceptions to the obligation to prepare a prospectus.
An obligation to publish just a basic information document applies to offerings where the total consideration is at least EUR 1 million but does not exceed EUR 8 million within a 12-month period. The basic information document must be submitted to the FIN-FSA to address perustietoasiakirjat(at)finanssivalvonta.fi.
There is no obligation to prepare a prospectus if one of the following exemptions apply to the offer:
- the total consideration of the offerings within a 12-month period is under EUR 1,000,000
- the total consideration of the offerings within a 12-month period is at least EUR 1,000,000 but does not exceed EUR 8,000,000 (instead of a prospectus the offeror is obliged to publish a basic information document referred to in the Securities Market Act)
- the securities are offered exclusively to qualified investors
- the securities are offered to fewer than 150 investors
- the minimum investment or denomination per unit is at least EUR 100,000.
Even where no obligation to publish a prospectus arises in the context of offering securities, it will arise if listing on a regulated market, i.e. the stock exchange, is sought for the securities. There are also certain exceptions to this obligation.
There is no obligation to publish a prospectus when the aggregate consideration for securities offered over 12 months does not exceed EUR 8,000,000, admission is sought to have the securities subject to trading in Finland in a multilateral trading facility (First North Finland) and a company description under the rules of the marketplace is kept available to investors. The information in the basic information document referred to in the Securities Markets Act must be incorporated into the company description.
Furthermore, in accordance with the Crowdfunding Act, a recipient of crowdfunding does not need to publish a prospectus when securities are offered in Finland through a crowdfunding intermediary for a total consideration of less than EUR 5,000,000 (from 22 July 2019 onwards less than EUR 8,000,000) over 12 months and the recipient of the funding publishes the information required in the Crowdfunding Act (amended 20 May 2019).
The total value of the offers is calculated separately for shares and bonds, and it is not affected by the final outcome of subscriptions.
For further information on these and other grounds for exceptions, see the Securities Markets Act (chapter 4, including changes in Securities Market Act applicable from 1 January 2019), Regulation (EU) 2017/1129 of the European Parliament and of the Council (article 49) and the Market Newsletter 4/2018.
An offering to the public means communications seeking to provide shareholders or prospective investors information for making an investment decision.
The offering may take place in any format and through any communication channel, and it always seeks the sale or other transfer of securities against consideration from one holder to another. The consideration may be cash, securities or something else.
A prospectus may be published when it has been approved by the Financial Supervision Authority. An application for approval of a prospectus is made in writing to the FIN-FSA. The processing period of a prospectus is 20 banking days when the securities of the company are being offered to the public for the first time or when a new company is being listed on the stock exchange. In other circumstances, the processing period of a prospectus is 10 banking days. The date on which the application was filed is not included in the processing time.
We charge a processing fee for an approval decision in accordance with our price schedule.
In connection with an application for approval, the FIN-FSA must be provided with the following:
- Cross-reference list
- Any documents incorporated in the prospectus by reference, e.g. financial statements
- Power of attorney, if an agent is employed who is not an attorney.
The application must indicate for what purpose the prospectus was prepared and which prospectus requirements were observed in preparing it. When applying lighter prospectus requirements, the justifications must also be presented. In addition, other material issues concerning the offering and prospectus must be described, and if the intention is to notify the approved prospectus to another EEA state, this must be mentioned. If permission regarding, for example, the language or publication schedule of the prospectus is sought, the justifications must be provided in the application. The application must also indicate who functions as the contact person during the inspection period, and who should be the recipient of the approval decision and invoice of the inspection.
The cross-reference list indicates which parts of the prospectus provide which information under the content requirements (e.g. Annexes of the Prospectus Regulation). The cross-reference list should be provided in as much detail as possible, taking all sub-items of the content requirements into account. Where some of the required information items does not exist or some requirement does not apply to the issuer, this should be mentioned, and the justifications for omitting an item should be given when necessary.
The application and appendices may be submitted to us either
- by email to kirjaamo(at)finanssivalvonta.fi, we recommend encrypted email or
- by mail to Finanssivalvonta, P.O. Box 103, FI-00101 Helsinki.
- Please contact us before filing an application so that the need for arranging a prospectus meeting can be determined.
- If the prospectus concerns a merger, demerger or another corporate transaction, presents pro forma financial information or involves other special characteristics, such as a need to diverge from the language requirements for a prospectus, we request that you contact us well in advance before filing an application.
- If the prospectus concerns listing on a stock exchange, please contact IFRS Supervision within the FIN-FSA for a review of the IFRS financial statements.
