On 8 October 2024, the European Council adopted the Listing Act, a significant legislative package designed to make EU capital markets more attractive and accessible to companies, in particular to small and medium-sized enterprises (SMEs) and to enhance transparency, market integrity and investor protection.
This package consists of inter alia two key instruments: (i) Regulation (EU) 2024/2809[1] of the European Parliament and of the Council amending the Prospectus Regulation, the Market Abuse Regulation (MAR) and MiFIR (the Listing Act Regulation), and (ii) Directive (EU) 2024/2811[2] of the European Parliament and of the Council amending MiFID II (the Listing Act Directive) to make public capital markets in the European Union more attractive for companies and to facilitate access to capital for SMEs.
The Listing Act aims at harmonising the regulatory landscape across EU Member States, to reduce administrative burdens, and to support innovation and economic growth. Now (partly) in force, these legislative changes are expected to simplify access to capital, making it easier for companies, especially SMEs, to list and raise funds while ensuring a higher level of investor protection.
We will explore the main provisions of the Listing Act in a two-part series. While we will address in this first Part all relevant changes brought to the prospectus regime, changes to MAR will be addressed in a second Part to follow.
*********************************************************
The European Commission introduced the Listing Act in December 2022 as part of the Capital Markets Union 2020 Action Plan, to create a unified European capital market that supports businesses, individuals, and the economy. The Listing Act includes a series of measures to revise existing regulations, such as Regulation (EU) 2017/129[3] (the Prospectus Regulation), Regulation (EU) No 596/2014[4] (MAR), Directive 2014/65/EU[5] (MiFID II) and Regulation (EU) No 600/2014[6] (MiFIR), as well as introducing a new directive on multiple-vote share structures[7].
The aim is to streamline the process for companies entering public markets or already listed, while upholding the highest standards of transparency, investor protection, and market integrity.
The Prospectus Regulation, which sets the requirements for preparing, approving, and distributing a prospectus when securities are offered to the public or listed on a regulated market, has been criticised for its complexity, high costs, and burdensome nature, particularly for SMEs.
To address these challenges, the Listing Act Regulation introduced several important amendments aimed at simplifying the process by introducing a more standardised and “lighter” prospectus format regime[8].
1. Eased Prospectus Requirements
1.1 Standardised format and sequencing
To improve readability and reduce costs for issuers, the Listing Act Regulation implements a standardised format and sequencing for prospectuses.
A 300-page limit is now introduced for prospectuses related to shares or equivalent transferable securities to reduce excessive information. This limit excludes the summary, information incorporated by reference, including the universal registration document (URD), and additional information for companies with complex financial histories[9]. It does not apply to bonds or to issuers seeking admission to trading on an EU regulated market while offering securities in third countries[10]. The prospectus summary length (seven pages) has also been extended by one page per guarantor (to the extent the information relates to said guarantor)[11]. Finally, the summary can include information in the form of charts, graphs, or tables, making it more comprehensible for retail investors[12].
The European Securities and Markets Authority shall (i) develop guidelines on comprehensibility and on the use of plain language in prospectuses and (ii) draft implementing technical standards to specify the template and layout of prospectuses, including the font size and style requirements (depending on the type of prospectus and the type of investors targeted)[13].
1.2 EU Follow-on prospectus
The simplified prospectus for secondary issuances by companies already listed on a regulated market or an SME growth market for at least 18 months is now limited to 50 pages for shares and must include essential information about the issuer, the securities, and the use of proceeds[14] .
The EU Follow-on prospectus must contain the minimum information set out in Annex IV or Annex V of the revised Prospectus Regulation, as applicable[15].
The European Commission will adopt, by 5 March 2026, delegated acts to define the specific content and standardised format for EU Follow-on prospectus requirements[16].
1.3 EU growth issuance prospectus
The EU growth issuance prospectus is now subject to a lighter and less burdensome regime[17]. The aim is to reduce costs and complexities for SMEs seeking to raise funds on public markets. This prospectus regime is available for SMEs, issuers other than SMEs whose securities are, or are to be, admitted to trading on a SME growth market (unless they have securities admitted to trading on a regulated market), and small unlisted companies with a total consideration for securities offered to the public below EUR 50,000,000 over 12 months[18].
