European Directive 2003/71/EC, regulating the prospectus that must be published in public offerings of financial instruments, was recently implemented in Italy through Legislative Decree 51 of March 28 2007.
Legislative Decree 51 has made big amendments to the Italian Financial Act.
The reform introduces new criteria for public offerings of financial products, aiming to provide stronger protection for investors and to allow offering procedures within the EU through a single prospectus.
The new legislation requires a prospectus to be approved, before publication, by Consob if the issuer of the EU financial instruments has its registered office in Italy.
Together with the relevant information relating to the issuer and the financial products (which must be comprehensible and clear), the prospectus must also contain a summary explaining the offering's risks and characteristics.
Consob will approve the prospectus if the information it provides is complete, consistent and comprehensible. It might also request additional information to protect investors against possible risks deriving from a lack of information.
The approved prospectus is effective in any other member state within the EU for the purposes of offering EU financial instruments.
The recent reform has strengthened the responsibility of the issuer, the guarantor (if any), any other person responsible for the information referred to in the prospectus and any offering subject for any damage suffered by investors who have reasonably relied on the correctness and completeness of the information set out in the prospectus.
In the case of false or omitted information that could influence a reasonable investor's investment decision, the intermediary responsible for the placement of the financial instruments could also be liable.
Action for damages has to be brought before a court within five years from the publication of the prospectus (or within two years after the investor's discovery of the false information or omissions).
According to the new regulation, the purchase or the submission of financial products may be withdrawn (within certain time limits) if the prospectus does not specify the maximum price or the conditions according to which the final price of the offering and the number of financial products are determined.
Specific regulations will have to be implemented by Consob to detail the procedures related to the applicability of Legislative Decree 51.