Prospectus Liability in Europe: The Relevant Breach of Duties

Abstract This article focuses on the relevant breach of duties under art 11 of the Prospectus Regulation (EU) 1129/2017, which provides only few elements of the private enforcement model, leaving the specific choices of the civil liability regime to the Member States. The main purpose of this paper is to underline the contradiction that exists between (i) a rigid formalism in the Prospectus Regulation and the extensive administrative rulebook and related soft law, which imposes binding formats and contents of prospectuses in order to enhance maximum harmonised investor protection and reduce issuers’ costs in Europe, and (ii) the existing different prospectus liability regimes among the European Member States, which undermine the effectiveness of Union law on prospectuses. In order to highlight this contradiction, the contribution analyses the different legal bases of prospectus liability provided in a sample of Member States, focusing on the different (and sometimes conflicting) methods of defining, from the defendant’s side, the persons responsible and liable for the incompleteness or the incorrectness of the prospectus, and, from the plaintiff’s side, the persons who can sue for damages. In this scenario, the Court of Justice of the European Union (CJEU) has recently brought some clarity as regards the potential scope of prospectus liability claims, thus revealing how important it is to solve the above-mentioned contradiction soon.