The EU growth issuance prospectus relating to shares will now be subject to a 75-page limit[19].
By 5 March 2026, the European Commission will adopt delegated acts defining and establishing a standardised format for the EU growth issuance prospectus requirements[20].
2. Exemptions from the obligation to publish a prospectus
2.1. Uniformised threshold
Under the former prospectus regime, Member States had the option to apply the small offer exemption regime for any offer with a total consideration of less than EUR 8,000,000. Luxembourg had elected to apply this threshold. The Listing Act now tends to apply a uniform small offer exemption regime across the EU, through a dual-threshold system:
- a principal harmonised threshold of EUR 12,000,000 per issuer over a 12-month period; and
- an optional lower threshold of EUR 5,000,000, allowing uniformity across the Member States as to the lower threshold[21].
From now on, the EUR 12,000,000 threshold will apply as general rule with the possibility for Member States to apply at their discretion the lower EUR 5,000,000 threshold. This change seeks to streamline costs and streamline the process for SMEs, mitigate market fragmentation, and facilitate capital raising without requiring the publication of a prospectus in compliance with the Prospectus Regulation.
2.2. Secondary issuances
Revised and updated exemptions apply to secondary issuances. In fact, the revised Prospectus Regulation introduces a new exemption for public offers of securities fungible with those already admitted to trading on a regulated market or on an SME growth market. This exemption applies when the newly offered securities:
- represent less than 30% (instead of 20% previously) of the existing securities already admitted to trading on the same market over a 12-months period; and
- to the extent that the issuer is not undergoing restructuring/insolvency proceedings[22].
The issuer now has to file a short-form document in compliance with Annex IX of the revised Prospectus Regulation (the Annex IX Document), with the national competent authority (NCA) (i.e., the CSSF in Luxembourg)[23]. The former exemption which applied to fungible securities admitted to trading on a regulated market has also been increased from 20% to 30%. As a result, the revised Prospectus Regulation applies a 30% threshold exemption applicable both in the case of public offers and admissions to trading, simplifying the process for issuers to raise capital[24].
Furthermore, a new exemption applies to offerings and admissions to trading of fungible securities, regardless of their size, if the original securities have been continuously traded on a regulated market or SME growth market for at least 18 months, excluding offers linked to mergers or takeovers[25]. The Annex IX Document must, in this situation, also be filed with the NCA, without need for approval.
The Annex IX Document is limited to 11 pages and includes essential information about the securities offered, the risks involved, and a statement of the issuer’s ongoing compliance with transparency and reporting obligation under the relevant European regulations[26].
Credit institutions are now exempted from the obligation to publish a prospectus in the case of an offer or admission to trading on a regulated market of certain non-equity securities issued on a continuous or repeated manner up to an aggregate consideration of EUR 150 million (instead of EUR 75 million previously) over a period of 12 months, subject to certain specific requirements[27]
3. ESG Information
Environmental, Social and Governance (ESG) considerations have now been introduced to enhance the disclosure of ESG factors in financial products and services. This ensures consistency with other EU legislative acts on sustainability reporting and aims to prevent greenwashing with the requirements to include specific ESG related statements in the prospectus[28].
The prospectus summary must now include, where relevant, a statement acknowledging that the company has identified environmental issues as a significant risk factor[29]. Additionally, if the issuer is subject to Article 8 of the Taxonomy[30], the prospectus should clarify whether the issuer’s activities are linked to economic activities that qualify as environmentally sustainable. For public offerings or listings of equity securities on a regulated market, the prospectus should either incorporate or include information from the management and consolidated management reports, which must cover sustainability disclosures as outlined in the Accounting Directive[31] and Transparency Directive[32].
