The European Commission said that it put forward on Thursday a proposal for the review of the Prospectus Directive to improve the protection of investors.
The proposal "increases legal clarity and efficiency in the prospectus regime and reduces administrative burdens for issuers and intermediaries", said the Commission in a news release.
It is also meant to enhance investor protection and ensure that the information provided is sufficient and adequate to cover the needs of retail investors.
The proposal was passed to the European Parliament and the Council of Ministers for consideration.
"These new rules meet the needs of issuers and investors and removes any unnecessary burdens on businesses," Internal Market and Services Commissioner Charlie McCreevy said, "It takes account of the lessons learned from the financial crisis and will ensure that investors have all the information they need."
The Prospectus Directive, which came into force on Dec. 31, 2003, lays down the rules governing the prospectus that has to be made available to the public in case a public offer or admission to trading of transferable securities in a regulated market takes place in the EU.
One of its major achievements is the introduction of a "passport mechanism" -- the prospectus approved by the competent authority in one member state is valid for public offers and admission to trading of securities in the entire 27-nation EU.
The main changes proposed are as follows: some types of securities issue will be subject to 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 ("retail cascades") and for employee share schemes, to name a few.