‘Brexit’ Implications for Listings of Securities on the London Stock Exchange

by Morgan Lewis
Contact

If Britain decides to leave the European Union as a result of a “Brexit” vote on 23 June 2016, the effect on the UK and EU financial services sectors could be significant; in particular, there could be effects on the London Stock Exchange (LSE) listing regime, which potentially (but not necessarily) would no longer be subject to the Prospectus Directive and other EU legislation related to securities listings.

Current Listing Regime

As an EU member state, the UK is currently required, through its own legislation, to comply with applicable EU legislation related to listings of securities. Significantly, the Prospectus Directive and Prospectus Regulation apply not only to the 28 EU member states but also to Norway, Iceland, and Liechtenstein (collectively with the EU member states, the European Economic Area or EEA). Consequently, the European listing regime applies EEA-wide.

The EEA listing requirements only apply to EEA “regulated markets”, which in the UK currently include the Main Market, the LSE’s flagship market.[1] The current requirements for listings of securities (including shares, global depositary receipts (GDRs) and bonds) on the LSE’s Main Market are contained in UK laws and rules that implement applicable EU legislation. The principal pieces of EU legislation applicable to listings of securities are the Prospectus Directive[2] and its implementing regulation the Prospectus Regulation.[3]

Under the existing regime, to list securities on the LSE’s Main Market, an issuer must, among other things, prepare a prospectus that

  • meets the content and format requirements of the Prospectus Directive,
  • is approved by the issuer’s “home member state” in the EEA, and
  • is published in accordance with Prospectus Directive requirements.

Once an issuer has securities listed on the LSE’s Main Market, it becomes subject to the UK’s Disclosure and Transparency Rules (DTRs), which implement the requirements of the Transparency Directive[4] into UK law and contain a range of continuing reporting and disclosure requirements.

A key feature of the Prospectus Directive regime is that prospectuses that are approved and published by the UK regulatory authority (currently the Financial Conduct Authority) can be “passported” into another EEA member state for listing on a regulated market in that other member state. Conversely, prospectuses approved for listings on regulated markets in other EEA member states may be passported into the UK for listings on the LSE’s Main Market or other regulated markets in the UK.

Brexit Implications for London Listing Requirements

It is currently unclear what type of relationship the UK would have with the EU following a Brexit. One possible outcome would be that the UK leaves the EU but decides to retain access to the EU markets through joining the EEA, which it could accomplish first by rejoining the European Free Trade Association and then acceding to the EEA Agreement. In that scenario, the effect of a Brexit on the UK listing regime would likely be minimal, albeit the UK would no longer have a seat at the EU table for having a say in the future development of the prospectus and listing regulations. Another possible outcome would be that, for political reasons, the UK decides to leave the EU and also decides effectively to exit the EEA by not rejoining it. This scenario would have a significant effect, not only directly on the UK listing regime but also indirectly on the capital markets in the remaining EEA countries (the rEEA).

A Brexit that includes an exit from the EEA would not in itself change the existing UK laws that implement the relevant European legislation related to listings, so it would generally have no immediate direct effect on the requirements for, and the implications of, a UK listing (other than in respect of passporting, as discussed below). The UK could simply choose to keep in place its existing laws related to listings (which implement current EU legislation). This may be the easiest course of action, given the volume and breadth of issues that the UK government will need to address in the event of a Brexit. However, in the event of a Brexit that includes an exit from the EEA, the UK listing rules and requirements will likely deviate over time from the EU requirements in certain respects as any amendments are made to either the UK or the EU requirements. Particular areas in which the UK and EU listing requirements could differ include

  • the content requirements for prospectuses,
  • the format requirements of prospectuses,
  • the procedures for approving prospectuses in connection with listings,
  • requirements and procedures related to publication of prospectuses, and
  • continuing reporting and disclosure obligations for listed companies.