In addition, tailored requirements have been established for European green bonds. If a bond qualifies as European green bond (within the meaning of Regulation (EU) 2023/2631, the EU Green Bond Regulation[33]), the prospectus must incorporate by reference the relevant information from the European green bond factsheet[34].
For bonds marketed as environmentally sustainable or substantiality-linked bonds, the prospectus shall include the optional disclosures from the EU Green Bond Regulation, but only if the issuer has opted to include them[35].
4. Incorporation by reference
Issuers can incorporate by reference on a voluntary basis information that is not to be included in a prospectus when such information has been previously published electronically, hence reducing duplication, and simplifying the prospectuses[36]. This includes documents approved by or filed with a competent authority, management reports, and sustainability reporting[37].
Likewise, to remove unnecessary costs and increase efficiency, issuers are not anymore required to publish a supplement for updating annual or interim financial information incorporated by reference into a base prospectus that is still valid[38]. Issuers still have the possibility to publish a supplement on a voluntary basis.
5. Equivalence regime for third-country issuers
To enhance access for third-country issuers, including SMEs, and increase investment opportunities for EU investors, it was crucial to streamline the process for third-country issuers seeking to enter EU public markets. This is achieved by recognising prospectuses already approved by third-country authorities as equivalent, provided that they also fulfil requirements such as language standards, adherence to advertising rules and regulatory cooperation, thereby facilitating their access to the EU market[39].
NCAs will no longer be responsible for assessing the equivalence of non-EU approved prospectuses with EU disclosure standards. Instead, the European Commission will undertake this assessment and grant equivalence, ensuring that only third country issuers from jurisdictions with comparable standards can access EU markets, thus preventing regulatory arbitration and maintaining EU standards[40].
The European Commission may adopt delegated acts to further specify the conditions for equivalence.
6. Reduced Publication Deadlines
To enhance the attractiveness of EU markets and respond more effectively to fast-moving market dynamics, the minimum period between the publication of a prospectus and the closing of an initial public offering has been shortened from six to three working days[41].
7. Risks Factors
This amendment redefines the approach to risk factors displayed in a prospectus, focusing on materiality and clarity, to ensure that investors receive accurate, relevant information regarding the risks associated with an issuer and the securities being offered[42].
Under the revised Prospectus Regulation, risk factors included in a prospectus must be material and relevant, focusing specifically on risks directly related to the issuer and the securities being offered. Generic or vague risk factors are excluded, ensuring that investors are provided with clear and actionable information[43]. Each risk must be explained in detail, outlining its potential impact on either the issuer or the securities, so that investors can fully understand how each risk may affect their investment. Issuers are required to assess the materiality of each risk by evaluating the likelihood of its occurrence and the potential severity of its impact. They may also include a qualitative scale to further clarify the level of materiality. Furthermore, risk factors must be organised and categorised appropriately, with the most material risks in each category presented in a consistent manner, reflecting the issuer's assessment of their significance[44]. This ensures that investors can easily identify and understand the key risks associated with the offering.
8. Entry into force
Amendments to the Prospectus Regulation are in force since 4 December 2024 with no need for implementation by Member States[45]. However, certain provisions will be delayed, namely:
- Provisions related to the EU growth issuance and follow-on prospectuses will take effect on 5 March 2026.
- Provisions on document standardisation and the "small offer" exemptions will apply on 5 June 2026.
A grandfathering regime allows prospectuses approved before these dates to remain governed by the previous Prospectus Regulation until their validity expires[46].
Conclusion
The Listing Act Regulation brings substantial changes to prospectus requirements, harmonising rules across EU Member States and improving market efficiency. By requiring more detailed and frequent disclosures, the regulation enhances transparency and boosts investor confidence, empowering more informed decision-making. Simplified procedures make compliance easier and improve access to financing, especially for SMEs. Overall, these reforms are set to foster a more integrated, transparent, and dynamic financial market within the European Union, driving economic growth and innovation.