- If a prospectus is submitted to us with material deficiencies, we may request the applicant to supplement the application. The supplement must be filed within 10 banking days of submitting the application. In this case, the deadline for approving the prospectus begins from the date when the supplementary information is provided.
- We provide comments on the prospectus primarily in writing on a separate comment form. We submit these comments in encrypted email to the person indicated in the application. There are usually several rounds of comments.
- Any changes made to the prospectus after filing a prospectus application must be made visibly, for example with the track changes function.
- The comment forms are returned to us completed, while also submitting a new version of the prospectus both clean and tracked for changes (compared always to the most recent version submitted to us).
- Where an initial public offering is concerned or the company offers its securities for the first time, we also request the marketing material concerning the offer for comments during the inspection period. We may also make a request to receive any investment analyses and due diligence reports for information purposes.
- We will submit the decision concerning the approval in a scanned copy by email to the contact person. The original decision and invoice of the inspection will be sent later by mail to the address indicated in the application.
- The issuer must submit the approved prospectus and any documents incorporated therein by reference to the public register of prospectuses maintained by us. Please see the instructions here.
- Any marketing material related to a prospectus must always be submitted to us at the latest when marketing begins, regardless of whether we have commented on it in connection with the inspection.
More information on procedures related to a prospectus inspection
Requirements for the contents and publication of prospectuses are harmonised across the European Economic Area. Present prospectus requirements based on the Prospectus Directive and on Commission Regulation (EY) 809/2004 will be repealed when EU Regulation (EU) 1129/2017 and other regulations given by virtue of that come into effect on 21 July 2019.
With the prospectus approved by the FIN-FSA, the securities can be offered to the public or application can be made for their admission to trading on a regulated market in any EEA state by requesting the FIN-FSA to give notification of the prospectus in another EEA state (the ‘European passport’).
The requirements of the basic information document in accordance with the Securities Market Act are set out in the relevant decree of the Ministry of Finance.
More information on the requirements for the content and structure of a prospectus or a basic information document:
- Content requirements for an EU prospectus are provided in the Commission Prospectus Regulation (EC) No 809/2004 in effect until 20 July 2019
- Content and structure of an EU prospectus, Securities Markets Act (chapter 4) in effect until 20 July 2019
- From 21 July 2019 onwards Regulation (EU) 2017/1129 of the European Parliament and of the Council is applicable for the prospectuses
- Decree of the Ministry of Finance on the content of the basic information document referred to in chapter 3, section 2 of the Securities Market Act (in Finnish only)
Recommendations, guidelines and interpretations concerning prospectuses:
- Regulations and guidelines 6/2013 Securities offerings and listings (not updated with the amendments in the Securities Market Act after 31 December 2018)
- Regulations and guidelines 15/2013 Marketing of financial services and products (in Finnish only)
- ESMA recommendations on the implementation of Commission Prospectus Regulation (EC) No 809/2004 (pdf)
- ESMA Guidelines on Alternative Performance Measures (pdf)
- Questions and answers on prospectuses by the European Securities and Markets Authority' (ESMA)
A prospectus may be published once it has been approved by the FIN-FSA. It must be published and kept available to investors in an electronic format on the issuer’s website. It must be published with its text and format identical to the approved original version. Any documents incorporated in the prospectus by reference are part of the prospectus and must be published in the same manner as the prospectus.
A prospectus concerning the offering of securities must be published at the latest two banking days before the beginning of the offer period or at least six banking days before the earliest end date of the offer, where a new share to be listed on a regulated market is concerned.
A prospectus will be valid until the closing of the offer or until the securities have been admitted to trading on a regulated market, but for no longer than 12 months after approval of the prospectus.
If an error is found in the information contained in the prospectus during its validity, or other such information arises which may have material importance for investors, the prospectus must be supplemented without undue delay. In the context of a supplementation of a prospectus, the investors as a rule receive the right to cancel their investment decision. The cancellation period is two banking days from the publication of the supplement. The supplement must state the right of cancellation and describe the cancellation procedure.
A supplement must be approved by the FIN-FSA before publication. The maximum processing period for a supplement is 7 banking days from the submission of the application. A supplement must be published in the same manner as the prospectus.
Further information on the date and manners of publication of a prospectus and on supplementation
- Ministry of Finance Decree on Prospectuses Referred to in Chapters 3-5 of the Securities Markets Act (1019/2012) (Available in Finnish)
- Regulations and guidelines 6/2013 Securities offerings and listings
- Commission Delegated Regulation (EU) No 382/2014 - regulatory technical standards for publication of supplements to the prospectus
- Commission Delegated Regulation (EU) 2016/301 - regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements