On October 8, 2024, the Council of the European Union approved the Listing Act, a package of measures that aims to facilitate companies‘ access to capital markets within the European Union. This legislative package includes, inter alia, relevant amendments to the Prospectus Regulation (EU Regulation 2017/1129), the Financial Markets Regulation (EU Regulation 600/2014) and the so-called MAR Regulation (EU Regulation 2014/596).

The main purpose of the Listing Act is to simplify listing procedures, to introduce new exemptions from the obligation to publish a prospectus in case of capital increases by companies already listed, as well as to create a more accessible market for SMEs. In the following pages, we analyse the main news regarding prospectus discipline and their implications for companies operating in the financial markets.

New exemptions from the obligation to publish a prospectus

The new Listing Act introduces several significant changes aimed at broadening the cases of exemptions from the obligation to publish a prospectus (either when securities are offered to the public or admitted to trading on a regulated market), reducing burdens on companies and maintaining at the same time adequate standards of transparency, so as to ensure a balance between streamlining listing procedures and protecting investors.

Exemption from public offer prospectus for securities fungible with already listed securities

Article 1, par. 4 of the Prospectus Regulation introduces two new exemptions from the obligation to publish a public offer prospectus in the following cases:

• offering of securities fungible with those already admitted to trading on a regulated market or an SME growth market, provided that these securities have been traded continuously for at least 18 months prior to the offering, and on the condition that the new securities are not issued as part of a public exchange offer, merger, or spin-off; or
• offering of securities meant to be admitted to trading on a regulated market or an SME growth market and fungible with those already admitted to the same market, on the condition that the newly issued securities represent, over a 12-month period, less than 30% of the total number of securities already admitted to trading on that market.

In both cases, the issuer must not be undergoing „restructuring“ or „insolvency proceedings“ as now defined under Article 2 of the Prospectus Regulation.

The exemption is grounded on the idea that most of the relevant information is already publicly available, enabling investors to make informed decisions without requiring a full prospectus.

For these exemptions, issuers are required to file a concise summary document (no more than 11 pages) with the competent authority and make it available to the public. This document is not subject to approval by the competent authority (in Italy, Consob).

Exemption from listing prospectus for securities fungible with already listed securities

Article 1, par. 5 of the Prospectus Regulation provides, also with respect to the case of admission of securities to trading on a regulated market, an exemption largely mirroring the exemption provided for public offerings. Specifically, issuers are exempt from the publication of a prospectus for admission to trading if the securities are fungible with those already admitted to trading on the same regulated market continuously for at least 18 months prior to the admission to trading. The conditions for this exemption include:

• the new securities must not be issued in connection with a public exchange offer, a merger, or spin-off;
• the issuer must not be undergoing restructuring or insolvency proceedings;
• The issuer files the mentioned summary document (no more than 11 pages) with the competent authority and make it available to the public.

Furthermore, admissions on a regulated market of securities fungible with those already admitted to trading on the same regulated market are now exempt from the requirement to publish a prospectus, provided that, over a 12-month period, they represent less than 30% (as opposed to the previous 20% threshold) of the total number of securities already admitted to trading on the same regulated market.

The above exemptions will come into force on the twentieth day following the publication of the Regulation amending the Prospectus Regulation in the Official Journal of the European Union.

‘Harmonised’ threshold for small offers

As outlined in Recital 8 of the Regulation amending the Prospectus Regulation, MAR, and MiFIR, in order to reduce market fragmentation while also having regard to the different sizes of national capital markets within the EU, the Listing Act replaces the current system that allows Member States to set different exemption thresholds ranging from 1 million to 8 million Euros.

Article 3 of the Prospectus Regulation is therefore amended to introduce a „dual-threshold system“ as follows:

• A general exemption threshold from the obligation to publish a prospectus for public offers where the total aggregated consideration in the EU does not exceed 12 million Euros per issuer or offeror, calculated over a 12-month period;
• a threshold of 5 million Euros per issuer or offeror, calculated over a 12-month period, which Member States may choose to apply by way of derogation from the general threshold mentioned above.

Below either the 12 million Euro or 5 million Euro thresholds, public offers will be exempt from the requirement to publish a prospectus, provided that such offers do not trigger the passporting regime (as per Article 25 of the Prospectus Regulation).

This provision will take effect 18 months after the entry into force of the Regulation amending the Prospectus Regulation.

Simplified prospectuses

The Listing Act introduces new scenarios where significantly simplified and shorter prospectus formats can be used.

