A core aim of the capital markets union is to improve access to market-based sources of financing for small and large firms. This will help them grow and diversify their funding, which is particularly important for small and medium-sized enterprises (SMEs) that rely excessively on bank loans. On 1 February 2024, the European Parliament and Council reached a provisional agreement on the Listing Act. What do the new listing rules cover and how will companies across Europe benefit from them?
The new listing rules
The Commission proposed the Listing Act in December 2022. It was a package of measures to review the Prospectus Regulation, Market Abuse Regulation, Markets in Financial Instruments Regulation and Directive (MiFIR/MiFID II), and to introduce a new Directive on multiple-vote share structures. The Listing Act will alleviate the requirements that apply when a company is going through the process of listing on a public stock exchange and when listed, while also preserving transparency, investor protection and market integrity. It will counter the fragmentation of national laws that restrict the flexibility of companies to issue multiple-vote shares when going public, which is particularly important for innovative scale-ups.
The Listing Act will simplify the listing rules for companies that want to list on public stock exchanges. These companies will benefit from a more cost-efficient regulatory regime. For example, it is estimated that EU listed companies will save approximately €100 million per year from lower compliance costs, with companies saving €67 million per year from simpler prospectus rules alone.
More flexible governance structure
Companies across the EU, in particular smaller ones, will also be able to benefit from the possibility to list with a more flexible governance structure. The new rules on multiple-vote shares will allow founders and owners to enjoy the benefits of listing their companies on public stock exchanges while maintaining control over their companies, enabling them to continue to pursue their long-term vision.
There will also be specific benefits for SMEs stemming from enhanced visibility towards investors on financial markets through new provisions on investment research and a more proportionate sanctioning regime for minor infringements of the market abuse rules.
Overall, the Listing Act package constitutes a major step towards making listing in the EU more attractive for companies.
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Details
- Publication date
- 15 March 2024
- Author
- Directorate-General for Financial Stability, Financial Services and Capital Markets Union