CJEU, 4th chamber, June 3, 2021, No C-910/19

THE COURT (Fourth Chamber),

1 This request for a preliminary ruling concerns the interpretation of Article 3(2) and Article 6 of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ 2003 L 345, p. 64), as amended by Directive 2008/11/EC of the European Parliament and of the Council of 11 March 2008 (OJ 2008 L 76, p. 37) (‘Directive 2003/71’).

2 The request has been made in proceedings between Bankia SA and the Unión Mutua Asistencial de Seguros (UMAS) concerning Bankia’s liability, as issuer of an offer of shares for subscription, on the grounds of information given in a prospectus published prior to that offer.

Legal context

European Union law

3 Directive 2003/71 was repealed, with effect from 20 July 2019, by Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (OJ 2017 L 168, p. 12). However, given the date of the facts in the main proceedings, the provisions of Directive 2003/71 remain applicable.

4 Recitals 10, 16, 18, 19, 21 and 27 of Directive 2003/71 stated as follows:

‘(10) The aim of this Directive and its implementing measures is to ensure investor protection and market efficiency, in accordance with high regulatory standards adopted in the relevant international fora.

…

(16) One of the objectives of this Directive is to protect investors. It is therefore appropriate to take account of the different requirements for protection of the various categories of investors and their level of expertise. Disclosure provided by the prospectus is not required for offers limited to qualified investors. In contrast, any resale to the public or public trading through admission to trading on a regulated market requires the publication of a prospectus.

…

(18) The provision of full information concerning securities and issuers of those securities promotes, together with rules on the conduct of business, the protection of investors. Moreover, such information provides an effective means of increasing confidence in securities and thus of contributing to the proper functioning and development of securities markets. The appropriate way to make this information available is to publish a prospectus.

(19) Investment in securities, like any other form of investment, involves risk. Safeguards for the protection of the interests of actual and potential investors are required in all Member States in order to enable them to make an informed assessment of such risks and thus to take investment decisions in full knowledge of the facts.

…

(21) Information is a key factor in investor protection; a summary conveying the essential characteristics of, and risks associated with, the issuer, any guarantor and the securities should be included in the prospectus. To ensure easy access to this information, the summary should be written in non-technical language and normally should not exceed 2 500 words in the language in which the prospectus was originally drawn up.

…

(27) Investors should be protected by ensuring publication of reliable information. The issuers whose securities are admitted to trading on a regulated market are subject to an ongoing disclosure obligation but are not required to publish updated information regularly. Further to this obligation, issuers should, at least annually, list all relevant information published or made available to the public over the preceding 12 months, including information provided to the various reporting requirements laid down in other Community legislation. …’

5 Article 2(1) of that directive provided:

‘For the purposes of this Directive, the following definitions shall apply:

…

(d) “offer of securities to the public” means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. This definition shall also be applicable to the placing of securities through financial intermediaries;

(e) “qualified investors” means:

(i) legal entities which are authorised or regulated to operate in the financial markets, including: credit institutions, investment firms, other authorised or regulated financial institutions, insurance companies, collective investment schemes and their management companies, pension funds and their management companies, commodity dealers, as well as entities not so authorised or regulated whose corporate purpose is solely to invest in securities;

(ii) national and regional governments, central banks, international and supranational institutions such as the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organisations;

…

(iv) certain natural persons: subject to mutual recognition, a Member State may choose to authorise natural persons who are resident in the Member State and who expressly ask to be considered as qualified investors if these persons meet at least two of the criteria set out in paragraph 2;

(v) certain [small and medium-sized enterprises (SMEs)]: subject to mutual recognition, a Member State may choose to authorise SMEs which have their registered office in that Member State and who expressly ask to be considered as qualified investors;

…

(h) “issuer” means a legal entity which issues or proposes to issue securities;

…’

6 Article 3 of that directive, entitled ‘Obligation to publish a prospectus’, provided:

‘1. Member States shall not allow any offer of securities to be made to the public within their territories without prior publication of a prospectus.

2. The obligation to publish a prospectus shall not apply to the following types of offer:

(a) an offer of securities addressed solely to qualified investors; …

…

3. Member States shall ensure that any admission of securities to trading on a regulated market situated or operating within their territories is subject to the publication of a prospectus.’

7 Article 4 of that directive provided for exemptions from the obligation to publish a prospectus for certain types of securities.

8 Article 5 of Directive 2003/71 provided:

‘1. Without prejudice to Article 8(2), the prospectus shall contain all information which, according to the particular nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities. This information shall be presented in an easily analysable and comprehensible form.

