BRUSSELS, Sept 24 (Reuters) - The European Union's executive body on Thursday proposed a revamp of the bloc's rules on issuing securities in a bid to cut company red tape and better protect investors.
The current EU rules on prospectuses introduced in 2005 map out what issuers must tell investors when they are offering shares in the 27-nation bloc.
The European Commission's reform must be adopted by EU governments and the European Parliament to come into force.
"These new rules meet the needs of issuers and investors and remove any unnecessary burdens on businesses. It takes account of the lessons learned from the financial crisis and will ensure that investors have all the information they need," EU Internal Market Commissioner, Charlie McCreevy said in a statement.
The main changes proposed are:
-- some types of securities issue, small companies, small lenders, rights issues and government guarantee schemes will face less comprehensive disclosure requirements;
-- the format and content of the prospectus summary have been improved
-- there are clearer exemptions from the obligation to publish a prospectus when companies sell through intermediaries and for employee share schemes;
The proposal requires the summary of information to retail investors to be simple, comprehensible and not restricted to any predetermined number of words.
It would also strengthen legal redress for investors.
"A logical consequence of having a more substantial summary document is to attach civil liability on the basis of the summary not only if it is misleading, inaccurate or inconsistent, when read together with the other parts of the prospectus, but also if it does not provide key information enabling investors to take informed investment decisions," the Commission said.
(Writing by Huw Jones; Editing by Victoria Main)