On 8 October, 2024, the Council of the EU adopted the EU Listing Act, aimed at making EU public capital markets more attractive and facilitate listings on European stock exchanges. Key amendments affect the EU Prospectus Regulation, EU Market Abuse Regulation as well as MiFID II and MiFIR1.
Changes to Public Offerings
- Offer Period: The minimum offer period for book building is reduced from six to three working days for IPOs of a class of shares admitted to trading on a regulated market for the first time.
- Withdrawal Rights: The deadline for investors to withdraw their acceptances during bookbuilding is extended from two to three working days if the issuer publishes a supplement due to significant new factors, material mistakes, or material inaccuracies.
Broadening Prospectus Exemptions
- Prospectus Exemption: The exemption for public offers of securities with a total consideration in the EU of < €1 million (calculated over a 12-month period) will be removed. The new threshold below which offers of securities to the public will be exempted from the obligation to publish a prospectus (provided that those offers do not require passporting) will be €12 million (calculated over a 12-month period) although Member States will have discretion to reduce that threshold from €12 million to €5 million.
- Threshold Increase: The threshold below which issuers are exempt from the obligation to publish a prospectus for the admission to trading on a regulated market of securities fungible with those already admitted to trading on the same regulated market is increased from 20% to 30%.
- Volume dependent exemption + summary document: The EU Listing Act introduces a new exemption for public offers of <30% of securities that are fungible with those already admitted to trading on a regulated market or an SME growth market, provided that (i) the issuer is not subject to a restructuring or to insolvency proceedings, and (ii) a short summary document (11 pages) is filed with the competent authority and made public.
- Volume independent exemption + summary document: The EU Listing Act introduces a new exemption for public offers and the admission to trading of securities – irrespective of the offer/issue size – if the original securities have been admitted to trading for at least 18 months on a regulated market or an SME growth market, provided that (i) the new securities are not issued in connection with a takeover by means of an exchange offer, a merger or a division, (ii) the issuer is not subject to a restructuring or to insolvency proceedings, and (iii) a short summary document (11 pages) is filed with the competent authority and made public.
EU Follow-on Prospectus
- Simplified Requirements: The EU Listing Act introduces an EU follow-on prospectus for issuers whose securities have been admitted to trading on a regulated market or SME growth market continuously for at least 18 months. This prospectus requires only one year of financial information and excludes the need for an Operating and Financial Review (OFR).
Prospectus Disclosure
Historical Financial Information: Equity prospectuses will only require two years of financial information (instead of three), and non-equity prospectuses require only one.
Incorporation by Reference: Prospectuses for equity securities will need to either incorporate by reference or include the information set out in the Issuer's management report. An OFR will no longer be required under the updated Annex to the EU Prospectus Regulation. Issuers of non-equity securities can incorporate future financial information by reference into a base prospectus without publishing a supplement. The scope of other information that may be incorporated by reference has also been expanded.
Maximum Length: The total length of prospectuses for shares or equivalent securities will be limited to 300 pages, excluding the summary, information on complex financial history and incorporated references. This limit does not apply when securities are also offered or placed in a third country, where an offering document is prepared under law, rule, or market practice of such third country.
Sustainability Disclosures: The EU Listing Act introduces sustainability-related disclosures for issuers of equity securities who are required to publish non-financial information under the EU Accounting Directive and the EU Corporate Sustainability Reporting Directive (CSRD). The prospectus summary must include a statement on whether the issuer's activities are associated with economic activities that qualify as environmentally sustainable according to the EU Taxonomy Regulation. Prospectuses for the issuance of a European Green Bond as referred to in the EU Green Bond Regulation shall incorporate by reference the European Green Bond factsheet. More detailed guidance by ESMA is expected to specify such disclosure.
Market Abuse Regulation
Public disclosure of inside information:
- Protracted Process: Issuers are no longer required to publish inside information related to intermediate steps in a protracted process, only the final event or circumstances need to be disclosed. The Commission will specify such final events or circumstances triggering an ad-hoc disclosure obligation with a Delegated Regulation.
- Delay of publication: The conditions for delaying the disclosure of inside information will be amended. The first condition (immediate disclosure likely to prejudice the issuer's legitimate interests) and the third condition (issuer is able to ensure the confidentiality of that information) will remain unchanged. However, the second condition (delayed disclosure unlikely to mislead the public) will be replaced and will require that delaying of publication of inside information is not in contrast with the latest public announcement or other type of communication regarding the matter to which the inside information relates.
Directors' dealings:
- Threshold Increase: The reporting threshold for PDMR (persons discharging managerial responsibilities) will increase from €5 thousand to €20 thousand per calendar year. Competent authorities can further increase the threshold to €50 thousand or decrease it to €10 thousand.
The different measures of the EU Listing Act will enter into force 20 days after their publication in the Official Journal of the EU, which is expected to take place during the last quarter of 2024, however, some of the amendments become applicable 15 or 18 months later.
1 MiFID II and MiFIR will be addressed in a separate Client Alert.
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