The Capital Markets Union (“CMU”) is an initiative that seeks to integrate national markets into a genuine EU-wide single market. The aim is that capital can flow throughout the EU so that it can benefit consumers, investors and businesses, regardless of where they are located.
In September 2020, as part of the COVID-19 recovery strategy, the European Commission published a second Action Plan to drive this initiative forward. Among other things, and after recognizing that listings are very costly in the EU (especially for SMEs), the plan proposes to simplify the rules for admission to trading on the capital markets.
To this end, the European Commission published legislative proposals in three areas on December 7 (“clearing, insolvency and listing package”): (i) clearing services¾aimed at making these more attractive and resilient, (ii) rules on corporate insolvency across the EU¾aimed at making the process more efficient and streamlining cross-border investment, and (iii) rules on the admission of securities to trading in regulated EU markets¾aimed at alleviating the burden of entering capital markets. In terms of listing, the European Commission put forward three legislative proposals (“listing package”):
i. Proposal for a regulation (and annexes to the Proposal) amending the Prospectus Regulation (2017/1129/EU), the Market Abuse Regulation or “MAR” (596/2014/EU), and the Markets in Financial Instruments Regulation or “MiFIR” (600/2014/EU).
ii. Proposal for a Directive amending the MIFID II Directive (2014/65/EU) and repealing the Listing Directive (2001/34/EC).
iii. Proposal for a new Directive on multiple-vote share structures in companies that seek admission to trading on SME growth markets.
The proposals are accompanied by FAQs (LISTING ACT Section).
These proposals include the following measures:
- for prospectuses for admission to trading on a regulated market or for an offer of securities to the public, a streamlining of the initial issues and simplifications and exceptions for frequent issuers;
- regarding market abuse, a clarification of the disclosure of insider information, a review of the rules on managers’ transactions, insider lists and market sounding, as well as a specific penalty regime for SMEs; and
- the possibility of using multiple-vote share structures for IPOs in SME growth markets in all Member States so that owners can retain sufficient control over the company after the listing.
The feedback period for the proposals for regulations and directives adopted by the European Commission runs until February 2023.