Raising Capital Without a Securities Prospectus: When Can Companies Issue Investments of Up to €5 Million Without Regulatory Approval?
As of 6 June 2026, the rules for raising capital without an approved prospectus are changing, with the limit increased to EUR 5 million. A mandatory offering document (mini-prospectus) is newly introduced for issuances in the EUR 1–5 million range, while for issuances up to EUR 1 million, the terms and conditions of the issue will be sufficient. However, all issuances must include a clear warning that the regulator has not assessed the issuer’s financial soundness; otherwise, fines may be imposed. This article will guide you through the new rules and help you avoid mistakes.
Table of contents
What the amendment to the Capital Market Undertakings Act brings in practice
In March 2026, the Czech Republic approved an amendment to Act No. 256/2004 Coll., on Capital Market Undertakings (ZPKT), responding to the pan-European legislative package known as the Listing Act. The changes are not merely technical—they represent a fundamental shift in the approach to financing business activities, especially for small and medium-sized enterprises.
The European Union is seeking to simplify access to public capital markets in order to increase the competitiveness of European companies and facilitate access to capital.
The key change concerns raising the threshold for public offers without a prospectus. Until now, this threshold in the Czech Republic was set at EUR 1 million. From 6 June 2026, it increases to EUR 5 million, with a new, lighter information regime introduced for offers between EUR 1 and 5 million.
The European Prospectus Regulation allows Member States to choose a threshold of up to EUR 12 million, but the Czech Republic has opted for a more conservative approach and set it at EUR 5 million. This means investor regulatory protection remains higher, while companies gain greater flexibility.
The new rules introduce three clearly defined bands:
- Issues up to EUR 1 million: You do not need a prospectus or an issue document approved by the regulator. . For bonds, the obligation to prepare remains in place, even if the volume does not exceed EUR 1 million.
- Issues from EUR 1 to 5 million: You must newly prepare (mini-prospectus) containing basic information about the issuer, details of the securities, the purpose of use of proceeds, risk factors, information on collateral, and publication details. However, this document .
- Issues from EUR 5 million: A traditional that must be approved by is necessary.
The attorneys at ARROWS, a Prague-based law firm, have been monitoring the development of these rules since their preparation at EU level and are already helping clients transition to the new regime to avoid mistakes or fines.
Issues up to EUR 1 million: The most flexible regime with important formal requirements
The regime for issues up to EUR 1 million has long remained the most attractive for smaller businesses and startups. There is no need to have anything approved by the Czech National Bank, and there is no need to prepare a bulky prospectus. Well-prepared issue terms and conditions are sufficient.
That sounds simple, but in practice this is where the first pitfall lies. Issue terms and conditions are not just some office paperwork—they are a legally binding document that creates the relationship between the issuer and all investors.
Under Act No. 190/2004 Coll., on Bonds, the issue terms and conditions must contain a number of mandatory elements. Any deficiency may lead to a so-called defective issue, which the regulator penalizes with a fine of up to CZK 15 million.
What must be included in the issue terms and conditions? Above all, identification of the issuer and a detailed description of its business activities. The rights and obligations of investors must also be clearly defined, including the repayment method and any collateral. Information must also be included on the risks associated with the investment, the contractual covenants, and the issuer’s financial situation. Since 1 January 2024, it has also been mandatory to publish the issue terms and conditions and audited financial statements on the issuer’s website.
Common mistakes we see in practice include a vague description of collateral (for example, “secured by land” without further specification), insufficient substantiation of risks, and unclear wording of contractual covenants. Issues prepared in this way may then become a target of the Czech National Bank, especially if it later turns out that the issuer was not in good financial condition and the collateral was essentially worthless.
From 20 April 2026, additional warnings are also mandatory for issues up to EUR 1 million. You must explicitly state that neither the Czech National Bank nor any other authority assessed the issuer’s financial health or guarantees the ability to repay the bonds. This warning must be visible and understandable. Failure to include it may result in a fine of up to CZK 2 million under the Capital Market Undertakings Act.
It should be emphasized that it is precisely with these “small” issues that an entrepreneur can very easily make a mistake and try to save on legal services or get help from a friend. The attorneys at ARROWS, a Prague-based law firm, work with such issues routinely and know all legally required elements, including the latest updates.
