I. Introduction: EU Listing Act Package
On 8 October 2024, the Council of the European Union adopted the Listing Act, a legislative initiative designed to enhance the attractiveness and accessibility of EU public capital markets, particularly for small and medium-sized enterprises (“SMEs”), with the overarching objective of making these markets more attractive to both issuers and investors. The Listing Act includes amendments to the Prospectus Regulation, the Market Abuse Regulation, MiFID II and MiFIR, and introduces a new directive on multiple-vote share structures.
The package comprises one Regulation and two Directives:
- Regulation (EU) 2024/2809 of the European Parliament and of the Council of 23 October 2024 amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises (“Regulation (EU) 2024/2809”);
- Directive (EU) 2024/2811 of the European Parliament and of the Council of 23 October 2024 amending Directive 2014/65/EU to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises and repealing Directive 2001/34/EC (“Directive (EU) 2024/2811”); and
- Directive (EU) 2024/2810 of the European Parliament and of the Council of 23 October 2024 on multiple-vote share structures in companies that seek admission to trading of their shares on a multilateral trading facility (“Directive (EU) 2024/2810”).
The amendments to the Prospectus Regulation aim to enhance the attractiveness of the European Union’s public markets, particularly for SMEs. To this end, the Listing Act addresses obstacles arising from the length, complexity, and high costs of prospectus documentation, both for companies seeking access to public markets through an initial public offering (“IPO”) and for companies conducting secondary issuances of equity or non-equity securities. The changes also tackle the lengthy scrutiny and approval processes by competent authorities and the lack of convergence in these procedures across the EU, creating a more streamlined and harmonised framework.
This article focuses on some of the key changes to the Prospectus Regulation, in particular the new and extended prospectus exemptions, the simplification and standardisation of prospectuses, and new prospectus types.
II. Key amendments to the Prospectus Regulation
A. New and extended prospectus exemptions
1. Dual-threshold system
The Listing Act has introduced a dual-threshold system to reduce the disproportionate costs of preparing prospectuses for small public offers.
Under the previous regime, public offers under EUR 1 million over a 12-month period were in any case exempt. Additionally, member states could opt to exempt public offers if (i) the total consideration did not exceed EUR 8 million over a 12-month period and (ii) passporting was not required for the public offer. This flexibility resulted in different national regimes. In Belgium, for example, the threshold was set at EUR 5 million (and EUR 8 million in case of investment instruments).
The new regime harmonises these rules across the EU while still allowing flexibility for the member states. By default, public offers under EUR 12 million over a 12-month period are exempt if passporting is not required. However, member states may choose to lower this threshold to EUR 5 million. In both cases, member states can still require a simplified disclosure document, containing no more than the information in a prospectus summary.
2. Extended exemption for secondary issuances
a. Increased threshold
Under the Prospectus Regulation, the admission to trading on a regulated market of securities fungible with those already admitted to trading on the same regulated market was exempt from the obligation to publish a prospectus, provided that the newly admitted securities represented, over a 12-month period, less than 20% of the securities already admitted to trading. The Listing Act increases this threshold from 20% to 30%.
b. Public offers
Moreover, while before the exemption applied solely to admissions to trading of fungible securities, the Listing Act now extends its application to public offers of securities to be admitted to trading on either a regulated market or an SME growth market, provided that:
- the newly admitted securities represent, over a 12-month period, less than 30% of the securities already admitted to trading on the same market;
- the issuer is not undergoing insolvency or restructuring proceedings; and
- a (new) short-form document, including key information for investors as set out in Annex IX to the amended Prospectus Regulation, is filed with the competent authority and made available to the public.
c. Continuously admitted to trading
Additionally, the Listing Act foresees an exemption for fungible securities, regardless of the number of these new securities compared to the number of securities already admitted to trading. The new exemption applies to both admissions to trading and public offers, provided that the original securities have been admitted to trading on a regulated market or an SME growth market continuously for at least 18 months.
In case of admission of securities to trading on a regulated market, it is not required to publish a listing prospectus if the securities are fungible with securities that have been admitted to trading on a regulated market continuously for at least 18 months.
