Proportionality and Coherence are Key Factors for Guidance on Risk Description in Prospectuses
Regarding the consultation on the ESMA Guidelines on presentation of risk factors in the prospectus Deutsches Aktieninstitut points out the right balance between the objective of ESMA to avoid overly generic/lengthy descriptions of risk factors and flexibility for issuers in their assessment of relevant risk factors to be included in the prospectus. Proportionality and coherence are key factors for guidance on risk factors. For instance, the requirement for specificity should not result in the obligation for issuers to disclose trade secrets. Nor should issuers be prohibited to continue to use the presentations of the risk factors of their annual financial report for its prospectuses. This is also important in order not to confuse investors facing different risk factors in different reports/documents. The coherent description of the same risk factors also promotes comparability and thus serves to protect investors.