Corporates ought to seriously consider the impact of the EU Prospectus Directive before embarking on a public offering in any of the EU states, warns Mercer Human Resource Consulting. The directive, published at the end of 2003, stipulates that corporates registered outside the EU must comply with the financial regulations of the first EU state into which they make a public share offering.
Under existing laws corporates have been subject to the regulations of each EU country in which they made a share offering. The new legislation comes in to force in June 2005.
Most corporates registered outside the EU, according to Mercer, have little understanding of the regulatory cost of a public offering in the EU's borders.
"The situation is confusing for companies because the directive has yet to be adopted by member states," says Alexy Armitage, European principal at Mercer's, "and so far the EU has provided very little guidance on compliance. Companies need to select a state based on past experience and, until the directive is adopted, they will continue to be regulated under existing laws."
Which country understands your business best? Which has the most financial service experience? Which country has the most pragmatic regulator? These questions, say Mercer's, ought to determine the thinking of ex-EU corporates looking to make a public offering in the EU.