Consultation paper on The Prospectus Rules (January 2025)

Summary

This is a GFSC consultation paper proposing a replacement for the Prospectus Rules, 2021, which govern prospectuses for Category 2 Controlled Investments and for Registered Collective Investment Schemes under the Registered Collective Investment Scheme Rules, 2021. The proposals do not change the core regulatory framework but expand certain exemptions, add new disclosure requirements, and extend notification obligations. A draft of the proposed new rules is attached and the Commission is seeking stakeholder feedback before finalising them.

• Exemptions widened: Promotions of Category 2 Controlled Investments to a newly defined Professional Investor would fall outside the rules, and the identifiable category exemption would rise from 50 to 200 persons; new exemptions also proposed for court sanctioned schemes, Takeover Code offers, and entities in the process of listing.
• New disclosures: Registered collective investment schemes would need to disclose valuation methodology and NAV publication, fees/charges/expenses, issue and redemption arrangements, and details of the investment manager/adviser; all prospectuses would need to disclose borrowing limits or restrictions.
• Conflict of interest narrowing: Disclosure of significant beneficial ownership in service providers would only be required where it represents an actual or potential conflict of interest.
• Schedule amalgamation: Schedule 2 (risk warning statement) would be merged into Schedule 1 (other mandatory statements), with Schedule 1 wording aligned to the Registered Collective Investment Scheme Rules.
• Circulation clarifications: Clarifies that the application fee for Category 2 Controlled Investment prospectuses is separate from the scheme application fee, and that a registered CIS prospectus cannot be circulated until the Commission has issued its declaration of registration.
• Extended notification duties: Investors and the Commission would need to be notified of changes to valuation methodology/NAV, fees and charges, issue/redemption procedures, and manager/adviser (for registered CIS), and of changes to investment strategy/restrictions, borrowing/hedging powers, and voting/other rights (for all prospectuses).

The consultation invites written responses via the Commission's Consultation Hub by 3 March 2025; after reviewing feedback the Commission will issue a public feedback paper and publish final rules, which as drafted would come into force in 2025 (specific date left blank in the draft).

Key obligations

• Stakeholders wishing to comment must submit responses via the Consultation Hub section of the GFSC website by 3 March 2025.
• Under the proposed rules, offerors of registered collective investment schemes would need to disclose valuation methodology/NAV, fees and charges, issue/redemption arrangements, and manager/investment adviser details in the prospectus.
• Under the proposed rules, all prospectuses would need to disclose borrowing limits or restrictions.
• Under the proposed rules, offerors would need to immediately notify investors and the Commission of specified changes to prospectus disclosures (valuation methodology, fees, issue/redemption procedures, manager/adviser for registered CIS; investment strategy, borrowing/hedging powers, and voting rights for all prospectuses).

Applies to

issuers of prospectuses for Category 2 Controlled Investments, persons operating or providing services to registered collective investment schemes, investors in Category 2 Controlled Investments or Registered Collective Investment Schemes

Deadlines

• 3 March 2025: Deadline for stakeholders to submit responses to the consultation paper via the Commission's Consultation Hub.