On 8th October 2024, the European Council adopted the EU Listing Act ("Act"), a legislative package designed to streamline the process of listing and making EU public capital markets more attractive to EU companies of all sizes, including small and medium-sized enterprises (SMEs). The aim is to simplify the process for companies by alleviating administrative burdens and costs, while preserving a sufficient degree of transparency, investor protection and market integrity. Some of the key reforms adopted include:
Changes to IPO process: The minimum period for an offer to the public to remain open is reduced from previously six to now three working days, to facilitate lower transaction risk in a volatile market environment.
Changes to the Prospectus Exemptions for Secondary Issuances:
Prospectus exemption threshold shall be raised from less than 20% to 30%, allowing companies to issue and list shares up to less than 30% of their share capital without needing a prospectus.
Issuers with securities listed for at least 18 months on a regulated or SME growth market, will be able to issue additional shares without volume limitation with no need of an approved prospectus, provided that a) new securities to be admitted are not in connection with a takeover, merger or division, b) the issuer is not subject to any insolvency proceedings or restructuring, and c) short document (maximum 11 sides of A4 paper) is filed in an electronic format outlining inter alia reason for the issuance, use of proceeds and risk factors specific to the user. For public offers of less than 30% of shares already admitted to trading on a regulated market or an SME growth market, the above exemption will be applicable provided points b) and c) are satisfied.
Simplified Follow-on Prospectus: The Act introduces an EU follow-on prospectus for secondaries and 'uplistings' (from SME growth to regulated market) provided issuer's shares have been admitted to trading on a regulated or SME growth market for at least the 18 months preceding the public offer. This prospectus requires only one year of financial information and excludes the need for an operating and financial review (OFR) in relation to such financial information.
Simplified Standardized Prospectus: The Act includes several amendments to streamline the process and disclosure of information, introducing inter alia a standardized format and sequence, maximum length, the possibility to incorporate information by reference instead of including the information itself.
Changes to Market Abuse Regulation (MAR): 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. Also, the threshold for reporting directors’ dealings is raised from EUR 5,000 to EUR 20,000 per calendar year, with national authorities having the discretion to adjust this threshold further.
Some provisions took effect upon the Listing Act's entry into force on 4th December 2024, however, most of the amendments become applicable from March and June