The Consumer Composite Investments (Designated Activities) Regulations 2024

Commission Delegated Regulation (EU) 2019/980

13.—(1) Commission Delegated Regulation (EU) 2019/980 of 14 March 2019 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Commission Regulation (EC) No 809/2004(1) is amended as follows.

(2) In Article 33 (specific summary for the UK Growth prospectus)—

(a) for paragraph 9, substitute—

“9.   Where securities are also subject to designated activity rules made under section 71N of the Financial Services and Markets Act 2000 by virtue of regulation 6 of the Consumer Composite Investments (Designated Activities) Regulations 2024, the competent authority may require the SMEs, the issuers and offerors referred to in Article 15(1) of Regulation (EU) 2017/1129 to substitute the information referred to in section 3 of Annex 23 to this Regulation with the following information—

(a) under the section titled ‘What is this product?’, the nature and main features of the product, including—

(i) the type of product;

(ii) its objectives and the means for achieving them, in particular whether the objectives are achieved by means of direct or indirect exposure to the underlying investment assets, including—

(aa) a description of the underlying instruments or reference values,

(bb) a specification of the markets the product invests in,

(cc) where applicable, specific environmental or social objectives targeted by the product,

(dd) how the return is determined;

(iii) a description of the type of investor to whom the product is intended to be marketed, in particular in terms of the ability to bear investment loss and the investment horizon;

(iv) where the product offers insurance benefits, details of those insurance benefits, including the circumstances that would trigger them;

(v) the term of the product, if known;

(b) under the section titled ‘What are the risks and what could I get in return?’, a brief description of the risk-reward profile comprising the following elements—

(i) a summary risk indicator, supplemented by a narrative explanation of that indicator, its main limitations and a narrative explanation of the risks which are materially relevant to the product and which are not adequately captured by the summary risk indicator;

(ii) the possible maximum loss of invested capital, including information on—

(aa) whether the investor can lose all invested capital;

(bb) whether the investor bears the risk of incurring additional financial commitments or obligations, including contingent liabilities in addition to the capital invested in the product;

(cc) where applicable, whether the product includes capital protection against market risk, and the details of its cover and limitations, in particular with respect to the timing of when it applies;

(iii) appropriate information on performance;

(iv) where applicable, information on conditions for returns to investors or built-in performance caps;

(v) a statement that the tax legislation of the United Kingdom may have an impact on the actual payout;

(c) under the section titled ‘What happens if [the name of the issuer] is unable to pay out?’, a brief description of whether the related loss is covered by an investor compensation or guarantee scheme and if so, which scheme it is, the name of the guarantor and which risks are covered by the scheme and which are not;

(d) under the section titled ‘What are the costs?’, the costs associated with an investment in the product, comprising—

(aa) both direct and indirect costs to be borne by the investor, including one-off and recurring costs, presented by means of summary indicators of these costs and, to ensure comparability, total aggregate costs expressed in monetary and percentage terms, to show the compound effects of the total costs on the investment;

(bb) a clear indication that advisors, distributors or any other person advising on, or selling, the product will provide information detailing any cost of distribution that is not already included in the costs specified in paragraph (aa), so as to enable the investor to understand the cumulative effect that these aggregate costs have on the return of the investment;

(e) under the section titled ‘How long should I hold it and can I take money out early?’—

(i) where applicable, whether there is a cooling off period or cancellation period for the product;

(ii) an indication of the recommended and, where applicable, required minimum holding period;

(iii) the ability to make, and the conditions for, any disinvestments before maturity, including all applicable fees and penalties, having regard to the risk and reward profile of the product and the market evolution it targets;

(iv) information about the potential consequences of cashing in before the end of the term or recommended holding period, such as the loss of capital protection or additional contingent fees;

(f) under the section titled ‘How can I complain?’, information about how and to whom an investor can make a complaint about the product or the conduct of the issuer or a person advising on, or selling, the product;

(g) under the section titled ‘Other relevant information’, a brief indication of any additional information documents to be provided to the investor at the pre-contractual or the post-contractual stage, excluding any marketing material.”;

(b) in paragraph 10, for the words “points (c)” to the end, substitute “points (a) to (g) of paragraph 9”;

(c) for paragraph 11, substitute—

“11.   Where the information set out in points (a) to (g) of paragraph 9 is substituted for the information in section 3 of Annex 23 to this Regulation pursuant to paragraphs 9 or 10, the information shall be included as a distinct section of the specific summary and that section shall clearly be identified as including the information set out in points (a) to (g) of paragraph 9.”;

(3) In Annex 14 (securities note for retail non-equity securities)—

(a) in item 5.3.1, in point (c), for the words from “Regulation (EU) No 1286/2014” to “Directive 2014/65/EU” substitute “designated activity rules made under section 71N of the Financial Services and Markets Act 2000 by virtue of regulation 6 of the Consumer Composite Investments (Designated Activities) Regulations 2024”;

(b) in item 7.4, for the words from “points (c)” to “No 1286/2014” substitute “points (a) to (g) of Article 33(9) of this Regulation”;

(4) In Annex 16 (securities note for secondary issuances of non-equity securities)—

(a) in item 5.3.1, in point (c), for the words from “Regulation (EU) No 1286/2014” to “Directive 2014/65/EU” substitute “designated activity rules made under section 71N of the Financial Services and Markets Act 2000 by virtue of regulation 6 of the Consumer Composite Investments (Designated Activities) Regulations 2024”;

(b) in item 7.3.a, for the words from “points (c)” to “No 1286/2014” substitute “points (a) to (g) of Article 33(9) of this Regulation”;

(5) In Annex 23 (specific summary for the UK growth prospectus), in item 1.5.1, for point (e) substitute—

“(e) where applicable, a comprehension alert which must read ‘You are about to purchase a product that is not simple and may be difficult to understand.’”;

(6) In Annex 27 (UK growth securities note for non-equity securities)—

(a) in item 1.8.4, for the words from “points (c)” to “No 1286/2014” substitute “points (a) to (g) of Article 33(9) of this Regulation”;

(b) in item 4.4.3, for the words from “Regulation (EU) No 1286/2014” to “Directive 2014/65/EU” substitute “designated activity rules made under section 71N of the Financial Services and Markets Act 2000 by virtue of regulation 6 of the Consumer Composite Investments (Designated Activities) Regulations 2024”.

(1)

EUR 2019/980. Relevant amendments were made by S.I. 2019/1234. There are other amendments which are not relevant.