Dutch prospectus requirements brought in line with EU regime

The Dutch ministry of finance has announced it will alleviate the prospectus requirements for companies to attract capital ahead of a significant update to the country’s exemption regulation of the financial supervision act (Vrijstellingsregeling Wft).

The update, which will take effect from 5 June, will crucially allow companies to raise €12 million on a yearly basis through issuing securities without preparing a prospectus that is approved by the Dutch financial regulator (AFM). This is a €7 million increase from the current maximum of €5 million. The amendment follows several important changes initiated in the EU Listing Act (Regulation EU) 2024/2809).

The Dutch minister of finance opted not to utilise a member state option to maintain the €5 million limit. This move is a departure from the more risk-averse position previously adopted by the Dutch government, which maintained a lower limit than the permitted EU maximum.

A prospectus is a document containing detailed financial information about a company offering securities – both debt and equity securities – inviting potential investors to buy those securities. An approved prospectus is mandatory if securities are offered to the public and/or admitted to trading on a regulated market in the Netherlands or another EU member state. Preparing a prospectus and having it approved is time consuming and burdensome, both in terms of the contents of the prospectus and regulatory fees.

The new €12 million exemption – as the current €5 million exemption – comes with the obligation to file an ‘information document’ with the AFM, setting out information for it to read like a summary prospectus. The standard applicable to this document will be amended following the introduction of the €12 million exemption.

Under the current, €5 million exemption, the exemption can be separated for offerings of shares and bonds by the same issuer. Under the new exemption regime, such issuances should be calculated together excluding offerings for which a prospectus has been published.

Another change is that, under the current €5 million exemption, issuances by group companies are taken into account when making the calculation. Under the new exemption, the numbers will be calculated per issuer or offeror, meaning that, within a group, different entities can benefit from the €12 million exemption.

This update will bring the Dutch regime in line with the EU’s recently amended prospectus regime. The EU Prospectus Regulation (EU 2017/1129) overhauled securities disclosure following concerns that SMEs across the EU were facing too many barriers to accessing public capital. The regulation was first adopted in 2017 and came fully into effect in July 2019.

Several changes to Dutch prospectus regulations have been in force since December 2024 through the EU Listing Act, which aims to make EU public capital markets more attractive, particularly for small and medium-sized enterprises (SMEs). In March, shorter and more simplified EU growth and follow-on prospectuses were introduced in the Netherlands ahead of these final changes taking effect in June.

From 5 June, the AFM said it will carefully review the information documents required when a company is exempt from publishing a prospectus. It said it would also continue to require comprehensive, consistent, and transparent prospectuses for larger offerings to protect investors. The AFM said that since 2020, with the exemption being limited to €5 million, securities with a value of approximately €2 billion have been offered using this exemption out of which 40% related to investment in objects, including real estate, crypto, metals, wine and whisky, which are considered to be high-risk and issuers promised huge returns on investment.The AFM highlighted that several of the exempted investment schemes were fraudulent, noting 66 registered signals in 2024, in connection with potential Ponzi schemes. The AFM is of the view that the increase to €12 million is a major risk for criminal behaviour and could be harmful to investor protection.

Lous Vervuurt, a financial regulation expert at Pinsent Masons in Amsterdam, said that securities issuing companies, in particular those in the SME sector, may view these changes as a positive step forward for capital raising in the Netherlands. “This is mostly a good move for investors and might enable some SME capital attraction, but we don't expect any serious changes to the capital markets,” she said.

Although supervisory authorities have expressed some concerns that the changes could enable more criminal activity, including investor fraud, Gijs De Haan, also a financial regulation expert in Amsterdam, agreed that this latest update is more likely to help market sentiment. He added: “Companies may also choose to use the existing exemption to offer securities in packages for a countervalue of at least €100,000 to avoid having to publish a prospectus,” he said. For that exemption to apply, there is no obligation at all to publish an information document. “We therefore believe the fears the supervisory authorities have are justified but the road to bypass is already paved.”