Issues from EUR 1 to 5 million: A new regime with an issue document
The regime for offers in the range of EUR 1 to 5 million is a major new development that takes effect on 6 June 2026. It is a compromise between minimal administrative burden and investor protection. Companies avoid the lengthy process of having a prospectus approved by the Czech National Bank (which typically takes 3–6 months), but at the same time they must provide more information than under the regime up to EUR 1 million.
In this band, the issuer must publish a so-called issue document (sometimes also called a mini-prospectus). This is a simplified version of a prospectus containing key information structured in a standardized manner.
The issue document must include:
- Basic information about the issuer – legal form, registered office, identification numbers, company management, and its main business activity.
- Details of the securities – type of securities, their nominal value, interest yield (for bonds), and maturity dates.
- Purpose of use of proceeds – a specific description of what the capital will be used for (investment in real estate, technology, working capital, etc.).
- Risk factors – key risks associated with the issue and the issuer’s financial situation.
- Information on collateral – if the issue is secured by an asset, it must be described what it is and how it works.
- Information on publication and approval – details of where and how the issue document will be published.
The issue document is not sent to the Czech National Bank for prior approval. The issuer prepares it, publishes it on its website and through other channels, and thereby fulfills its obligation. However, the Czech National Bank may request it as part of an inspection and assess whether it meets statutory requirements.
In practice, the issuer has slightly less time to prepare than for a prospectus (typically 2–4 weeks), and the text is less extensive. But the content must be carefully drafted, because it must provide the reader with an objective picture of the company and the risks.
Especially in the Czech environment, where in recent years attention has been drawn to fraudulent issues and hidden public offers (so-called chaining of issues), the regulator is paying attention to the new regime and monitoring it.
ARROWS attorneys have experience preparing offering documents, are familiar with case law and the latest practice of the Czech National Bank in interpreting these rules, and can also assist with follow-up legal advice. For example, they can help set up the offering correctly so that it is not mistakenly classified as a public offering and so that statutory limits are not breached.
How the EUR 1–5 million threshold is calculated and what other exemptions apply
Once a company decides to raise capital through an issue, it should immediately clarify which band it falls into. It seems simple – just add up how many euros’ worth of securities are being issued. But it is not only about a single issue. The threshold is calculated on a rolling basis over the last 12 months and includes all public offers of securities of the same type, by the same issuer and within the same group across the entire European Union.
Practical example: In January 2026, a company publicly offered bonds worth EUR 2 million. In July 2026, it wants to issue additional bonds worth EUR 3 million. These are added together: 2 + 3 = EUR 5 million. The second issue is therefore assessed as part of one “group” of issues over the last 12 months, and the total volume is calculated as EUR 5 million. If the total volume exceeded EUR 5 million, it would be necessary to prepare a traditional prospectus approved by the Czech National Bank.
The reason for this rule is clear – the aim is to prevent companies from avoiding regulation by issuing, for example, ten times EUR 400,000 and pretending that each issue is “below the threshold”.
Attorneys from ARROWS, a Prague-based law firm, often deal with these situations and can correctly assess how a specific issue is counted towards the thresholds, especially if the client has a more complex group structure or is planning multiple issues within a short period of time.
In addition, there are important exemptions from the obligation to have a prospectus or an offering document that you need to be aware of:
An offer addressed exclusively to qualified investors: If you offer securities only to persons who are considered qualified investors under the law, then the obligation to prepare a prospectus or an offering document does not apply.
An offer addressed to fewer than 150 non-professional investors in each EU Member State separately: This is a so-called “private placement” – a non-public offer. Here, the limit is calculated separately for each Member State. You can therefore offer to up to 149 non-professional investors in the Czech Republic, another 149 in Germany, etc., without triggering the prospectus requirement. But beware – this limit applies to persons who are not qualified investors. As soon as you publish a banner on a website or on social media saying “Invest with us, 8% interest”, you have addressed an unlimited circle of persons and the non-public offer regime no longer applies; the offer becomes a public offer.
An offer where the total consideration per investor is at least EUR 100,000: This exemption applies if each individual investor invests an amount equal to or higher than EUR 100,000.
