In December 2022, the European Commission presented a legislative proposal containing, among other things, proposed changes to the Prospectus Regulation and the Market Abuse Regulation (MAR). The proposal forms part of the Listing Act legislative initiative, which aims to simplify pre- and post-stock market listing requirements in order to make the capital markets more attractive in the EU.
WHAT DOES THE PROPOSAL ENTAIL?
If the proposal becomes a reality, it will mean several important changes in practical terms that that will affect stock market listings and raising capital in listed companies. The exemptions from the prospectus obligation are broadened, which means that more transactions will be exempt from the prospectus obligation. The information requirements for prospectuses are further standardised and new simplified types of prospectuses are introduced for secondary issues and SMEs. The aim is to make it both easier and cheaper to draw up a prospectus in connection with a stock market listing or when raising capital.
The proposal also means changes with regard to listed companies’ obligation to disclose insider information, simplified requirements relating to insider lists and a higher threshold for transparency reporting of transactions carried out by senior executives and their related parties.
A brief sample of the proposed changes to the Prospectus Regulation and the Market Abuse Regulation is presented below:
The Prospectus Regulation:
- Offers below EUR 12 million (in total over a twelve-month period) are exempt from the prospectus obligation.
- The exemption from the prospectus obligation upon admission to trading of securities in the case of new issues is increased from up to 20% of the securities already admitted to trading to up to 40% of the securities already admitted to trading. It is proposed that the exemption should also apply to offers to the public.
- A new simplified type of prospectus is introduced for secondary issues.
- A simplified type of prospectus for SMEs replacing the current EU growth prospectus is introduced.
- A new prospectus exemption which, under certain conditions, allows a separate summary to be drawn up for secondary issues in SMEs is introduced.
- The information requirements for prospectuses are further standardised and a fixed outline and page restrictions are introduced.
- Incorporation by reference becomes obligatory for certain types of information (e.g. financial reports).
- There is a proposal that it should be possible to draw up a prospectus only in English without applying for an exemption (with the exception of the summary, which must also be drawn up in Swedish).
The Market Abuse Regulation (MAR):
- It is proposed that the obligation to make public insider information that relates to a step in an ongoing process be removed (insider information need not be made public before a process has been completed).
- Clarifications are issued regarding the conditions for deferred publication of insider information and new rules are introduced on when the competent authority must be notified of a decision on deferred publication.
- The requirements relating to insider lists are simplified in that the listed company only need draw up a list of permanent insiders.
- The threshold amount for reporting on insider trading is raised from EUR 5,000 to EUR 20,000 per calendar year.
WHAT HAPPENS NOW?
Comments on the proposal may be submitted up to the end of March 2023. Before the legislative proposal can enter into force, it must go through the EU's legislative process and be approved by both the European Parliament and the Council of the European Union. It is therefore by no means certain that the proposal in its current form will lead to strong legislation and it is unclear when the proposed changes will enter into force if they are approved. Lindahl is monitoring developments in relation to the Listing Act and will provide updates as the legislative process progresses.
You are very welcome to contact us if you have any questions regarding the Listing Act or other questions relating to capital markets and public M&A.