The current Prospectus Directive requirements (which are implemented in current UK legislation) generally are consistent with international standards for stock exchange listings. As one of the world’s leading financial centres, the UK can be expected to continue to apply international standards in its listing and disclosure regime to maintain its reputation among investors and to continue to attract companies to list on its markets. Accordingly, we anticipate that, in the event that a Brexit occurs and the UK also exits the EEA, the differences between the UK listing requirements and those applicable to rEEA regulated markets would not be substantial.

Brexit Implications for Dual and Multiple Listings

One significant change that would occur immediately in the event of a Brexit that includes an exit from the EEA is that the UK would no longer be a participant in the Prospectus Directive’s passporting regime for prospectuses. In such a scenario, if a prospectus were approved in an rEEA member state in connection with a listing on a regulated market in that rEEA member state, in order for that prospectus to be approved in the UK, the listing authority in the UK (currently the Financial Conduct Authority) would need to apply its own standards to determine whether to approve it for UK listing purposes. Conversely, prospectuses approved in the UK would need to be approved afresh by the regulatory authority in an rEEA member state under applicable Prospectus Directive standards for the prospectus to be used for a listing on a regulated market in that rEEA member state.

It is possible that the inability to passport approved prospectuses to and from the UK and rEEA member states following a Brexit and an exit from the EEA could have a negative effect on the volume of issuers that choose to list their securities on the LSE. However, depending on the nature of the new relationship that the UK establishes with the EU following a Brexit, there could nonetheless be arrangements established that provide a certain level of reciprocity regarding prospectuses going forward. In particular, under the Prospectus Directive, an EEA member state regulator is able to approve a prospectus approved in a “third country” (i.e., a non-EEA member state, such as what the UK would be after a Brexit, assuming it does not join the EEA) if the European Commission were to be satisfied that the prospectus was drawn up in accordance with international standards and that the relevant third country’s prospectus content requirements were equivalent to those in the Prospectus Directive.[5] As long as the UK’s prospectus approval requirements do not change dramatically from what they are now, we believe that the UK’s requirements should be considered equivalent to the Prospectus Directive requirements for this purpose. However, in the wake of a Brexit, EU decisions about UK equivalence could acquire a political dimension that renders the outcome of EU deliberations uncertain. To the extent that UK-approved prospectuses were accepted for listings by rEEA member state regulators on the foregoing basis, we expect that the UK would establish (or would already have had to establish) a similar reciprocal policy of accepting prospectuses approved by regulators in rEEA member states for listings in the UK.

Conclusion

Because it is unclear what type of relationship the UK would have with the EU following a Brexit and how the UK or the EU may amend their listing requirements going forward, there is uncertainty about how a Brexit would affect the LSE listing regime. Immediately following a Brexit, dual and multiple listings that involve the UK and rEEA regulated markets would potentially be more time consuming and/or costly than they currently are under the passporting regime, but, at least in the medium term, we do not expect that there would be major differences in the requirements for and process of listing securities on the LSE following a Brexit as compared with the current LSE listing regime. However, unless the UK rejoins the EEA, prospectuses approved in the UK could no longer be passported into the rEEA countries for admission to trading on their markets, and similar consequences would flow with respect to prospectuses approved in the rEEA countries for passporting into the UK.

In light of the effects and uncertainties discussed above, companies that have securities currently listed on the LSE or that are planning LSE listings in the future should monitor Brexit developments and be prepared for possible changes to the LSE listing regime going forward.

Resources

Morgan Lewis has set up a dedicated Brexit Resource Center to provide up-to-date news and industry contacts to answer any questions you may have about the implications for you or your business in the event of a Brexit.


[1] Other regulated markets in the UK are the BATS Europe Regulated Market, CME Europe Limited, Gibraltar Stock Exchange, ICE Futures Europe, ISDX Main Board, Euronext London, and London Metal Exchange. Certain other UK securities markets, such as the Alternative Investment Market (AIM) and the Professional Securities Market, are operated by the LSE but are not themselves “regulated markets” for purposes of the Prospectus Directive.

[2] Directive 2003/71/EC.

[3] Regulation 809/2004 of 29 April 2004.

[4] Directive 2004/109/EC.

[5] Prospectus Directive, Article 20(1).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis
Contact
more
less

Morgan Lewis on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.