2. The prospectus shall contain information concerning the issuer and the securities to be offered to the public or to be admitted to trading on a regulated market. It shall also include a summary. The summary shall, in a brief manner and in non-technical language, convey the essential characteristics and risks associated with the issuer, any guarantor and the securities, in the language in which the prospectus was originally drawn up. The summary shall also contain a warning that:

…

(d) civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.

…’

9 Article 6 of that directive, entitled ‘Responsibility attaching to the prospectus’, provided:

‘1. Member States shall ensure that responsibility for the information given in a prospectus attaches at least to the issuer or its administrative, management or supervisory bodies, the offeror, the person asking for the admission to trading on a regulated market or the guarantor, as the case may be. The persons responsible shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their names and registered offices, as well as declarations by them that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.

2. Member States shall ensure that their laws, regulations and administrative provisions on civil liability apply to those persons responsible for the information given in a prospectus.

However, Member States shall ensure that no civil liability shall attach to any person solely on the basis of the summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.’

Spanish law

10 Article 28 of Ley 24/1988, de 28 de julio, del Mercado de Valores (Law 24/1988 on the Securities Market of 29 July 1988, (BOE No 181 of 29 July 1988, p. 23405), in the version applicable in the main proceedings, provided:

‘1. Responsibility for the information given in a prospectus attaches at least to the issuer, the offeror or the person asking for the admission to trading on an official secondary market and the directors of those persons, in accordance with the provisions laid down by regulation.

…

2. The persons responsible for the information in the prospectus shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their names and registered offices. They must also declare that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.

3. In accordance with the provisions laid down by regulation, all the persons referred to in the preceding paragraphs shall, where appropriate, be liable for any damage caused to the holders of securities acquired as a result of incorrect information or the omission of relevant data from the prospectus or from the document to be prepared, where appropriate, by the guarantor.

…

4. No liability shall attach to the persons referred to in the preceding paragraphs on the basis of the summary, or of its translation, unless it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus, or does not provide, when read together with the other parts of the prospectus, key information that will assist investors when deciding whether or not to invest in the securities.’

11 Article 30a(1) of that law provided:

‘An offer of securities to the public for sale or subscription means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to those securities.

The obligation to publish a prospectus shall not apply to the following types of offer which, as a result of the effects of this law, will not be deemed to be public offers:

(a) an offer of securities addressed solely to qualified investors.

…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

12 During 2011, Bankia issued an offer of shares to the public, divided into two tranches, for the purpose of becoming listed on the stock exchange. One tranche was addressed to investors other than qualified investors, within the meaning of Article 2(1)(e) of Directive 2003/71 (‘retail investors’) and to the employees and directors of that company, while a second tranche, the ‘institutional tranche’, was addressed to ‘qualified investors’.

13 The two offer tranches were offered from the date on which the prospectus was registered with the Comisión Nacional del Mercado de Valores (Securities Market Commission, Spain), that is to say 29 June 2011. The ‘book-building period’, in which potential qualified investors could submit subscription bids, ran between that date and 18 July 2011. On 18 July 2011 the share price was set at EUR 3.75 for both the retail tranche and the institutional tranche. The subscription bids were selected and became irrevocable once they had been confirmed. The corresponding shares were allotted to investors on the same day and were officially listed the following day.

14 In the context of the subscription offer, Bankia contacted UMAS, an establishment active in the mutual insurance sector and which is regarded as a qualified investor. On 5 July 2011 UMAS signed a EUR 600 000 purchase order for 160 000 shares at EUR 3.75 each, which came to a total amount of EUR 600 000.

15 Following a revision of Bankia’s annual financial statements, the shares lost almost all their value on the secondary market and were suspended from trading.

16 UMAS brought proceedings against Bankia seeking, primarily, annulment of the share purchase order, on the grounds that the consent was vitiated by error, and, in the alternative, a declaration that Bankia was liable on the grounds that the prospectus was misleading. The first instance court annulled the share purchase order and ordered repayment of the consideration given by UMAS, without giving a ruling on Bankia’s liability.

17 Bankia appealed against that judgment before the Audiencia Provincial de Madrid (Provincial Court, Madrid, Spain), which, in contrast to the first instance court, dismissed UMAS’ action for annulment, but upheld the action for damages concerning the prospectus.

18 Following that judgment, Bankia brought an appeal on a point of law before the referring court, the Tribunal Supremo (Supreme Court, Spain), which had already held, in proceedings brought by retail investors, that the prospectus issued by Bankia contained serious inaccuracies regarding that company’s true financial situation.

