Background
On 24 April 2024, the EU Parliament adopted the EU Listing Act. The Listing Act is part of a package of measures aiming to further develop the Capital Markets Union. The purpose of the Capital Markets Union is to enable companies to diversify their funding and access funding sources other than bank lending, to help them grow and to adapt their financing structure when maturing.
The Listing Act package introduces reforms to make EU public capital markets more attractive for companies to seek listing and stay listed by alleviating and making more proportionate the requirements that apply both at the moment of listing and when a company is already listed.
The reform consists in targeted amendments to:
- EU Regulation 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the Prospectus Regulation);
- EU Regulation 596/2014 on market abuse (the Market Abuse Regulation); and
- EU Directive 2014/65 on markets in financial instruments (MiFID II) and EU Regulation 600/2014 on markets in financial instruments (MiFIR).
A new Directive on multiple vote share structures has also been adopted. Additionally, Directive 2001/34 on the admission of securities to official stock exchange listing and on information to be published on those securities is repealed (the Listing Directive).
While one of the expressed purposes of the Listing Act is to facilitate access to capital for small and medium-sized enterprises, the scope is more general, and all listed companies and companies seeking a listing are concerned by the reform.
This briefing is part of a series of briefing in three parts covering the Listing Act. Part 1 of the series provided an overview of the most important changes to the Prospectus Regulation. This Part 2 analyses the changes made to the Market Abuse Regulation and MiFID II, which are materialised in (i) a Regulation amending Regulation (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 and (ii) a Directive 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. Part 3 will discuss the new directive on multiple-vote share structures.
Key insights
- Feedback from stakeholders has revealed that the Market
Abuse Regulation places significant burden on companies
once listed. The Listing Act aims to address disproportionate
disclosure requirements for issuers while ensuring an appropriate
level of investor protection and market integrity.
- Key changes include a change in the disclosure
obligations of inside information in protracted processes
and an increase of the threshold applicable to
managers' transactions notifications.
Additional changes are made to the market sounding
regime and the share buyback safe
harbour. A new cross market order book
surveillance mechanism is also put into place.
- Changes made to MiFID II address the shortage of investment research regarding small and mid-capitalisation companies by a change in the unbundling rule and the introduction of an EU code of conduct for issuer-sponsored research. Free float requirements for listings on regulated markets are also decreased.
1. Market Abuse Regulation
A. Delaying disclosure of inside information
When an issuer holds inside information which directly concerns that issuer, it must disclose such information to the public as soon as possible, unless the issuer would decide to make use of the possibility to delay disclosure under its responsibility and would to be entitled to do so under the conditions of the Market Abuse Regulation.
Under the amended Market Abuse Regulation, delaying disclosure is possible under the three following conditions:
- Immediate disclosure is likely to prejudice the legitimate interest of the issuer.
- The information that is intended to be delayed is not in contrast with the latest public announcement or other type of communication by the issuer on the same matter.
- The issuer is able to ensure confidentiality.
This first and third conditions already apply today. The second condition replaces the more generic condition that "the delay is not likely to mislead the public".
The new condition is inspired by the current guidelines of ESMA on delayed disclosure, according to which the delay is likely to mislead the public in at least the following circumstances if the information (i) is materially different from a previous announcement of the issuer on the same matter, (ii) relates to the fact that financial objectives will likely not be met where they have been previously announced and (ii) is in contrast with market expectations when such expectations are based on signals sent by the issuer.
The EU Commission has been empowered to adopt a Delegated Act setting out where necessary a non-exhaustive list of situations in which inside information is in contrast with the latest public announcement or other type of communication.
Contrary to the initial proposal of the EU Commission, the competent authority will only need to be informed that the delaying procedure has been applied immediately after the information has been disclosed to the public (ex-post notification – no changes compared to current regime).
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