‘- Written by Francesco Dagnino, Andrea M. Maroni and Giovanni Piscopo
By Decision No. 22455 of September 21, 2022, CONSOB and the Stock Exchange approved amendments to the Regulations of Markets Organized and Managed by Borsa Italiana (the “Regulations”) and related Instructions (the “Instructions”).
As of October 3, 2022, the new provisions of the Rules and Instructions aim to make companies’ access to the regulated Euronext Milan market more efficient.
These changes also come within the context of the Task Force established by the Ministry of Economy and Finance, whose work resulted in the Libro Verde “La competitività dei mercati finanziari italiani a sostegno della crescita” (The Competitiveness of Italian Financial Markets in Support of Growth).
In this context was stressed the need to review the process of listing on regulated markets. It is considered excessively burdensome compared to other systems and it has obvious repercussions on the competitiveness of the Italian market.
In particular, the main areas of intervention concerned:
- the decrease in the documentation to be presented for the admission procedure;
- the revision of Borsa Italiana’s competencies in admission matters;
- the reshaping of the role and responsibilities of the sponsor, now renamed “listing agent.”
- The regulation of the specialist operator.
- Simplifications for listing by Borsa Italiana
Documentation simplification
The documentation to be produced for the listing application has been significantly reduced.
Among the most important changes, the preparation of a memorandum on the management control system is no longer required. Instead, it has been replaced by a simple statement by the issuer, making use of the audits carried out by the statutory auditor or auditing firm, or another qualified party.
The requirement to file the following documents was also eliminated:
- the consolidated business plan for the current and two subsequent fiscal years and the relevant comparison of the forecast and actual figures for the last three fiscal years;
- the report containing a comparison of the issuer’s corporate governance system with the recommendations proposed by the Corporate Governance Code for Listed Companies;
- the Document prepared to support the Valuation, with a request to report on the development of the discounted cash flow method and the market multiples method;
- copy of the last three annual, statutory or consolidated financial statements, if the issuer is required to prepare them;
- a copy of the report of the statutory auditor or the appointed auditing firm on the financial statements, both statutory and consolidated, for the last of the three annual fiscal years and, if applicable, the two preceding years;
- an analysis, as of the most recent date, of any past due debt relationships of the issuer and its other group companies.
Powers of Admission
The revision of the listing process also affected the criteria exemplifying the grounds for rejection of the application for admission, through the elimination of the list of cases in which Borsa Italiana may reject the application.
Among the grounds for rejection, however, the case in which admission may damage the reputation of the market as a whole and/or Borsa Italiana has been added.
In addition, if the rejection of the application for admission is declared contrary to the interest of investors, it is now clarified that Borsa Italiana’s assessment may be based on the results of the discussions it has had with the listing agent, as well as on documentary evidence and other information otherwise available to the market operator.
The role and responsibilities of the listing agent (former sponsor)
As part of the revision of the admission procedure, the figure of the listing agent has undergone significant downsizing.
In addition to the name-changed from “sponsor” to “listing agent”-his role has also been redefined in the context of equity placement consortia. It has been given at least one of the functions of global coordinator and book runner, while the reference to the role of lead manager of the public offering or institutional placement, which it previously played, has been eliminated.
In the new regulatory framework, moreover, the listing agent represents the reference for interlocutions with Borsa Italiana in the context of the admission procedure.
Moreover, in light of the reshaping of Borsa Italiana’s responsibilities in the listing process, the listing agent’s responsibilities and burdens have also decreased. In particular, the latter is no longer required to declare:
- that it has not become aware of any evidence that the issuer and the main group companies have not adopted internally a management control system that complies with that described by the issuer in the above-mentioned memorandum;
- that the forecast data exhibited as part of the business plan, relating to the current fiscal year as of the date of submission of the application for listing, have been determined by the issuer after careful and thorough documentary examination of the economic and financial prospects of the issuer and the relevant group to which it belongs.
The discipline of the specialist operator
Finally, it should be noted that – for companies with a foreseeable market capitalization of less than €1 billion – the appointment of a specialist operator is now envisaged. He or she will perform the functions outlined in Article 2.3.5 of the Regulations concerning ordinary shares, in place of the listing agent and analogy with the provisions for issuers listed on Euronext STAR Milan, but in this case only for the 3 years following admission.
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