Compensation & Benefits: EU Commission proposes exempting all employee share schemes from the Prospectus Directive

Posted on 9th January, 2009

Estimated reading time 2 minutes

The proposal extends the current employee share schemes exemption to all companies even if they  are not listed on a regulated market in the EEA,  but it may take some time to come into force.

On 24 September 2009 the EU Commission published it proposed amendments to the Prospectus Directive (see Resources below) as part of a review and simplification process on which it has already consulted.

Currently, the prospectus Directive allows issuers of securities to employees an exemption for the obligation to issue a Prospectus if the issuer is a company whose shares are traded on an European Economic Area (“EEA”) “regulated market” as long as it is accompanied by a document containing certain prescribed information.

This has been seen as highly disadvantageous to non-EU issuers and EU-issuers who are not listed on a regulated market (as defined).  The burden of such issuers having then to prepare and issue a full prospectus is seen as involving excessive costs which are not justified in terms of investor protection.


Therefore, it is proposed that the existing exception is extended to cover employee share schemes of companies not admitted to trading on a regulated market in the EEA.   This will then cover all offers of securities to current and former employees and directors irrespective of whether the company is publicly listed, private, within the EEA or outside it.  However, issuers will still have to issue a document giving certain basic information about the shares, and the reasons for a details of the offer.

Timing – may involve quite a wait

The Directive amendments will take effect 20 days after the final version of the amending directive is published in the Official Journal of the European Union.  This may take some months or even years.


Full EU Commission proposal

For further information on requirements of the Prospectus Directive as they apply to employee share plans or to discuss the issues raised, please contact Guy Abbiss ( on +44 (0) 203 051 5711.


Content is for general information purposes only.  The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice.  If you require assistance in relation to any issue, please seek specific advice relevant to your particular circumstances.