[1] 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 available on https://eur-lex.europa.eu/
[2] 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 available on https://eur-lex.europa.eu/
[3] Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC available on https://eur-lex.europa.eu/
[4] Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC available on https://eur-lex.europa.eu/
[5] Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU available on https://eur-lex.europa.eu/
[6] Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 available on https://eur-lex.europa.eu/
[7] 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 available on https://eur-lex.europa.eu/
[8] Preamble n°6 of the Listing Act Regulation, spec. Article 1 (1) amending Article 1 §4 of the Prospectus Regulation.
[9] Article 1 (6) amending Article 6 of the Prospectus Regulation.
[10] Ibidem.
[11] Ibidem.
[12] Preamble n° 19 and 20 of the Listing Act Regulation, spec. Article 1 (7) amending Article 7 §3 of the Prospectus Regulation.
[13] Ibidem.
[14] Preamble, n°27 of the Listing Act Regulation, spec. Article 1 (12) introducing new Article 14a in the Prospectus Regulation.
[15] Preamble, n°27 of the Listing Act Regulation, spec. Article 1 (12) introducing new Article 14a §4 in the Prospectus Regulation.
[16] Preamble n°27 of the Listing Act Regulation, spec. Article 1 (12) introducing a new Article 14a §8 in the Prospectus Regulation.
[17] Preamble n°35 of the Listing Act Regulation, spec. Article 1 (14) introducing a new Article 15a in the Prospectus Regulation.
[18] Preamble n°35 of the Listing Act Regulation, spec. Article 1 (14) introducing a new Article 15a in the Prospectus Regulation.
[19] Ibidem.
[20] Preamble n°35 of the Listing Act Regulation, spec. Article 1 (14) introducing a new Article 15a §8 in the Prospectus Regulation
[21] Preamble n°8 of the Listing Act Regulation, spec. Article 1 (3) amending Article 3 §1, 2 and 2a of the Prospectus Regulation.
[22] Preamble n°11 of the Listing Act Regulation, spec. Article 1 (4) amending Article 1 §4 of the Prospectus Regulation.
[23] Preamble n°11 of the Listing Act Regulation, spec. Article 1 (1) amending Article 1 §4 of the Prospectus Regulation.
[24] Ibidem.
[25] Ibidem.
[26] Appendix IX Document of the Prospectus Regulation.
[27] Preamble n°11 of the Listing Act Regulation, spec. Article 1 (1) amending Article 1 §5 (i) of the Prospectus Regulation.
[28] Preamble n°26 of the Listing Act Regulation, spec. Article 1 (10) amending Article 13 of the Prospectus Regulation.
[29] Preamble n° 20 of the Listing Act Regulation, spec. Article 1 (7) amending Article 7 §5 of the Prospectus Regulation.
[30] Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 available on https://eur-lex.europa.eu/
[31] Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC available on https://eur-lex.europa.eu/
[32] Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC available on https://eur-lex.europa.eu/
[33] Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds available on https://eur-lex.europa.eu/
[34] Article 1 (10) of the Listing Act Regulation amending Article 13 of the Prospectus Regulation.
[35] Preamble n°26 of the Listing Act Regulation, spec. Article 1 (10) amending Article 13 of the Prospectus Regulation.
[36] Preamble n°42 of the Listing Act Regulation, spec. Article 1 (17) amending Article 19 of the Prospectus Regulation.
[37] Ibidem.
[38] Preamble n°43 of the Listing Act Regulation, spec. Article 1 (17) inserting Article 19 in the Prospectus Regulation.
[39] Preamble n°56 of the Listing Act Regulation, Article 1 (22) replacing Article 29 of the Prospectus Regulation.
[40] Ibidem.
[41] Preamble n°49 of the Listing Act Regulation, Article 1 (19) amending Article 21 of the Prospectus Regulation.
[42] Preamble n°40 of the Listing Act Regulation.
[43] Ibidem.
[44] Preamble n°40 of the Listing Act Regulation, Article 1 (15) amending Article 16 §1 of the Prospectus Regulation.
[45] Article 4 of the Listing Act Regulation.
[46] Article 1 (30) of the Listing Act Regulation introducing a new Article 48a in the Prospectus Regulation.
