Changes from report parliamentary committee draft to plenary report

RemovedEXPLANATORY STATEMENT

AddedPower is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

RemovedThe Rapporteur welcomes the Commission’s proposal for the Listing Act and its designed overhaul of the current EU framework for company listings.

Added______________

RemovedAs part of this proposal, a package of reviews to existing pieces of legislation is in front of us.

Added* 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 (OJ L 198, 22.6.2020, p. 13).’;

RemovedThe Commission proposals comprise the following:

Added(e) paragraph 7 is amended as follows:

Removed A proposal to amend (i) the Prospectus Regulation to harmonise requirements for the drawing up, approval, and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (2017/1129), (ii) the regulation on market abuse (MAR) aimed at preventing and detecting market abuse, market manipulation and insider dealing (596/2014), and (iii) the regulation on markets in financial instruments (MiFIR), which provides a legal framework for securities markets, investment intermediaries, and trading venues (600/2014);

Added(i) the introductory sentence is replaced by the following:

Removed A proposal to amend the directive on markets in financial instruments, MiFID II, designed to regulate financial markets and improve protections for investors (2014/65/EU), and to repeal the Listing Directive coordinating the conditions for admission of securities to official stock exchange listings and the information to be published on those securities (2001/34/EC);

Added‘The section referred to in paragraph 4, point (c), shall contain the following information in the following order:’;

Removed A proposal for a new directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market. The proposal aims to address the regulatory burden faced by companies during the phase preceding the initial public offering (IPO) and the imbalance across the EU when choosing appropriate governance structures when they list (2022/0406).

Added(ii) the fifth subparagraph is replaced by the following:

RemovedAs a general approach, the Rapporteur approves simplification and standardisation of the listing framework in the EU, as long as this is not to the detriment of investors and/or the market. There is a general acceptance from all sides: work on the CMU has fallen too far behind, and it is not delivering results.

Added‘Where the summary contains the information referred to in the first subparagraph, point (c), the maximum length set out in paragraph 3 shall be extended by one additional side of A4-sized paper, where there is one guarantor only, or by 3 additional sides of A4-sized paper where there are more guarantors.’;

RemovedThe EU capital market continues to lose ground when compared to other continent-wide markets. In relative terms but not only, the share of market capitalisation worldwide has been shrinking these last three years, and this with Brexit taken into account.

Added(f) in paragraph 8, the introductory sentence is replaced by the following:

RemovedThe Listing Act aims to reduce regulatory burdens, generally perceived as one of the main obstacles to progress towards a flourishing EU capital market. A reduction in regulatory burdens associated with listing must, however, not come at the expense of keeping strong investor protection rules in place.

Added‘The section referred to in paragraph 4, point (d), shall contain the following information in the following order:’;

RemovedIn the spirit of attaining a balanced approach, the Rapporteur has met with a great number of market participants and regulators. On this basis, the Rapporteur is proposing to amend the Commission’s proposal on a number of elements while maintaining and enhancing its main raison d’etre.

Added(g) paragraph 12a is deleted;

RemovedThe major changes relate to the following issues: threshold for prospectus requirements; length of the prospectus; strengthening of ESG requirements; MAR’s revision on insiders; proposed changes to the Mifid II Directive; and the widening of the Multiple Voting Structure Directive.

Added(h) the following paragraph ▌is inserted:

RemovedThreshold for prospectus requirements

Added‘12b. By way of derogation from paragraphs 3 to 12 of this Article, an EU Follow-on prospectus drawn up in accordance with Article 14b or an EU prospectus drawn up in accordance with Article 15a shall contain a summary drawn up in accordance with this paragraph.

RemovedThe Rapporteur believes that due to the current European market architecture, a uniform EUR 12 million threshold for exempting small offers of securities to the public from the obligation to publish a prospectus is not in the best interest of maintaining satisfactory regulation over the market at national level. Therefore, it is proposed to adopt the Commission’s approach on the sequencing of the prospectus, to also allow an increase of the threshold to EUR 12 million but at the same time giving flexibility to Member States to adopt lower thresholds with a minimum of EUR 5 million threshold.

AddedThe summary of an EU Follow-on prospectus or of an EU Growth prospectus shall be drawn up as a short document written in a concise manner and of a maximum length of 7 sides of A4-sized paper when printed.

RemovedLength of the prospectus

AddedThe summary of an EU Follow-on prospectus or of an EU Growth prospectus shall not contain cross-references to other parts of the prospectus or incorporate information by reference and shall comply with the following requirements:

RemovedAs part of the Listing Act proposal, the Commission is attempting to create an EU-level standardisation for prospectuses. This approach is generally welcomed by the Rapporteur. He fully agrees with the view that a uniform structure based on sequencing is ideal for all players on the market since it makes prospectuses more readable and comprehensible for both retail and professional investors.

