[co-author: Menno Baks*]
On November 14, 2024, the EU Listing Act (the “Act”) was published in the Official Journal of the European Union. The Act entails a legislative package designed to improve capital markets access and reduce disclosure obligations for EU issuers, particularly small- and medium-sized companies (“SMEs”). According to the European Commission, SMEs account for 99% of all European businesses and employ 85 million European citizens. Two key provisions of the Act that benefit SMEs relate to the EU Follow-On Prospectus and the EU Growth Issuance Prospectus.
The Act introduces a new regime governing the EU Follow-On Prospectus, which replaces the existing simplified disclosure rules governing follow-on offerings that were widely viewed as too prescriptive and burdensome. The EU Follow-On Prospectus is available to issuers with securities that have been admitted to trading on (i) a regulated market or (ii) an SME growth market (e.g., Euronext Growth Milan) for at least 18 months. The prospectus includes only one year of financial information and excludes an Operating and Financial Review section, which is the equivalent of an MD&A in the U.S. market. To focus disclosure on the most relevant information, the EU Follow-On Prospectus is limited to 50 pages in length.
The Act also introduces a new EU Growth Issuance Prospectus to replace the existing EU Growth Prospectus. The EU Growth Issuance Prospectus is available to, among others, (i) SMEs, (ii) issuers with securities already admitted to trading on a SME growth market, and (iii) unlisted companies with an aggregate offering value of no more than €50 million within a twelve-month period and fewer than 499 employees, on average, during the most recent fiscal year. To focus disclosure, the EU Growth Issuance Prospectus consists of a single standardized document limited to 75 page in length.
The EU Follow-On Prospectus and EU Growth Issuance Prospectus complement reforms enacted across Europe in recent years designed to improve to capital markets access for SMEs and we believe they will be useful tools for SMEs seeking to raise additional capital in the EU.
Most provisions of the Act will enter into force on December 4, 2024, but the entry into force of certain significant provisions will be delayed until 15 or 18 months after that date. For example, the new rules regarding the EU Growth Issuance Prospectus and the EU Follow-On Prospectus will only apply beginning on March 5, 2026.
*Menno Baks of Loyens & Loeff N.V.