In case of a public offer, it is not required to publish an offering prospectus when the offered securities are fungible with securities that have been admitted to trading on a regulated market or an SME growth market continuously for at least 18 months.
In both cases, however, the exemption does require the publication of a short-form document with key information for investors.
B. Simplification and standardisation of prospectuses
The Listing Act introduces a uniform structure for prospectuses, requiring a standardised format and sequence as set out in new Annexes to the Prospectus Regulation, with further details to follow in delegated acts.
To improve readability and reduce costs, a 300-page limit now applies to prospectuses for public offers or admissions to trading of shares. This limit excludes summaries, incorporated information, and certain additional disclosures for complex financial histories or major changes. The prospectus summary remains limited at 7 pages.
C. New prospectus types
1. EU Follow-on prospectus
The Listing Act introduces a new ‘EU Follow-on prospectus’ that will replace the simplified disclosure regime for secondary issuances.
The EU Follow-on prospectus may be drawn up by:
- issuers whose securities have been admitted to trading on a regulated market continuously for at least the last 18 months preceding either the offer to the public or the admission to trading of the new securities;
- issuers whose securities have been admitted to trading on an SME growth market continuously for at least the 18 months preceding the offer to the public of the new securities;
- issuers who seek admission to trading on a regulated market of securities fungible with securities that have been admitted to trading on an SME growth market continuously for at least the last 18 months preceding the admission to trading of the securities; or
- offerors of securities admitted to trading on a regulated market or an SME growth market continuously for at least the 18 months preceding the offer of securities to the public.
Depending on the types of securities, the EU Follow-on prospectus shall contain the minimum information set out in new annexes IV or V to the Prospectus Regulation.
2. EU Growth issuance prospectus
One of the key objectives of the capital markets union is to make it easier for SMEs to access public markets and secure funding beyond bank loans, helping them to scale and grow. However, the cost of producing a prospectus can deter SMEs from offering securities.
Under the initial Prospectus Regulation, a lighter prospectus, the EU Growth prospectus, was introduced to reduce the costs of preparing a prospectus for smaller issuers, while providing investors with essential information to assess the offer and take an informed investment decision. However, the level of disclosure of an EU Growth prospectus was still considered overly complex and burdensome. The Listing Act therefore replaces the EU Growth prospectus with the EU Growth issuance prospectus.
The EU Growth issuance prospectus may be drawn up by SMEs, and certain other issuers, in the case of an offer of securities to the public, and provided that no securities have been admitted to trading on a regulated market.
The EU Growth issuance prospectus shall contain the relevant reduced and proportionate information necessary to allow investors to understand, in short:
- the prospects and financial performance of the issuer and the significant changes in its financial and business position since the end of the last financial year, if any, as well as its growth strategy;
- the essential information on the securities; and
- the reasons for the issuance and its impact on the issuer.
D. Entry into force and application
The amendments to the Prospectus Regulation entered into force on 4 December 2024. However, there is a phased entry into force for several prospectus amendments.
The replacement of the simplified disclosure regime for secondary issuances with the introduction of the EU Follow-on prospectus, and the replacement of the EU Growth prospectus with the EU Growth issuance prospectus, will enter into force as from 5 March 2026. Simplified prospectuses and EU Growth prospectuses approved before that date will be subject to the former regime.
Several other amendments, such as the revised general de minimis rule for public offers and the standardised format, sequence and page limit, will all enter into force as from 5 June 2026.
III. Conclusion
The amendments to the Prospectus Regulation pursue the overarching objective of enhancing the attractiveness and efficiency of EU public capital markets, with particular regard to facilitating access for SMEs. They are designed to alleviate administrative burdens and reduce the length, complexity, and costs traditionally associated with prospectus documentation, while maintaining robust standards of transparency, investor protection, and market integrity.
While this article has focused on selected key changes to the Prospectus Regulation, the Listing Act also introduces changes to other aspects of the Prospectus Regulation, including ESG disclosure requirements. These and other changes introduced by the EU Listing Act warrant close attention and may require updates to internal policies, disclosure procedures, and compliance systems.
If you have any question about this new regulation, feel free to contact the authors of this article.
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This newsletter does not constitute legal advice or a legal opinion. Please consult with a legal counsel of your choice before taking any action based on the information provided.