An offer where the total consideration in the EU is lower than EUR 100,000: This exemption applies to very small total volumes of offers within the EU, calculated over a rolling 12-month period.
Frequently asked questions on thresholds and prospectus exemptions
1. If a company is to issue bonds worth EUR 2.5 million, does it have to prepare an offering document?
Yes. From 6 June 2026, such an issue falls within the EUR 1–5 million band, where an offering document is mandatory. If the issue were below EUR 1 million, the terms and conditions of the issue would be sufficient. If the total volume over 12 months exceeded EUR 5 million, it would be necessary to prepare a prospectus approved by the Czech National Bank.
2. Do we count all issues, or only issues by the same issuer?
The threshold is calculated separately for each issuer and on a rolling basis over the last 12 months. It includes all public offers of securities of the same type, by the same issuer and within the same group across the entire European Union. If a company has multiple subsidiaries, each of them is assessed separately; however, within the group it is necessary to assess whether there is any chaining of offers that should be aggregated. It is advisable to consult the attorneys at ARROWS, a Prague-based law firm, in this regard.
3. If I offer bonds only to “people I know”, can it be under the EUR 1 million regime without a prospectus?
The term “people I know” is not used in law. For it to be a non-public offer, you must be able to prove that you approached a specific, limited circle of persons (a maximum of 149 non-professional investors in each Member State) and that you have some prior relationship with those persons. If the offer is made via a website, social media, or general advertising, it is a public offer – regardless of whether “only people you know saw it”.
New mandatory warning for all issues
From 20 April 2026, a new obligation applies that all companies must be aware of. Regardless of whether you issue up to EUR 1 million (with terms and conditions of the issue), EUR 1–5 million (with an offering document) or above EUR 5 million (with a prospectus), in every case you must include a visible and clear warning that:
Neither the Czech National Bank nor any other authority has assessed the issuer’s financial soundness or guarantees its ability to repay the bonds.
This warning must be written so that the investor cannot miss it and must be placed prominently, ideally right at the beginning. Failure to include it may result in a fine of up to CZK 2 million under the Capital Market Undertakings Act.
The purpose of this warning is to protect investors against the false confidence that the mere fact that an issue has been made and, where applicable, that a prospectus has been approved means the investment is safe. The opposite is true – approval of a prospectus only means that the information is complete and comprehensible, not that the business will be able to meet its obligations.
In practice, this means that if an issuer prepares the offering document itself or gets help from the wrong adviser and forgets this warning, it will be in breach of the law. If this is discovered later (for example during an inspection by the Czech National Bank), a fine may be imposed.
Attorneys from ARROWS, a Prague-based law firm, are aware of these obligations and will ensure that your issue includes all required warnings and notices.
|
Potential issues |
How ARROWS can help (office@arws.cz) |
|
Incorrect classification of the issuance into a band: A company offers securities for EUR 3 million, but prepares only the terms and conditions of the issue without an issuance document, as if it were below EUR 1 million. |
We will provide a legal analysis of your specific issuance plan and correctly classify it under the relevant regime. We will help you understand which documents you will need to prepare and how long it will take. |
|
Incomplete issuance document or terms and conditions of the issue: Missing information on risks, security, company management, or financial situation. |
We will prepare complete issuance documentation that meets all statutory requirements and the practice of the Czech National Bank. We will check that nothing is missing. |
|
Missing mandatory warning that the Czech National Bank has not assessed the issuer’s creditworthiness: May lead to a fine of up to CZK 2 million. |
We will ensure that the mandatory investor warning is stated prominently and clearly on your documents. |
|
Incorrect calculation of the 12-month limit: A company believes it is below the limit, but in fact it has already carried out an issuance in previous months and the total volume exceeds the threshold. |
We will analyse all of your issuances over the last 12 months in the EU and correctly calculate their cumulative volume. We will propose how to proceed next. |
|
Circumventing regulation by formally splitting an issuance: A company wants to avoid a prospectus by splitting the issuance into ten smaller tranches. |
We will advise you on how to proceed in a legally compliant manner. The Czech National Bank monitors deliberate circumvention of obligations and may sanction it with substantially harsher penalties. |
Final summary
The new rules for issuances without a prospectus, which take effect on 6 June 2026, bring significant simplification for companies that need capital. Increasing the limit from EUR 1 million to EUR 5 million and introducing a lighter regime for an issuance document mean that small and medium-sized enterprises are getting closer to being able to raise capital without lengthy and costly prospectus approval processes.