Added(a) it shall be presented and laid out in a way that is easy to read, using characters of readable size;

RemovedYet, the Commission also seeks to introduce a blanket length limit at 300 pages for prospectuses in order, it claims, to make it easier for retail investors to read such prospectuses. The Rapporteur recognises that prospectuses are lengthy and possibly unreadable for the average retail investor. Yet, data shows that retail investors do not read prospectuses, even in countries where prospectuses are lower than 300 pages. The prospectus in fact remains a professional document prepared for professional investors. It is seen as an instrument that covers issuers for legal liability, mostly read by professional investors or advisors operating out of investing funding agencies. They have, or should have, no problem with reading and understanding prospectuses, no matter their length. For these stated reasons, the Rapporteur adopts the Commission’s view on the sequencing of prospectuses while suggesting to remove page limits on prospectus documents.

Added(b) it shall be written in a language that is clear, non-technical, concise and comprehensible for investors and in a style that facilitates the understanding of the information;

RemovedStrengthening of ESG requirements

Added(c) it shall be made up of the following four sections in the following order:

RemovedThe Rapporteur welcomes the inclusion of ESG rules in the proposed framework, and is of the view that the placement of ESG rules needs to be strengthened in the prospectus presentation and elsewhere. Changes to the prospectus regulation must, in the Rapporteur’s view, remain coherent with the ongoing general EU reform commitment across this essential policy area, about which there is wide-ranging agreement.

Added(i) an introduction, containing all of the information referred to in paragraph 5 of this Article, including warnings and the date of approval of the EU Follow-on prospectus or of the EU Growth issuance document;

RemovedMAR’s revision on insiders

Added(ii) key information on the issuer;

RemovedThe Listing Act’s proposals for changes to the MAR are generally welcomed although the Rapporteur recognises the controversial nature of the Commission’s proposed revision on insiders and how to identify and monitor them. Here, the Rapporteur notes ESMA’s warning regarding the simplifications being proposed, which could harm the capacity of national supervisors to easily enforce the rules against market abuse. Therefore, the Draft Report proposes the removal of the Commission’s text on insiders list.

Added(iii) key information on the securities, including the rights attached to those securities and any limitations on those rights;

RemovedProposed changes to the Mifid II Directive

Added(iv) key information on the offer of securities to the public or the admission to trading on a regulated market, or both;

RemovedOn a general note, the Rapporteur welcomes the elements introduced by the Commission to the Mifid II Directive and in this context recognises the efforts aimed at facilitating the listing of companies.

Added(v) where there is a guarantee attached to the securities, key information on the guarantor and on the nature and scope of the guarantee.

RemovedWith the aim of improving on the Commission’s proposals, the Rapporteur introduces the idea of regulatory technical standards by ESMA to establish an EU harmonised code of conduct for issuer-sponsored research. Furthermore, in view of reducing the risks of fragmentation of liquidity, the Rapporteur, extends the issuer non-objection requirement concerning the admission to trading of an instrument already admitted on SME Growth Markets, to any trading venue.

AddedWithout prejudice to the third subparagraph, points (a) and (b), the summary of an EU Follow-on prospectus or of an EU Growth prospectus may present or summarize information in the form of charts, graphs or tables.

RemovedWidening of Multiple Voting Structures while safeguarding investors

AddedWhere the summary of an EU Follow-on prospectus or of an EU Growth prospectus contains the information referred to in the third subparagraph, point (c)(v), the maximum length as referred to in the second subparagraph shall be extended by one additional side of A4-sized paper, where there is one guarantor only, or by 3 additional sides of A4-sized paper where there are more guarantors.’;

RemovedThe Commission’s proposal for this Directive is that companies should be able to choose governance structures that best suit their development stage. The Rapporteur agrees with the approach with some proposed adjustments.

Added(ha) the following paragraph is added:

RemovedSpecifically, in order to increase the attractiveness of listing in the EU, the option for multiple voting structures should not be limited to SME growth markets but expanded to all regulated markets. Furthermore, in order to maintain a high level of trust in the market, the Rapporteur introduces a set of obligatory safeguards including a limited voting ratio and a 10-year (definite time-set) sunset clause.

Added‘13a. ESMA shall develop guidelines on comprehensibility and on the use of plain language in summaries to ensure that the information provided therein is concise, clear and user friendly.

AddedIn order to ensure uniform conditions of application of this Article, ESMA shall develop draft implementing technical standards to specify the template and layout of the summaries, including the font size and style requirements.

AddedESMA shall submit those draft implementing technical standards to the Commission by ... [XX months from the date of entry into force of this amending Regulation].

AddedPower is delegated to the Commission to supplement this Regulation by adopting the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.’;

Added(8) in Article 9(2), the second subparagraph is replaced by the following:

Added‘After the issuer has had a universal registration document approved by the competent authority for one financial year, subsequent universal registration documents may be filed with the competent authority without prior approval.’;

Added(9) in Article 11(2), second subparagraph, the introductory part is replaced by the following: