Listing Act: provisional agreement reached between the EP and the Council



On 7 December 2022, the European Commission (EC) submitted a package of measures known as the “Listing Act” (the Act), aiming at making public markets more attractive for European Union (EU) companies by facilitating access to capital for small and medium-sized companies (SMEs) (Refer to our earlier publication on this topic for more detail on the initial proposal)

On the one hand, the Act put forward several amendments to Regulation (EU) 2017/1129 of the European Parliament (the EP) and of the Council (the Prospectus Regulation), Regulation No 596/2014 of the EP and of the Council (the Market Abuse Regulation or MAR), as well as limited amendments to Regulation No 600/2014 of the EP and of the Council (the Markets in Financial Instruments Regulation or MiFIR).

On the other hand, the Act also introduces two additional proposals: (i) a directive, amending Directive 2014/65/EU of the EP and of the Council (the Markets in Financial Instruments Directive or MiFID II) and repealing Directive 2001/34/EC of the EP and of the Council11 (the Listing Directive), which harmonises and clarifies the listing requirements, and increases the low level of investment research on SMEs; and (ii) a directive harmonising rules on multiple-vote share structures.

On 1 February 2024, the Council and the EP reached a provisional agreement on the Act, almost two years after its submission.

The provisional agreement (the Agreement) envisages to:

  • improve access to stock markets by reducing the administrative burden of listing,
  • refine the listing procedure, and
  • balance the regulatory and compliance costs for companies wishing to list, and for companies already listed, while safeguarding investors protection and market integrity.

Amendments to the Prospectus Regulation

The Council and the EP provisionally agreed to amend the Prospectus Regulation to achieve greater harmonisation of the requirements for drawing up, approving and distributing the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market.

The Act introduces a new harmonised threshold of EUR 12 million below which offers of securities to the public that do not require a passport are exempted from the obligation to publish a prospectus, hence replacing the possibility for Member States to exempt offers of securities to the public of up to EUR 8 million over a period of 12 months from the obligation to publish a prospectus if they do not require notification.

However, a crucial provision introduced by this Αgreement is that Member States may derogate from the above-mentioned threshold and instead exempt offers of securities to the public from the obligation to publish a prospectus, provided that the total amount paid in the EU for the securities offered is less than EUR 5,000,000 per issuer or offeror, calculated over a period of 12 months. In this case, Member States should inform the EC and ESMA when they decide to apply this threshold and should also inform them when they decide to adopt the exemption threshold of EUR 12,000,000 instead.

In addition, the Agreement seeks to reduce the cost of the prospectus and therefore proposes to have a standardised format, which includes essential information, plain language, and targeted investors.

Lastly, the Agreement is seeking to introduce sustainability-related disclosures within the required content of prospectuses. In this context, issuers who are subject to Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (the EU Taxonomy Regulation) will have to disclose, within the prospectus, whether their activities are associated with economic activities which qualify as environmentally sustainable under Article 3 and 9 of the EU Taxonomy Regulation. Additionally, issuers of green bonds or bonds marketed as environmentally sustainable or sustainability-linked bonds under Regulation (EU) 2023/2631 of 22 November 2023 on European Green Bonds (the EU Green Bond Regulation) would be required to include in their prospectus the information required by the EU Green Bond Regulation, relating namely to the proceeds of the issued instruments.

Amendments to MiFID II

The Council and the EP provisionally agreed to amend MiFID II as regards, inter alia, the rules on the provision of investment research by third parties. According to the Agreement, investment firms: 

  • will be more flexible in selecting how they wish to arrange payments for execution services and research purposed, while being transparent in this regard,
  • will have to inform their clients whether they apply separate or joint payment for third party services and research and of measures to prevent or manage conflicts of interest, and
  • should assess whether such research assist investment firm's clients to make investment decisions.

Amendments to MiFIR

Regarding MiFIR, the Council and the EP did not propose any particular or essential modifications from the existing amendments brought by the Act to MiFIR, but only some minor additions to the existing amendments.

Amendments to MAR

With regards to MAR, the Council and the EP provisionally agreed to provide further amendments in relation to:

  • the issuer's obligation to inform the public of confidential information directly concerning the issuer and thus limiting the scope of application,
  • insider lists to be drawn up by issuers whose financial instruments are admitted to trading on an SME growth market,
  • the threshold for transaction notifications conducted by persons discharging managerial responsibilities and persons closely associated, as it is proposed that the competent authority may decide to reduce the threshold to EUR 10,000 following a justification of its decision and notifying ESMA of this decision with specific reference to market conditions,
  • mechanism to exchange order data, and
  • administrative sanctions and measures.

Multiple vote share structure

The Agreement is making an important development in establishing common rules for companies seeking to have their shares traded on a growth market for SMEs and other multilateral trading facilities, regarding multiple vote share structures.

In fact, this Agreement foresees mandatory safeguards for such structure and requires them to publish information on their multiple vote share structure to ensure transparency to future shareholders.

It is quite evident that the primary objective of the Council and the EP is to ensure fair and non-discriminatory treatment of shareholders, while also providing sufficient protection of the interests of those shareholders who do not hold multiple-vote shares.

Timing and next steps

The text of the Agreement is expected to be finalised and submitted to the representatives of the Member States and the EP for approval. The Council and the EP will then have to formally adopt the legislative texts.

Our experts at CMS Luxembourg will keep you up to date on further developments on this topic.

If you have any questions related to this topic, feel free to reach out to our Capital Markets experts José OcañaAurélien Hollard, Julie Pelcé, Stamatina Stylianopoulou, and Julien Robert.