At the same time, it is important to realise that even in these “simpler” regimes there are precise rules you must comply with. The terms and conditions of the issue must include all mandatory requirements. Issuance documents must provide an objective picture of the company and the risks. All issuances without exception must include a prominent investor warning. And the limits are calculated on a rolling 12-month basis across the entire European Union.
Mistakes here are not merely formal – they can lead to fines in the millions of Czech crowns, invalidity of issuances, court disputes with investors, or even the regulator prohibiting the activity. Entrepreneurs who want to proceed with their issuances safely and without the risk of unnecessary delays or sanctions should not improvise.
The lawyers at ARROWS, a Prague-based law firm, already have practical experience with the new regimes and know all the details that can affect the success of your issuance. Contact them at office@arws.cz if you would like assistance with preparing issuance documentation or legal advice tailored to your specific situation.
FAQ: Most common questions about raising capital without a securities prospectus
1. From what date do the new rules for issuances without a prospectus apply?
The new rules take effect on 6 June 2026. Until that date, the existing rules apply – the limit remains EUR 1 million and the issuance document does not apply. After 6 June 2026, the new bands apply (up to EUR 1 million, EUR 1–5 million, above EUR 5 million). If you are planning an issuance close to this date, consult the lawyers at ARROWS, a Prague-based law firm, on how to proceed in view of the transitional periods.
2. Can I try an issuance without a prospectus and, if it turns out I should have prepared one, is it just a technical mistake?
Absolutely not. An issuance without a prospectus where a prospectus was mandatory is considered a serious breach of the law. The regulator may sanction it with a fine of up to CZK 150 million, and it may be accompanied by a ban on activity and an obligation to return investors’ money. This is not a trivial mistake. It is always safer to have the correct rule interpreted first by the lawyers at ARROWS, a Prague-based law firm, rather than proceeding on your own.
3. If I have the issuance document prepared in an amateur way or using a cheap advisory kit, what can go wrong?
The risk is high. The issuance document must contain precisely defined information, which is also assessed by the regulator. Errors may include incomplete risk descriptions, vague information on security, insufficient details about company management, or incorrect financial data. The regulator may deem such a document not to meet statutory requirements and impose a fine of up to CZK 15 million. At the same time, investors may complain that they were not properly informed. The lawyers at ARROWS, a Prague-based law firm, handle issuance documents professionally and know what to watch out for.
4. How is the limit of 149 persons for a non-public offer calculated – does it apply to the Czech Republic or to the whole EU?
The limit is calculated separately for each EU Member State. This means that if you offer securities under a private placement regime (a non-public offer), you may approach up to 149 non-professional investors in the Czech Republic, and at the same time another 149 in Germany, 149 in Poland, etc. However, if you exceed 149 persons in one Member State, it becomes a public offer in that state. If you also offer in several states and in total it exceeds EUR 1 million (or another relevant threshold depending on the national application of the Prospectus Regulation), you must prepare a prospectus. This is a complex calculation – the lawyers at ARROWS, a Prague-based law firm, will help you determine what it looks like in a specific situation.
Disclaimer: The information contained in this article is of a general informational nature only and is intended for basic orientation in the matter under the legal framework as of 2026. Although we take maximum care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS, a Prague-based law firm, an entity registered with the Czech Bar Association, and for maximum client security we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS, a Prague-based law firm, directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.
Read also:
- How to Obtain a Czech National Bank Licence for Financial Institutions
- Funding Agreements in the Czech Republic: How to Write Clauses That Withstand Audits
- CFO Checklist: 7 Legal Traps in Company Structures and Contracts in the Czech Republic
- Preparing Your Company for Sale: Legal, Financial and Tax Steps to Maximise Value
- Owner-to-Company Loans in the Czech Republic: Interest Rates and Tax Audits