In particular, with the repeal of Article 14 of the Prospectus Regulation, which governed simplified disclosure regimes for secondary issuances, a new Article 14-bis is introduced. This article regulates the so-called “follow-on prospectus,” which can be used primarily in cases of public offers or admissions on a regulated market of securities by:

• issuers whose securities have been admitted to trading on a regulated market continuously for at least the 18 months preceding the public offer or admission to trading of the new securities;
• issuers whose securities have been admitted to trading on an SME growth market continuously for at least the 18 months preceding the public offer of the new securities;
• issuers seeking admission to trading on a regulated market of securities fungible with securities that have been admitted to trading on an SME growth market continuously for at least the 18 months preceding the admission of the securities (so-called “uplisting”);
• offerors of securities admitted to trading on a regulated market or an SME growth market continuously for at least the 18 months preceding the public offer.

If the prospectus concerns shares, it can be limited to a maximum length of 50 pages. This provision will take effect 15 months after the entry into force of the Regulation amending the Prospectus Regulation.

Another new simplified regime relates to the repeal of Article 15 and the introduction of a new Article 15-bis of the Prospectus Regulation, concerning the so-called “EU Growth Issuance Prospectus” for public offers of securities by the following entities, provided that they do not have securities admitted to trading on a regulated market:

a)   SMEs;

b)   issuers, other than SMEs, whose securities are or will be admitted to trading on an SME growth market;

c)   issuers not covered under points (a) and (b), where the total aggregated consideration of securities offered to the public in the EU is less than 50 million Euros over a 12-month period, provided that these issuers do not have securities traded on a multilateral trading facility (MTF) and had an average of up to 499 employees during the previous financial year;

d)   offerors of securities issued by entities mentioned under points a) and b).

If the prospectus concerns shares, it can be limited to a maximum length of 75 pages. This provision will also take effect 15 months after the entry into force of the Regulation amending the Prospectus Regulation.

New drafting criteria for prospectuses

In addition to the new exemptions and simplifications introduced, the Listing Act implements further significant changes regarding the drafting of prospectuses (with specific implementation timelines outlined for each provision):

Harmonised format: a standardized format for all primary issuances, whether for equity or non-equity securities, is introduced. This format must follow a predefined structure to ensure uniformity and comparability across different issuers (effective 18 months after the entry into force of the Regulation amending the Prospectus Regulation).

Length limits: prospectuses concerning shares are limited to a maximum of 300 pages. The document must be presented and structured in a way that enhances readability, with legible font sizes, to avoid information overload and ensure more effective communication with investors (effective 18 months after the entry into force of the Regulation amending the Prospectus Regulation).

Reduction of complexity: The prospectus should contain only essential information for investors, such as risk details, key financial information, and a clear description of the issuer’s business activities.

Risk factors highlighted in the prospectus are limited to those that are specific to the issuer and the securities, avoiding generic risk factors or those included merely as disclaimers. Issuers are required to assess the relevance of risk factors based on the likelihood of their occurrence and the expected negative impact. Risk factors are to be presented in a limited number of categories, depending on their nature. Within each category, the most relevant risk factors must be listed in a manner consistent with the issuer’s assessment (effective on the twentieth day following the publication of the Regulation amending the Prospectus Regulation in the Official Journal of the European Union).

Incorporation by reference: information required to be included in the prospectus under the Prospectus Regulation and delegated acts (or even voluntarily included) can be incorporated by reference if it has been previously or simultaneously published electronically, reducing the need to repeat already available data.

Issuers are not required to publish a supplement for new annual or interim financial information released while a base prospectus remains valid, but such information can be incorporated by reference into the base prospectus (effective on the twentieth day following the publication of the Regulation amending the Prospectus Regulation in the Official Journal of the European Union).

The incorporation of information by reference will be further facilitated in the future, as investors will have more efficient and effective access to this information via the European Single Access Point (ESAP).

Language flexibility and digital distribution: Issuers are permitted to draft the prospectus entirely in a language commonly used in international finance, chosen at the issuer’s discretion (except for the summary), thus facilitating access to international markets and reducing translation costs. However, in the case of offers targeting a single Member State, the Member State may require that the prospectus is drafted in a language accepted by its supervisory authority (such a decision must be notified to the Commission and ESMA) (effective 18 months after the entry into force of the Regulation amending the Prospectus Regulation).

The prospectus must be distributed in electronic format, eliminating the requirement for printed copies and further reducing operating costs for businesses (effective on the twentieth day following the publication of the Regulation amending the Prospectus Regulation in the Official Journal of the European Union).