Warning Notice no. 4/2019 of September 18, 2019 - ESMA guidelines on risk factors pursuant to the new Prospectus Regulation and revocation of CONSOB Recommendations n. 7105108 (29.11.2007) and n. 0096857 (28.10.2016) concerning, respectively, the risk factors and the "Warnings for the investor" of the prospectuses

Warning Notice no. 4/2019 of September 18, 2019

Subject: ESMA guidelines on risk factors pursuant to the new Prospectus Regulation and revocation of CONSOB Recommendations n. 7105108 (29.11.2007) and n. 0096857 (28.10.2016) concerning, respectively, the risk factors and the "Warnings for the investor "of the prospectuses.

Prospectus Regulation (Reg. (UE) n. 1129/2017) - which came into effect on 21.7.2019 and is applicable in all EU countries, together with the related implementing provisions [1] - exceeds the previous Directive[2], through binding provisions for the formulation and presentation of risk factors in the prospectus and in the Summary.

According to the new European regulations, the risk factors included in the prospectus must concern the most significant and specific risks for the issuer and its securities and must be confirmed by the content of the prospectus. The new legislation also indicates the methods of classification and description, requiring to explain clearly and concisely how the risk factor may affect the issuer or the securities.

In the case of the retail prospectuses, the regulation summary has relevance, too. This Note must be prepared in a concise and easily understandable form: It must also provide a limited selection of specific risks (maximum 15 risk factors) that the issuer judges of greatest relevance for the investor's investment decision.

To further integrate the regulatory framework on the subject, on 29 March 2019 the European Securities and Markets Authority (ESMA) published, on its website - pursuant to art. 16 (4) ("Risk Factors") of the Prospectus Regulation - its own guidelines ("Guidelines") concerning risk factors in English. The Guidelines will soon be published in the official languages of the European Union countries and it will be made also available on the CONSOB website.

These Guidelines further the adequate, targeted and more optimized information on risk factors, in an easily analysable, concise and understandable form, assisting the competent authorities in their examining of the prospectus pursuant to Article 20 of the Prospectus Regulation. Those who are responsible for the prospectus will also have to take this into account in order to speed up the approval process related to the prospectus.

CONSOB decided to comply with the Guidelines in implementing the new regulations, taking into account the relevant new elements introduced by it.

Given the above, it is recalled the attention of those who are responsible for the prospectus about the compliance with the new EU regulations governing the prospectus and, in particular, about the provisions relating to risk factors and the Summary note, so as supplemented by the ESMA Guidelines.

Given the above, it is believed that the aforementioned EU legislation on the prospectus now supersedes the indications provided in the past by CONSOB to national market operators, with specific reference to risk factors and Warnings. With regard to the Warnings, it is emphasized that their purpose is assigned, by the current European regulation on the prospectus, to the risk factors and to the Summary note, whose identification criteria and preparation modalities are explicitly defined.

CONSOB Recommendations n. 7105108 (29.11.2007) and n. 0096857 (28.10.2016) concerning the risk factors and the "Warnings for the investor" are therefore revoked with reference to the offer and quotation documents prepared according to the new regulation.

As required by the ESMA Guidelines, CONSOB incorporates the same Guidelines in its supervisory practices and monitors that issuers, and other subjects responsible for drawing up the prospectus, be compliant with it, being able, wherever necessary, to exercise the powers established by Article 114, paragraph 5, of the Consolidated Law on Finance (Testo unico della finanza – Tuf).

THE PRESIDENT
Paolo Savona


[1] EU Regulation 2019/980 of 14 March 2019 on the form, content, control and approval of the prospectus; EU Regulation 2019/979 of 14 March 2019 containing, among other things, technical regulations for the managing of information summary keys, publication and classification of the prospectus, advertisements, supplement and the prospectus notification portal.

[2] Directive 2003/71/EC.