23 August 2011

Government introduces deregulatory measures to help SMEs access equity financing

The Financial Secretary to the Treasury, Mark Hoban MP, has announced that two deregulatory amendments to the EU Prospectus Directive have been brought into effect a year early by the UK to help small businesses access equity finance more cheaply and effectively.

The new requirements come into law on 31 July 2011, allowing businesses to take advantage of the measures from 1 August this year. Implementing the amendments a year early means that fewer small issuers are caught by the prospectus regime. SMEs will now be able to raise equity finance up to €5 million (doubled from €2.5 million) before a costly prospectus must be produced and will also be able to target a larger pool of investors (up to 150 investors, from 100).

The Treasury believes that lifting a significant number of small companies outside of the obligations to issue a prospectus will make accessing equity finance more efficient and save UK SMEs around £12 million per year.