19 The referring court notes that the fact that there was a tranche of the offer which was addressed to retail investors made mandatory the publication of a prospectus, which, without being addressed to qualified investors, was able to influence the investment decision of the qualified investors. According to the referring court, neither Directive 2003/71 nor Spanish law expressly provides that it is possible for qualified investors to hold the issuer liable for an inaccurate prospectus where the offer made to the public to subscribe for securities is combined, that is to say, is addressed to both retail and qualified investors. The referring court points out that Article 3(2) of Directive 2003/71 exempts issuers of offers addressed exclusively to qualified investors from the obligation to publish a prospectus, since the qualified investors are deemed to have the capability and means of information enabling them to take an informed decision, whilst recital 27 of that directive states that the protection of investors must be ensured by the publication of reliable information, with no distinction being drawn between the various types of investor.

20 In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) When an offer of shares to the public for subscription is directed at both retail and qualified investors, and a prospectus is issued for the retail investors, [are Article 3(2) and Article 6 of Directive 2003/71 to be interpreted as meaning that] an action for damages arising from the prospectus [is] available to both kinds of investor or only to retail investors?

(2) In the event that the answer to the first question is that it is also available to qualified investors, is it possible to assess the extent to which they were aware of the economic situation of the issuer of the offer of shares to the public for subscription otherwise than through the prospectus, on the basis of their legal and commercial relations with that issuer (for example, being shareholders of the issuer or members of its management bodies, etc.)?’

Admissibility of the request for a preliminary ruling

21 UMAS submits that the request for a preliminary ruling is inadmissible, in the first place, on the ground that the questions referred by the referring court were not raised by the parties to the main proceedings and that they cannot be raised by the referring court of its own motion. In the second place, UMAS contends that the request for a preliminary ruling does not satisfy the requirements of Article 94 of the Rules of Procedure of the Court of Justice on account of its omissions and deficiencies in the presentation of the facts and in the statement of reasons which led the referring court to make the reference to the Court. In the third place, UMAS submits that the national legislation at issue in the main proceedings leaves no room for doubt regarding the persons who may bring the action for damages provided for in Article 6 of Directive 2003/71.

22 It should be recalled, in the first place, that the system established by Article 267 TFEU with a view to ensuring that EU law is interpreted uniformly throughout the Member States institutes direct cooperation between the Court of Justice and the national courts by means of a procedure which is completely independent of any initiative by the parties. Consequently, although the referring court is at liberty to request the parties to the dispute before it to suggest wording suitable for the questions to be referred, the fact remains that it is for that court alone ultimately to decide both the form and content of those questions (see, to that effect, judgment of 18 July 2013, Consiglio Nazionale dei Geologi, C‑136/12, EU:C:2013:489, paragraphs 28 to 30).

23 Therefore, even if, as UMAS contends, the present request for a preliminary ruling relates to questions which were not raised by the parties to the main proceedings, that fact cannot render it inadmissible.

24 In the second place, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance (judgment of 26 March 2020, Miasto Łowicz and Prokurator Generalny, C‑558/18 and C‑563/18, EU:C:2020:234, paragraph 43). The Court may refuse to give a ruling on a question referred by a national court for a preliminary ruling, only where, for instance, the requirements concerning the content of a request for a preliminary ruling, set out in Article 94 of the Rules of Procedure, are not satisfied or where it is quite obvious that the interpretation of a provision of EU law which is sought by the national court bears no relation to the actual facts of the main action or to its purpose or where the problem is hypothetical (see, to that effect, judgment of 3 September 2020, Supreme Site Services and Others, C‑186/19, EU:C:2020:638, paragraph 42).

25 The arguments put forward by UMAS regarding the Spanish legislation applicable to the dispute in the main proceedings do not enable the presumption of relevance enjoyed by the questions raised by the referring court to be called into question. In addition, the referring court has complied with the requirements of Article 94 of the Rules of Procedure, since it has set out with sufficient precision the matters of fact and law at issue in the main proceedings, the subject matter of those proceedings and the link between those proceedings and the interpretation of the provisions of EU law which is sought.

26 The request for a preliminary ruling is therefore admissible.

Consideration of the questions referred

The first question

27 By its first question, the referring court asks, in essence, whether Article 6 of Directive 2003/71, read in conjunction with Article 3(2)(a) of that directive, must be interpreted as meaning that, in the event of an offer of shares to the public for subscription which is addressed to both retail investors and qualified investors, an action for damages on the grounds of the information given in the prospectus may be brought not only by retail investors but also by qualified investors.

