SMEs can now raise up to ?4.4m without a prospectus

SMEs can now raise equity finance up to ?5 million (doubled from ?2.5 million), and approach up to 150 investors, rather than 100, before the requirement to produce a prospectus is triggered.

A prospectus must be published when securities are offered to the public or are admitted to trading on a regulated market. The EU Prospectus Directive 2003 establishes a series of thresholds, which dictate when a prospectus must be produced.

The UK is the first EU country to implement the new thresholds. By lifting a significant number of SMEs outside of the obligations to issue a prospectus, the Treasury estimates UK SMEs will save around ?12m per year.

John Walker, national chairman of the Federation of Small Businesses, welcomes the new rules:

“Extending the number of investors and increasing the prospectus value will help more small businesses access equity finance and show there are more options than just going to the bank for credit. What’s important is that small businesses are aware of the alternative routes to finance.”

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