Prospectus proceedings in Finantsinspektsioon

Which instruments can be qualified as securities

The Prospectus Regulation applies in certain conditions to offers of transferable securities as defined in Article 4 (1) (44) of Directive 2014/65/EU of the European Parliament and of the Council (“MiFID II”). Based on MiFID II, it can be concluded that an instrument is a transferable security if it:

  1. is freely transferable;

  2. is negotiable on the capital markets;

  3. is in a standardized format;

  4. has similar characteristics to a typical transferable security.

“Transferability” should be understood as a general characteristic of the instrument which can be transferred. This means that the instrument (which can be a right, an obligation or a contract) is technically transferable. Specific or temporary restrictions on the disposal of an instrument may not preclude its transferability. For example, the transferability of securities may be reduced on a contractual basis, such as selling restrictions applicable in a specific country or by a lock-up agreement between the issuer and existing shareholders.

Negotiability on the capital markets should be understood as a general feature of an instrument being capable for trading on the capital markets. The term “capital market” is widely interpreted and does not include only regulated markets, but any environment where the buying and selling interests of securities can be met. It is also of primary importance that securities can, at least in theory, be traded on the capital market (i.e. that they are not subject to general restrictions on their trading and that they are sufficiently standardised).

Securities are standardised if they have certain common features resulting in interchangeability.

Typical transferable securities are set out in an open list in Article 4 (1) (44) of MiFID II. In general, it means that the instrument gives the investor the right to participate in the business of the issuing company (voting rights) and/or to obtain some kind of financial benefit. 

Obligation to publish a prospectus and the information document 

A prospectus must be prepared and published for public offerings of securities in accordance with Regulation (EU) 2017/1129 of the European Parliament and of the Council (the "Prospectus Regulation") if the total sales price of the securities offered across all Member States exceeds EUR 8,000,000 over a one-year period. This prospectus must be approved by the Finantsinspektsioon.
A prospectus is not required if:

  • The offer of securities is exclusively to qualified investors;

  • The offer of securities is to fewer than 150 natural or legal persons per Member State who are not qualified investors;

  • The securities offered have a denomination per unit of at least EUR 100,000;

  • The offer of securities is to investors who acquire securities for a total consideration of at least EUR 100,000 per investor, per each separate offer.

A complete list of exemptions from the obligation to publish a prospectus can be found in Article 1(4) of the Prospectus Regulation.
Even if there is no obligation to publish a prospectus in connection with an offering of securities, a prospectus must still be published if the securities are being applied for admission to trading on a regulated market, i.e., listing on a stock exchange. There are also certain exemptions from this obligation, which are listed in Article 1(5) of the Prospectus Regulation.

Requirements for the Information Document for the Offering of Securities

As of May 13, 2024, a new regulation by the Minister of Finance came into effect in Estonia, simplifying capital raising for small and medium-sized enterprises (SMEs) in the Baltic region by establishing unified requirements for information documents for smaller public offerings of securities. The new requirements, which came into effect in Estonia, reduce costs for companies by allowing them to prepare a single information document for public offerings in all three Baltic countries. Previously, companies had to prepare separate documents according to the laws of each country. As of July 1, a new regulation in Estonia raised the threshold for the obligation to prepare a securities prospectus from EUR 5 million to EUR 8 million, harmonizing it with Latvia and Lithuania.

For the organization of a securities offering, where the total value of the securities offered within a one-year period is between EUR 1,000,000 and EUR 8,000,000, the issuer must prepare an information document in accordance with the Minister of Finance regulation (Requirements for the Information Document for the Offering of Securities). The information document does not need to be approved by the Finantsinspektsioon and does not need to be submitted to the Finantsinspektsioon. Securities cannot be offered in other member states based on this information document. The issuer may always choose to prepare a prospectus in accordance with the Prospectus Regulation.
The Minister of Finance regulation does not apply to:

  • Securities and offerings referred to in Article 1(2)–(4) of Regulation (EU) 2017/1129 of the European Parliament and of the Council;

  • Offerings of securities for which a key investment information document has been prepared under Article 23 of Regulation (EU) 2020/1503 of the European Parliament and of the Council;

  • Offerings of securities for which a prospectus has been voluntarily prepared under Article 4(1) of Regulation (EU) 2017/1129 of the European Parliament and of the Council.

Applying for Prospectus Approval at the Finantsinspektsioon

We recommend contacting the Finantsinspektsioon before submitting an application for prospectus approval and providing details about the planned offering or listing (offered instruments, volume of the offering, purpose, and schedule). Please use the email address [email protected] for this purpose.
To apply for prospectus approval, please submit the following documents to the Finantsinspektsioon:

  1. An application for approval signed by the issuer or authorized representative, indicating a contact point with whom the Finantsinspektsioon can communicate regarding the prospectus procedure.

  2. The prospectus (in electronic form with search capability).

  3. Appendices to the prospectus (e.g., financial statements, articles of association).

  4. A document proving the payment of the handling fee (the handling fee is 2000 euros).

  5. A cross-reference table indicating the location of information required by the Prospectus Regulation in the prospectus or justifying its omission.

Detailed requirements for the documents to be submitted are set out in Article 42 of Commission Delegated Regulation (EU) 2019/980. Please send the application for prospectus approval and accompanying documents to the email address: [email protected].

Documents should be submitted to the Finantsinspektsioon in Estonian or English. According to the Securities Market Act, a translation of the prospectus into Estonian must also be published if the prospectus is not in Estonian but the securities are being offered in Estonia.

If the documents submitted in the application do not comply with the legal requirements, including if the prospectus does not contain all necessary information in the opinion of the Finantsinspektsioon with investor interests in mind, the Finantsinspektsioon will provide comments for supplementing or correcting the deficiencies in the prospectus. The Finantsinspektsioon will respond via email to the applicant within 10 working days of the application submission or the submission of an amended version of the prospectus.

If the issuer's securities have not previously been publicly offered or admitted to trading on a regulated market, the Finantsinspektsioon may provide the first feedback on the prospectus registration application within up to 20 working days of the application submission. Usually, the Finantsinspektsioon exercises this right.

During the prospectus procedure, the Finantsinspektsioon typically provides comments and clarifications multiple times.

When responding to the comments from the Finantsinspektsioon, please submit the amended documents electronically in two versions: one with "track changes" and the other as a "clean" version.

Along with the amended prospectus, please submit an explanatory response indicating the part of the prospectus that has been amended in response to each comment.

The Finantsinspektsioon has the right to refuse to approve the prospectus if the issuer, offeror, or applicant for admission to trading on a regulated market cannot or does not wish to make the required changes or provide additional information within the deadline set by the Finantsinspektsioon.

Upon approval of the prospectus, the Finantsinspektsioon will send the applicant a digitally signed decision of the Management Board electronically.

If the securities are to be publicly offered or admitted to trading on a regulated market in one or more member states or in a member state other than the home member state, the prospectus approved by the home member state and its possible appendices are valid on the basis of notification in any number of host member states. To forward the prospectus to other member states, a corresponding request must be submitted to the Finantsinspektsioon, based on which the Finantsinspektsioon can notify the competent authority of each host member state. The competent authority of the host member state has the right to require a translation of the prospectus summary into a language accepted by the competent authority of the host member state.

If new significant circumstances, material errors, or material inaccuracies related to the information in the prospectus, which may affect the assessment of the securities, arise after the prospectus has been approved but during the offering period or before the start of trading on a regulated market, a supplement to the prospectus must be approved by the Finantsinspektsioon.

The supplement is approved within a maximum of five working days in the same manner as the prospectus and published at least as rigorously as the original prospectus. If necessary, the summary and its translations are also updated to take into account the new information in the supplement. The handling fee for approving a supplement to the prospectus is 1000 euros.

Publication of the Prospectus and Offering Advertisement

The prospectus must not be published before it has been approved by the Finantsinspektsioon. After approval, the issuer, offeror, or applicant for admission to trading on a regulated market must make the prospectus available to the public within a reasonable time before the public offering of the relevant securities or their admission to trading or at the latest when the public offering begins or the securities are admitted to trading.

The prospectus must be published in one of the following ways:

  • On the website of the issuer, offeror, or applicant for admission to trading on a regulated market;

  • On the website of the financial intermediary involved in the offering or sale of the securities, including the paying agent;

  • On the website of the regulated market where admission to trading is sought, or if admission to trading on a regulated market is not sought, on the website of the organizer of a multilateral trading facility.

The Finantsinspektsioon publishes all approved prospectuses and a list of approved prospectuses on its website. However, this does not constitute making the prospectus available to the public.

The prospectus must be published in a section of the website that is easily accessible upon entering the site. It must be possible to download, print, and search the prospectus in an electronic format that cannot be modified.

Advertisements related to the offering must comply with the general requirements set out in Article 22 of the Prospectus Regulation and the detailed requirements specified in Commission Delegated Regulation (EU) 2019/979, as well as the requirements set out in the Advertising Act.

If there is no obligation to publish a prospectus under the Prospectus Regulation, the information provided by the issuer or offeror to qualified investors or specified groups of investors, including information disclosed in meetings related to the offering of securities, must be made available to all qualified investors or specified groups of investors to whom the offer is directed.

General advertising requirements from the Advertising Act apply to offerings for which no prospectus is required. This means that the advertisement must not be misleading, must contain truthful information, and must clearly indicate that it is an advertisement.

Legal acts and guidelines