Inclusion of long financial time series in an equity prospectus
In this article, the Financial Supervisory Authority (FIN-FSA) presents its interpretation of the inclusion of long financial time series in equity prospectuses (full prospectus and secondary market prospectus). In connection with the FIN-FSA’s prospectus review, questions have arisen about the conditions under which this is possible. The Listing Act[1] reform will affect the financial information of prospectuses and possibly also the inclusion of long financial time series in prospectuses, so the interpretation will be reviewed once the changes come into force.
FIN-FSA’s interpretation – current prospectus regulations
Full equity prospectus
According to current prospectus regulations, a “full equity prospectus”[2] must include the issuer’s historical financial information covering the latest three financial years or such shorter period as the issuer has been in operation. Financial information in this context includes, among other things, audited financial statements, an operating and financial review, and performance measures.
The above-mentioned three financial year periods is the minimum requirement for a full equity prospectus. The FIN-FSA considers that if the issuer deems it necessary to include in the full equity prospectus certain selected financial information from a longer period than the latest three financial years, the prospectus must also include all financial information required by prospectus regulations for this longer period, such as an operating and financial review, and audited financial statements. The FIN-FSA’s interpretation is based on, among other things, ESMA’s Guidelines on disclosure requirements under the Prospectus Regulation. According to the guidelines, the operating and financial review must provide information for the periods for which historical or interim financial information is included in the prospectus and must be comparable to historical financial information presented elsewhere in the prospectus.[3]
In accordance with the FIN-FSA’s established interpretation, however, it is possible to include in a full equity prospectus a time series of the issuer’s turnover for a period longer than three financial years without also having to provide all the related other financial information required by prospectus regulations. In that case, a basic requirement is that the historical turnover time series of more than three financial years included in the prospectus is materially comparable throughout the presented turnover time period and that the presentation of the time series is not misleading. When assessing comparability and misleadingness, the issuer must take into account, among other things, any material changes in accounting principles and the transition from FAS to IFRS. The inclusion of a longer turnover time series in a prospectus often involves a case-by-case assessment, and issuers are therefore advised to contact the FIN-FSA well in advance of submitting a prospectus application so that the matter can be assessed in more detail.
Equity prospectus under simplified disclosure regime (secondary market prospectus)
An issuer with a sufficient listing history has the possibility to prepare an equity prospectus under the simplified disclosure regime (“secondary market prospectus”)[4]. The minimum requirements for financial information in a secondary market prospectus are more limited compared with a full equity prospectus. A material difference in the financial information requirements is, among other things, that the secondary market prospectus must include annual financial statements and half-yearly reports only for the 12-month period prior to the approval of the prospectus. An operating and financial review is not required.
In accordance with the FIN-FSA’s established interpretation, it is in principle possible to include in the secondary market prospectuses long financial time series for the period for which the issuer has published financial reports under the Securities Markets Act and stock exchange rules. This means that the secondary market prospectus does not need to include, for example, audited financial statements for the entire period of the financial time series included in the prospectus.
Factors to consider in addition to minimum requirements
The presentation of financial information in a prospectus is a matter that, if necessary, should be examined more broadly than the minimum requirements of the above-mentioned Delegated Regulation.
Article 6 of the Prospectus Regulation regulates the content of the prospectus. It requires the prospectus to contain necessary information which is material to an investor for making informed decision on, among other things, the issuer’s assets and liabilities, profits and losses, financial position and future prospects. This means, among other things, that if the issuer considers the inclusion of long financial time series in the prospectus to be material from the investor’s perspective, the issuer should assess the inclusion of such information in the prospectus.
When including longer time series in a prospectus, the prohibition on giving false or misleading information in accordance with chapter 1, section 3 of the Securities Market Act must always be taken into account.
Listing Act reform – Changes to financial information in a prospectus
The Listing Act reform will result in changes to the minimum requirements contained in Delegated Regulation (EU) 2019/980 for financial information in a prospectus. The amended minimum requirements of Delegated Regulation (EU) 2019/980 will apply from spring 2026 (including the new types of prospectuses, the EU Growth Issuance Prospectus and the EU Follow-on Prospectus) and summer 2026 (including the full equity prospectus). In addition, ESMA’s Guidelines on disclosure requirements under the Prospectus Regulation are intended to be revised during 2026 to reflect the changes to the Delegated Regulation brought about by the Listing Act reform.
In the FIN-FSA’s view, the main changes to the financial information in a full equity prospectus will be as follows: the minimum requirement for the financial information to be included in the prospectus is reduced from three to two financial years, the requirement to present capitalisation and indebtedness is removed, and the requirement to include an operating and financial review is replaced by a requirement to include management reports in the prospectus.
As the Listing Act reform will materially affect the minimum requirements for financial information in a prospectus, the FIN-FSA will reassess its interpretation of the inclusion of long time series in a prospectus in the light of the entry into force of the amendments. The FIN-FSA intends to provide information about the practical effects of the reform through a Market Newsletter and to organise, if necessary, a webinar on the effects of the Listing Act.
For further information, please contact:
- Ossi Eräkivi, Chief Specialist, ossi.erakivi(at)finanssivalvonta.fi, tel. +358 9 183 5262
[1] Regulation (EU) 2024/2809 of the European Parliament and of the Council
[2] Commission Delegated Regulation (EU) 2019/980, Annex 1
[3] ESMA Guidelines On disclosure requirements under the Prospectus Regulation (ESMA32-382-1138), Guideline 2 (Overarching principles for the operating and financial review)
[4] Prospectus Regulation (2017/1129) Article 14; Commission Delegated Regulation (EU) 2019/980, Annex 3