28 According to the settled case-law of the Court, when a provision of EU law is being interpreted, account must be taken not only of its wording and the objectives it pursues, but also of its context and the provisions of EU law as a whole (judgment of 11 March 2020, X (Recovery of additional import duties), C‑160/18, EU:C:2020:190, paragraph 34 and the case-law cited).

29 It should be noted in that regard that Directive 2003/71 does not identify the investors who may bring such an action for damages. Article 6(1) of that directive does no more than identify the persons who may be held liable for the prospectus’ content being erroneous or incomplete.

30 As to the objectives pursued by that directive, it is apparent, in particular, from recital 10 of that directive that the protection of investors and the proper functioning and development of markets form the fundamental core of that directive (see, to that effect, judgment of 17 September 2014, Almer Beheer and Daedalus Holding, C‑441/12, EU:C:2014:2226, paragraphs 31 and 33).

31 It follows, moreover, from a combined reading of recitals 18, 21 and 27 of Directive 2003/71 that full, reliable and easily accessible information on securities and issuers strengthens the protection of investors and is an effective means of strengthening public confidence, thereby contributing to the proper functioning and development of the markets concerned, by preventing such proper functioning and development being hindered by irregularities (see, to that effect, judgment of 17 September 2014, Almer Beheer and Daedalus Holding, C‑441/12, EU:C:2014:2226, paragraph 33).

32 In that context, the publication of a prospectus, as is apparent from recital 19 of that directive, contributes to the implementation of safeguards for the protection of the interests of actual and potential investors, to enable them to make an assessment of the risks involved in investing in securities and thereby to take investment decisions in full knowledge of the facts.

33 It follows from the foregoing that an investor who has participated in an offer of securities in the context of which a prospectus has been published may legitimately rely on the information given in that prospectus and is therefore entitled to bring an action for damages on the grounds of that information, whether or not the prospectus was issued for that investor.

34 The distinction between retail investors and qualified investors which is apparent from Article 3 of Directive 2003/71 does not cast doubt on that interpretation of Article 6 of that directive.

35 It is true that Article 3(2) of that directive lays down a series of exemptions from the general obligation to publish a prospectus, which is set out in paragraph 1 of that article, in particular where the offer of securities is exclusively addressed to qualified investors. As stated in recital 16 of that directive, the EU legislature intended to take account of the different requirements for protection of the various categories of investor, and their level of expertise. Accordingly, offers of securities exclusively reserved to qualified investors fall outside the obligation of prior publication of a prospectus, since, unlike retail investors, qualified investors may have access, by their own means, to the information necessary for their investment decisions, otherwise than through the prospectus.

36 However, it cannot be inferred from Article 3(2)(a) of Directive 2003/71, which as an exemption from the principle established in Article 3(1) of that directive is to be interpreted strictly (see, by analogy, judgments of 29 July 2019, Funke Medien NRW, C‑469/17, EU:C:2019:623, paragraph 69, and of 3 March 2020, Gómez del Moral Guasch, C‑125/18, EU:C:2020:138, paragraph 30), that the qualified investors are denied the opportunity to bring an action for damages, provided for in Article 6 of Directive 2003/71, on the grounds of the information contained in a prospectus published pursuant to Article 3(1) of that directive.

37 In the case of a combined offer, such as that at issue in the main proceedings, which is addressed to both qualified investors and retail investors, all investors, regardless of their status, have at their disposal that document, which is supposed, as has been noted in paragraph 33 of the present judgment, to contain full and reliable information on which they may legitimately rely. Furthermore, as the Advocate General stated in point 30 of his Opinion, the exemptions from the obligation to publish a prospectus, referred to in Article 3(2) of that directive, do not prohibit voluntary publication of such a document for all investors.

38 As the Advocate General stated, in essence, in point 38 of his Opinion, the fact that Articles 3 and 4 of Directive 2003/71 provide, in detail, for numerous exemptions from the obligation to publish a prospectus, whilst Article 6 of that directive lays down, without exception, a principle of civil liability in the event of an incorrect prospectus, must lead to an interpretation of that provision that, where a prospectus has been published, it must be possible to bring an action for damages on the grounds of the information given in it, irrespective of the type of investor who considers he or she has been injured.

39 Consequently, the answer to the first question is that Article 6 of Directive 2003/71, read in conjunction with Article 3(2)(a) of that directive, must be interpreted as meaning that, in the event of an offer of shares to the public for subscription which is addressed to both retail investors and qualified investors, an action for damages on the grounds of the information given in the prospectus may be brought not only by retail investors but also by qualified investors.

