Amendments to the Prospectus Regulation: EU Listing Act approved by the Council of the European Union

October 14, 2024

On October 8, 2024, the Council of the European Union approved the legislative package, known as the "Listing Act", which includes:

1. A regulation amending EU Regulation 2017/1129 ("Prospectus Regulation"), EU Regulation 596/2014 (Market Abuse Regulation) and EU Regulation 600/2014 (MiFIR),
2. A directive amending EU Directive 2014/65 ("MiFID II"), and
3. A directive introducing a framework to facilitate the issuance and use of multiple-vote shares.

The legislative package is yet to be published in the Official Journal of the European Union. Once published, it will enter into force after 20 days. Member States will have 18 months to transpose the directive amending the MiFID II into national legislation and two years to transpose directive on multiple-vote shares.

The Listing Act aims to facilitate access to the capital markets for small and medium sized enterprises by alleviating the administrative burden and costs, while providing a sufficient degree of investor protection and market transparency.

The reform streamlines the requirements applicable to listing procedures and introduces a broad range of amendments, many of which refer to the Prospectus Regulation. The major changes in this respect are summarized hereafter:

• The requirements under the annexes to the EU Delegated Regulation 980/2019, which set out the content of prospectuses, have been simplified. These should be implemented by the European Commission when it adopts the relevant delegated acts within 18 months from the date of entry into force of the new regulation.
• The amendment removes the requirement for issuers to publish a supplement in order to incorporate new annual or interim financial information into a base prospectus during its validity period. However, companies will be allowed to voluntarily publish such information in a supplement.
• Currently, issuers or offerors, whose offered securities in the European Union in a 12-month period have a total consideration of less than €8,000,000, are exempted from the obligation to publish a prospectus. Under the new regulation, this threshold for exemption will increase to €12,000,000. However, Member States may - after notifying the Commission and ESMA accordingly exempt offers of securities to the public from such obligation in respect of a threshold of €5,000,000 per issuer or offeror calculated over a period of 12 months.
• Currently, if an issuer lists 'new' fungible securities, which make up 20% or less of its securities already listed on the same regulated market, it is exempted from the obligation to publish a prospectus. Under the new regulation, this threshold will increase from 20% to 30%. The same increase also applies in the case of a public offer of such securities.
• Prospectuses will need to be prepared in a standardized format and the information disclosure will need to be presented in a standardized sequence. This will help to ensure that information is presented in a concise and comprehensible form that can be easily analyzed by investors.
• Save for the case of issuers with complex financial conditions or significant financial commitments, prospectuses relating to offers to the public and admission to listing of equity instruments shall be no longer than 300 pages, excluding summary notes and information incorporated by reference.