FAQ - Bond prospectus approvals by the Central Bank of Ireland

A bond is a debt security that represents a loan from an investor to a borrower.  It is a contractual arrangement between the investor and the borrower that entitles the investor to repayment by the borrower at an agreed time in the future at an agreed rate of return.  Bonds are for example issued by governments and corporations when they want to raise money.

A bond prospectus is a detailed legal document that bond issuers are required to prepare, which contains the material information relating to the bond issuer, the business and financial position of the issuer,  a description of the offer and a description of the securities to be issued. The bond prospectus also describes the risks of investing in the security, including any potential for losses.

Under the European Union’s Prospectus Regulation¹, a prospectus must be drawn up, approved and published when securities are to be offered to the public and/or admitted to trading on a regulated market in the EU.

The bond prospectus is a document for investors. The main objective of the Prospectus Regulation to is protect investors to ensure that the bond prospectus contains all the material information that investors need in order to be able to make an informed decision about whether to invest in a bond. 

_{[1] Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market.}

As competent authority under the Prospectus Regulation, the Central Bank is responsible for assessing whether a prospectus has been drawn up in compliance with the disclosure requirements of the Prospectus Regulation.  The specific disclosure requirements and the requirements for prospectus approval process are specified in Commission Delegated Regulation (EU) 980/2019, which supplements the Prospectus Regulation.

The Central Bank is required to approve a prospectus under the Prospectus Regulation, where the prospectus documentation meets standards of completeness, consistency and comprehensibility under the legislation.

By approving a bond prospectus, the Central Bank does not endorse the issuer or the securities. Rather it means the Central Bank is satisfied that the issuer has disclosed the required information, in the required manner, to potential purchases of the securities, so investors can make an informed investment decision.

Ireland has a large and internationally oriented financial sector. The Central Bank approves bond prospectuses for bonds issued by entities incorporated in Ireland, offered in Ireland and for bonds admitted to trading on a regulated market in Ireland.

Additionally, the Central Bank must approve the bond prospectuses of third country (non-EU Member States) issuers, for example the State of Israel, who have chosen Ireland as their Home Member State, in advance of issuing bonds in Ireland and in other EU Member States, subject to certain criteria set out in the EU Prospectus Regulation.

The choice of Home Member State within the EU is up to the issuer.  

The Central Bank can only object if we do not believe we have legal jurisdiction for the approval based on the Prospectus Regulation.

Prior to 2021, the UK was the EU Home Member State under the Prospectus Regulation for the State of Israel. Ireland was chosen as new Home Member State after Brexit. 

The Central Bank can only refuse the approval of a prospectus where the Central Bank has a legal basis to do so. Other than insufficient prospectus disclosures, an example of a legal basis for refusal would be:

1. The existence of EU financial sanctions prohibiting the provision of services or assistance in connection with the issuance of securities by the Israeli government, or
2. National restrictive measures to the same effect. 

The law is clear that we have to approve a prospectus for the offer of securities to the public as long as the prospectus meets the required standards of completeness, comprehensibility and consistency.

The law is also clear that our approval should not be considered an endorsement of the issuer or of the securities.

The prospectus documentation for the Israeli bond programme contains all the necessary information for investors to make an informed investment decision as required under the Prospectus Regulation, and for this reason it has been approved by the Central Bank of Ireland.

For more information, please see our explainer on the Consumer Hub ‘What is a securities prospectus and what can I learn from it’?