BETTER FINANCE Responds to ESMA Public Consultation on the Guidelines on Supplements Which Introduce New Securities to a Base Prospectus
BETTER FINANCE welcomes ESMA's initiative to clarify when a supplement to a base prospectus may or may not be used to introduce new securities. We strongly support the overall aim of the guidelines to strengthen supervisory convergence between NCAs, enhance legal certainty, and prevent the misuse of supplements, mainly when introducing new or complex product types.
Our response stresses that supplements should be used solely to update information on securities already described in the base prospectus, rather than to expand their scope. While planning ahead is important, we believe the inclusion of anticipated product types should be encouraged but not mandatory, to avoid excessive or vague disclosures. We also call for greater granularity in defining what constitutes a “new type of security,” and urge ESMA to explicitly treat ESG-labelled instruments, such as green or sustainability-linked bonds, as distinct, unless they are clearly anticipated as such in the original base prospectus, as those are of high greenwashing risk.
BETTER FINANCE further advocates for a proportionate, modular disclosure framework, combining a general base prospectus with short, tailored, and investor-friendly supplements. Legalistic or compliance-driven language should be avoided in favour of clarity, simplicity, and comparability, in line with MiFID II standards. While the Guidelines are a step in the right direction, they would be further strengthened by providing practical criteria to help NCAs and issuers determine when a new prospectus is needed. Finally, consistency with current best practices and other disclosure frameworks, such as the KID, is essential to maintaining investor trust in the EU's prospectus regime.
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