The entry into force of the European Union Prospectus Directive, the European Union’s (EU) decision to require companies to adopt international accounting standards, and the adoption in December 2004 of the Transparency Directive constituted significant milestones in the development of a unified capital market in the EU. The new regulations will soon allow investors to benefit from enhanced and more easily comparable disclosure documents. Issuers will benefit from the passporting regime, which will simplify EU-wide public offerings and allow them to tap into larger liquidity pools.
These benefits will, however, come at the price of material increases in the cost to issuers of preparing disclosure documents, the administrative burden of keeping these documents up to date, and probable delays in launching retail-targeted debt securities. Infrequent EU and non-EU issuers will probably bear the bulk of these costs. Non-EU issuers are also confronted with uncertainty as to which accounting standards will ultimately be recognised as equivalent to the International Financial Reporting Standards (IFRS). They are, therefore, facing the risk of expensive account restatements or reconciliations.
