Dorothee Fischer-Appelt American Bar Association Section of International Law

1. Convergence of Securities Laws?The European Prospectus and Transparency Directives in Comparative Perspective Dorothee Fischer-Appelt American Bar Association Section of International Law Fall meeting in Brussels 27 October 2005 2430108

2. Scope of Prospective Directive • Public offer definition • How to avoid an “offer to the public” • Offer to institutions • Offer to less than 100 persons per Member State • Offer in units of Euro 50K • Resales

3. Periodic and Current Disclosure • Prospectus Directive: Annual information update • Transparency Directive: Periodic financial reporting • Market Abuse Directive: Ad hoc disclosure of inside information • Compare to U.S. system

4. Shelf Registration and Incorporation by Reference • New EU system of shelf registration and incorporation by reference • Similar to U.S. shelf? • Two pitfalls: • Separate regulatory approval • No true EU system of integrated disclosure yet • Compare to new flexibility of U.S. shelf for WKSIs… • For debt: base prospectus and final terms (versus supplement)

5. Disclosure Obligations under Prospectus Regulation • EU schedules and building-block approach versus U.S. framework regulation • Convergence of rules based on IOSCO standards with remaining divergence in the detail • CESR level 3 guidance • See EU vs. U.S. MD&A requirements • Role of convergence by way of private conduct

6. Equivalence • Equivalence of prospectuses • Case-by-case review in Member States • But the future may bring level 2 measures… • Similar approach under Transparency Directive • Compare to U.S. requirements for foreign issuers • GAAP equivalence versus reconciliation? • CESR’s advice to Commission: GAAP equivalence, subject to a number of specified qualifications requiring “remedies”… • CESR recommends that remedies are audited

7. Equivalence (cont’d) – CESR’s Advice on U.S., Canadian and Japanese GAAP: Remedies • Additional disclosures • Disclosure A (narrative and/or quantitative) • Explanation of transactions and method for accounting • Assumptions, valuation methods or hypothesis used • Disclosure of fair value of assets if not already included • Disclosure B • Quantitative impact of transaction had it been accounted for under IFRS • Include gross effect of difference on profit and loss or shareholders’ equity, and effect next of tax • Supplementary statements • Significant differences, or specific statement missing • Pro formas based on third country GAAP, including limited restatement • Other remedies in “exceptional" situations • Industry-specific or unusual accounting outcome

8. Disclosure System and Corporate Governance • “The disclosure requirements of the present Directive do not prevent a Member State… to impose other particular requirements in the context of admission to trading of securities on a regulated market (notably regarding corporate governance).” • Binding and non-binding EU measures on corporate governance • Does securities law harmonisation entail some degree of harmonisation of corporate governance rules?

9. Liability • Is true convergence of EU standards possible without uniform liability rules? • Prospectus and Transparency Directives make a first step in harmonising certain aspects: • Responsibility statements • Limited liability for summary • Race to the bottom?

10. Regulators • The big question: Does Europe need a single regulator? • Contrasting the European approach

11. Convergence of Securities Laws?The European Prospectus and Transparency Directives in Comparative Perspective Dorothee Fischer-Appelt American Bar Association Section of International Law Fall meeting in Brussels 27 October 2005 2430108