The EU's Listing Act package was first proposed in 2022 as part of reforms to the EU's Capital Markets Union. The package aims to simplify listing requirements and ongoing obligations to make public markets more attractive to EU companies and to support access to capital for small and medium enterprises (SMEs).
Following conclusion of the EU legislative process, the package was published in the Official Journal of the EU on 14 November 2024. It is made up of three legislative acts:
- Regulation (EU) 2024/2809 (the Listing Regulation) amends the Prospectus Regulation (EU) 2017/1129 (the PR), the Market Abuse Regulation (EU) 596/2014 (MAR) and the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR).
- Directive (EU) 2024/2811 (the Listing Directive) amends the Markets in Financial Instruments Directive (EU) 2014/65 (MiFID) in relation to investment research.
- Directive (EU) 2024/2810 (the MVSD) is a new directive introducing multiple-vote share structures in companies seeking admission to trading on multilateral trading facilities (MTFs).
Some of the most significant reforms are introduced by the Listing Regulation and amend the PR and MAR. They apply on a phased basis over the next 18 months on three key dates: 4 December 2024, 5 March 2026 and 5 June 2026.
From 4 December 2024
The key changes to the PR are as follows:
- Risk factors: New wording in the PR provides that a prospectus should not contain risk factors that are generic, serve only as disclaimers, or that "do not give a sufficiently clear picture of the specific risk factors of which investors are to be aware". The requirement to rank the most material risk factors is replaced by a requirement to list the most material risk factors in a limited number of categories and in a manner that “is consistent with” the issuer’s assessment of the materiality of those risk factors "based on the probability of their occurrence and the expected magnitude of their negative impact".
- Electronic access: Prospectuses need only be provided electronically, on request by potential investors, and free of charge.
- Language: Unless a particular Member State ops out, issuers will now be permitted to draw up their prospectus in "a language customary in the sphere of international finance" (thought to mean the English language) where an offer of securities to the public is made or admission to trading on a regulated market is sought in the home Member State only. Previously, the prospectus had to be drawn up in the language specified by the competent authority of the home Member State.
In relation to MAR, the key changes include:
- PDMR/PCA transactions: The threshold above which Persons Discharging Managerial Responsibilities (PDMR) and Persons Closely Associated (PCA) dealings must be notified is rising from €5,000 to €20,000.
- Expansion of exemptions: The current exemptions to the PDMR/PCA prohibition are expanded to include financial instruments and other shares (such as debt and derivative instruments).
- Expansion of exceptional circumstances: The list of exceptional circumstances where a PDMR can deal during a closed period is also expanded.
From 5 March 2026
The key changes to the PR and MAR include the following:
- New EU Follow-on Prospectus: This will replace the EU Recovery prospectus regime, the simplified disclosure regime for equity and non-equity secondary issuances.
- New EU Growth issuance prospectus: This will replace the EU Growth Prospectus regime. This will mainly affect SMEs and other issuers with securities admitted or to be admitted to trading on an SME growth market.
From 5 June 2026
Key changes to the PR include the following:
- New Member State exemption threshold: The discretionary national exemption threshold for public offers of securities will be raised from €8m to €12m (the current Irish threshold is €8m).
- Other exemptions: The exemption for offers of securities to the public with a total consideration in the EU of less than €1m will be removed and the ‘admission to trading’ exemption threshold for secondary issuances will increase from 20% to 30%. There will also be new exemptions for secondary issuances based on a ‘key information’ document.
- New standardised format: Various amendments will be made to further standardise and streamline the format and sequencing of the prospectus and summary, most notably in relation to the order in which information is disclosed. The European Securities and Markets Authority (ESMA) is tasked with drafting technical standards for the European Commission and with developing guidelines on comprehensibility and the use of plain language in summaries. The key features of the new prospectus format include:
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a 300-page limit (on A4-sized paper) for prospectuses relating to offers of shares
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a prospectus presented and laid out in a way that is easy to read, using characters of readable size
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specific requirements for sustainability disclosures
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the possibility to incorporate new annual or interim financial information into the base prospectus by reference instead of having to supplement it
Key changes to MAR include the following:
- Market soundings: Changes will be introduced to the market soundings framework, including a change in the definition of 'market sounding' to include communications of information not followed by any specific announcement of a transaction (such as where inside information is disclosed to potential investors in respect of a transaction that doesn’t go ahead). An amendment to MAR will also clarify that the market soundings framework is optional for disclosing market participants. Disclosing market participants complying with the framework will still benefit from a safe harbour from the prohibition against the unlawful disclosure of inside information, but non-compliance will not create a presumption of unlawful disclosure.
- Delayed disclosure of inside information: The current rules setting out when issuers can legitimately delay disclosure of inside information include the condition that delay of disclosure should not be "likely to mislead the public". This will be replaced with the condition that the delayed inside information is not contrary to the most recent previous public announcement by the company on the matter to which the inside information relates.
- Disclosure of inside information during protracted processes: MAR will carve out intermediate steps in a protracted process (such as a large merger or litigation) to alleviate the current immediate disclosure obligation. In such circumstances, an issuer will be required — subject to safeguarding confidentiality — to make an announcement only when the final step in the process is taken, such as when definitive transaction documents are signed, or board approval is obtained. Before this final step is taken, the issuer will not be considered to be "delaying" in making an announcement, so it will not need to satisfy conditions in the ESMA guidelines on delayed disclosure.
Note: These changes only affect announcements disclosing inside information to the public. If the issuer comes into possession of inside information during an intermediate step, it must still create an insider list, prohibit dealings by insiders, and take the other usual precautions around inside information.
The Listing Directive
Member States have until 5 June 2026 to introduce implementing measures and legislation to transpose the Listing Directive and this legislation must be applied across the EU from 6 June 2026. The Listing Directive has two key impacts, as follows:
- MiFID II maximum market capitalisation threshold: This threshold will be removed, which means investment firms will have much more freedom when it comes to payments for execution services and research, subject to the following provisos:
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Investment firms must agree the methodology of their remuneration with the third-party provider of research and execution services, including how the total cost of research will be taken into account when establishing the total charges for investment services.
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Investment firms must inform clients of their choice to pay either jointly or separately for execution services and research, their policy regarding this, and how they prevent or manage conflicts of interest.
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Repeal of the old Listing Directive and the free float requirement: Most of the provisions of the old Listing Directive (the Consolidated Admissions and Reporting Directive 2001/34/EC) will not be replaced or reinstated. However, the requirement for a minimum percentage of shares to be in public hands from admission (the "free float requirement") will be retained, but with the percentage reduced from 25% to 10%. It will also become easier to satisfy this requirement, because eligible investors will count as "the public" wherever they are in the world, whereas at present they count only if they are located in the EU or the EEA.
MVSD
Member States have until 5 December 2026 to introduce legislation and measures to implement the MVSD into national law. The MVSD lays down common rules on multi-vote share structures (also known as dual-class share structures (DCSS)) in companies seeking the admission to trading of their shares on MTFs, including SME growth markets, for the first time. Member States will be required to ensure that a company seeking to list its shares on an EU MTF for the first time is permitted to adopt a DCSS. This will allow for greater harmonisation among Member States and deter forum shopping for an initial public offering (IPO) venue that permits their desired form of DCSS.
At the same time, the MVSD will protect the rights of shareholders who hold shares with a lower number of votes per share by introducing certain safeguards. For example, the impact of DCSS on the decision-making process of the general meeting must be limited by the introduction of either:
The impact of the Listing Act package will be felt gradually, as it will take some time for all of the changes to come into effect. We will be following these developments closely and analysing what, if any, impact they have on EU markets.
