Introduction
On 24 April 2024, the European Parliament adopted a package of new measures which are commonly referred to as the "Listing Act" which aims to further develop the Capital Markets Union and which consists of three interconnected legislative proposals:
an amending regulation amending Regulation (EU) 2017/1129 (the "Prospectus Regulation"), Regulation (EU) 600/2014 ("MiFIR") and Regulation (EU) 596/2014 ("MAR").
an amending directive amending Directive 2014/65/EU ("MiFID II") and repealing Directive 2001/34/EC (the "Listing Directive").
a new directive on multiple-vote shares for small and medium-sized enterprises ("SMEs").
The Listing Act aims to improve access to capital markets, particularly for SMEs by:
streamlining and decreasing the expenses related to creating a prospectus, thereby lowering the barrier for companies looking to list on EU capital markets;
providing clear guidelines on defining inside information and determining conditions when the disclosure of such information can be delayed;
enabling the implementation of diverse vote share structures in businesses seeking to have their shares traded on an SME growth market.
Key proposed amendments to the Prospectus Regulation
As regards the existing exemption which allows companies to avoid publishing a prospectus when their securities are admitted to trading on a regulated market, provided that these newly admitted securities are of the same class and represent over a twelve-month period less than 20% of the total number of securities already traded on the same market:- the threshold shall be increased from 20% to 30% and the exemption shall be extended to cover offers to the public (and not only admissions to trading).
As regards exemptions for small offers: the consideration threshold exempting small offers from the Prospectus Regulation shall be increased from EUR 1,000,000 to a harmonised threshold of EUR 12,000,000 over 12 months. The de minimis threshold shall decrease from EUR 8,000,000 to EUR 5,000,000, above which Member States have the option to exempt public offer.
A new EU Follow-On prospectus (limited to 50 pages) shall be introduced (and shall replace the simplified prospectus) which will be available to issuers with securities admitted to trading on a regulated market for 18 months, excluding those with only non-equity securities.
The requirements for the EU Growth Issuance Prospectus shall be less complex and burdensome.
Further standardisation and page limitation requirements for prospectuses have been introduced and the minimum offer period for IPOs has been shortened from 6 to 3 trading days.
Key proposed amendments to MAR
Protracted processes
There shall no longer be an immediate disclosure requirement in respect of the intermediate steps of a protracted process; issuers shall only need to disclose inside information relating to the concluding event.
Conditions for delayed disclosure
One of the three conditions for delayed disclosure shall be amended; specifically the existing condition that delay of disclosure is not likely to mislead the public shall be replaced with the condition that the information that is intended to be delayed is not in contrast with the latest public announcement or other type of communication by the issuer on the same matter.
A limited number of changes have also been introduced to the rules regarding managers’ transactions, market soundings, share buyback programmes and insider lists.
Proposed amendments to MiFID
The EUR 1,000,000 market capitalization requirement for admitting shares to a regulated market shall remain unchanged. However, the minimum free float requirement will be reduced to from 25% to 10%.
Rules regarding investment research will be alleviated with the aim of increasing the amount of research on SMEs.
New directive on multiple-vote shares
The new directive on multiple vote share structures shall apply to companies looking to list their shares on a multilateral trading facility (MTF) and whose shares have not already been admitted on an MTF or any regulated market. Companies shall be permitted to issue multiple vote shares when listing on an MTF which will enable founding shareholders to maintain control over their company.
Next steps
The Listing Act will enter into force 20 days after publication in the EU Official Journal which is expected to occur at the earliest, in autumn 2024.
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