The second question

40 By its second question, the referring court asks, in essence, whether Article 6(2) of Directive 2003/71 must be interpreted as precluding provisions of national law which, in the context of an action for damages brought by a qualified investor on the grounds of the information given in the prospectus, allow, or even require, the court to take account of the fact that that investor was, or ought to have been, aware of the economic situation of the issuer of the offer of shares to the public, on the basis of its relations with that issuer and otherwise than through the prospectus.

41 In that regard, it should be recalled at the outset that Article 6(2) of Directive 2003/71 provides, in its first subparagraph, that Member States are to ensure that their laws, regulations and administrative provisions on civil liability apply to those persons responsible for the information given in the prospectus. Article 6(2) does not therefore require specific provisions of national law in that field to be adopted, subject, in accordance with the second subparagraph of Article 6(2), to the proviso that no civil liability is to attach to ‘any person’ solely on the basis of the summary of the prospectus or any translation thereof, unless the content of the summary or translation is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.

42 It follows that Article 6(2) of Directive 2003/71 grants, as the Advocate General observed, in essence, in points 44, 47 and 49 of his Opinion, a broad discretion to the Member States to lay down the rules for bringing an action for damages on the grounds of the information given in the prospectus.

43 Furthermore, it is apparent from Article 3(2)(a) of that directive, read in the light of recital 16 thereof, that, although the prospectus for the sale of securities contains essential information for retail investors in order to enable them to take their investment decisions in full knowledge of the facts, qualified investors, having regard, in particular, to their level of expertise, usually have, by contrast, access to other information capable of informing their decision-making.

44 It is therefore, in principle, open to the Member States – by adopting, where appropriate, specific provisions in their national legal systems in respect of civil liability – to allow, or even require, account to be taken of the qualified investor’s level of expertise, as well as its relations with the issuer of the securities concerned, at the stage of liability being incurred on the grounds of the information given in the prospectus, pursuant to Article 6(2) of Directive 2003/71.

45 However, although the Member States have a broad discretion in relation to the rules for the bringing of the action for damages provided for in Article 6 of that directive, in accordance with the principle of institutional and procedural autonomy, that principle must nevertheless be applied in compliance with the principles of equivalence and effectiveness, in order to preserve the effectiveness of the applicable provisions of EU law (see, by analogy, judgment of 19 December 2013, Hirmann, C‑174/12, EU:C:2013:856, paragraph 40).

46 The principle of equivalence requires that national procedural provisions governing situations subject to EU law must be no less favourable than those governing similar domestic actions, while the principle of effectiveness requires that such provisions must not make it impossible or excessively difficult to exercise of rights conferred by EU law (see, to that effect, judgment of 19 December 2019, Deutsche Umwelthilfe, C‑752/18, EU:C:2019:1114, paragraph 33).

47 Accordingly, where provisions of national law allow, or even require, in the context of an action for damages pursuant to Article 6(2) of Directive 2003/71, account to be taken of the knowledge which the qualified investor has or must have of the issuer’s economic situation, on the basis of its relations with that issuer, it is for the national court hearing such an action for damages to verify that those provisions are no less favourable than those governing similar actions under national law and do not in practice make it impossible or excessively difficult to bring that action in damages.

48 Consequently, the answer to the second question is that Article 6(2) of Directive 2003/71 must be interpreted as not precluding provisions of national law which, in the context of an action for damages brought by a qualified investor on the grounds of the information given in the prospectus, allow, or even require, the court to take account of the fact that that investor was, or ought to have been, aware of the economic situation of the issuer of the offer of shares to the public, on the basis of its relations with that issuer and otherwise than through the prospectus, in so far as those provisions are no less favourable than those governing similar actions under national law and do not, in practice, make it impossible or excessively difficult to bring that action.

Costs

49 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1. Article 6 of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, as amended by Directive 2008/11/EC of the European Parliament and of the Council of 11 March 2008, read in conjunction with Article 3(2)(a) of that directive, as amended by Directive 2008/11, must be interpreted as meaning that, in the event of an offer of shares to the public for subscription which is addressed to both retail investors and qualified investors, an action for damages on the grounds of the information given in the prospectus may be brought not only by retail investors but also by qualified investors.

2. Article 6(2) of Directive 2003/71, as amended by Directive 2008/11, must be interpreted as not precluding provisions of national law which, in the context of an action for damages brought by a qualified investor on the grounds of the information given in the prospectus, allow, or even require, the court to take account of the fact that that investor was, or ought to have been, aware of the economic situation of the issuer of the offer of shares to the public, on the basis of its relations with that issuer and otherwise than through the prospectus, in so far as those provisions are no less favourable than those governing similar actions under national law and do not, in practice, make it impossible or excessively difficult to bring that action.