Regulation (EU) 2024/2809 of the European Parliament and of the Council of 23 October 2024 amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises (Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

Acting in accordance with the ordinary legislative procedure (2),

Whereas:

(1) The capital markets union (CMU) presented in the communication of the Commission of 30 September 2015 on an Action Plan on Building a Capital Markets Union aims to develop Union capital markets and decrease their fragmentation along national borders, thereby enabling companies to access funding sources other than bank lending and to adapt their financing structure when maturing and growing in size. More diversified financing in the form of debt and equity will decrease risks for individual companies and the overall economy, as well as help Union companies, including small and mid-sized enterprises (SMEs), realise their growth potential. It is acknowledged that the CMU needs to be realised more quickly and that investment needs to reach the levels made necessary by the Union’s policy priorities related to environmental protection, digitalisation and strategic autonomy. Moving forward in the area of listing is a necessary step for the CMU, especially in the short term, but as a stand-alone measure it cannot be sufficient.

(2) The CMU requires an effective and efficient regulatory framework that supports access to public equity funding for companies, including SMEs. Directive 2014/65/EU of the European Parliament and of the Council (3) created a new type of trading venue, the SME growth market, to facilitate access to capital specifically for SMEs. Directive 2014/65/EU also expressed the need to monitor how future regulation should further foster and promote the use of SME growth markets and provide further incentives for SMEs to access capital markets through SME growth markets. Such measures need to ensure not only that SME growth markets provide an increasingly attractive opportunity for SMEs to raise funds but also that, with time and success, SMEs are able to access other capital markets, if they choose to do so.

(3) Regulation (EU) 2019/2115 of the European Parliament and of the Council (4) introduced proportionate alleviations to enhance the use of SME growth markets and to reduce the regulatory requirements for issuers seeking the admission of securities on SME growth markets, while preserving an appropriate level of investor protection and market integrity. Nevertheless, more needs to be done to make access to Union public markets more attractive and render the regulatory treatment of companies more flexible and proportionate to their size. The High-Level Forum on the CMU recommended that the Commission remove regulatory obstacles that hold back companies from accessing public markets. The Technical Expert Stakeholder Group on SMEs set out detailed recommendations on how to foster access by companies and, in particular, SMEs to Union public markets.

(4) Building on one of the Commission’s initiatives within its post-COVID19 recovery strategy, namely, the Capital Markets Recovery Package, targeted amendments have been introduced into Regulations (EU) 2017/1129 (5) and (EU) 2017/2402 (6) of the European Parliament and of the Council, and into Directives 2014/65/EU and 2004/109/EC of the European Parliament and of the Council (7) to make it easier for companies affected by the economic crisis caused by the pandemic to raise equity capital on public markets, facilitate investments in the real economy, allow for the rapid re-capitalisation of businesses, and increase banks’ capacity to finance the recovery. Overall, however, and for a number of reasons, those measures have had only a limited impact.

(5) On the basis of the recommendations of the Technical Expert Stakeholder Group on SMEs and building on Regulation (EU) 2019/2115 and on the measures adopted under Regulation (EU) 2021/337 of the European Parliament and of the Council (8), and as part of the Capital Markets Recovery Package, the Commission committed to putting forward a legislative initiative to make access to public markets in the Union more attractive by reducing compliance costs, and by removing significant obstacles that hold back companies, including SMEs, from accessing public markets in the Union. To achieve its objectives, the scope of that legislative initiative should be broad and address obstacles that concern companies’ access to public markets, namely the pre-initial public offering, initial public offering (IPO) and post-IPO phases. In particular, the simplification and removal of obstacles should focus on the IPO and post-IPO phases by addressing burdensome disclosure requirements to seek admission to trading on public markets laid down in Regulation (EU) 2017/1129, and by addressing burdensome ongoing disclosure requirements laid down in Regulation (EU) No 596/2014 of the European Parliament and of the Council (9).

(6) Regulation (EU) 2017/1129 lays down requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market that is situated in or operating within a Member State. To reinforce the attractiveness of Union public markets, it is necessary to address obstacles stemming from the length, complexity and high costs of the prospectus documentation, both where companies, including SMEs, seek access to public markets for the first time through an IPO, and where companies access public markets for secondary issuances of equity or non-equity securities. For the same reason, the length of the scrutiny and approval process of those prospectuses by competent authorities, and the lack of convergence of those processes across the Union, should also be addressed.

(7) For small offers of securities to the public, the costs of producing a prospectus might be disproportionate in relation to the total consideration of the offer. Regulation (EU) 2017/1129 does not apply to offers of securities to the public with a total consideration in the Union of less than EUR 1 000 000. In addition, in view of the varying sizes of financial markets across the Union, Member States are able to exempt offers of securities to the public from the obligation to publish a prospectus where such offers have a total consideration below a certain threshold, which Member States are able to set between EUR 1 000 000 and EUR 8 000 000. Certain Member States have made use of that possibility, which has resulted in different exemption thresholds, creating complexity and a lack of clarity for both issuers and investors. In order to reduce complexity under Regulation (EU) 2017/1129 and to foster legal clarity, the lower threshold of EUR 1 000 000, below which that Regulation does not apply, should be removed.

(8) In order to reduce market fragmentation while also having regard to the different sizes of national capital markets within the Union, the existing system that allows Member States to set various exemption thresholds between EUR 1 000 000 and EUR 8 000 000 should be replaced by a dual-threshold system. A threshold with a total aggregated consideration in the Union of EUR 12 000 000 per issuer or offeror, calculated over a period of 12 months, should be the principal threshold, while Member States should be able to decide to apply a threshold of EUR 5 000 000. Below the threshold of either EUR 12 000 000 or EUR 5 000 000, offers of securities to the public should be exempted from the obligation to publish a prospectus, provided that those offers do not require passporting. In the case of such an exemption, however, Member States should be allowed but not be obliged to require the issuer to publish either a document containing the information referred to in Article 7 of Regulation (EU) 2017/1129, or, a document containing the information requirements at national level, provided that the extent and level of such information is equivalent or lower than the information set out in Article 7 of Regulation (EU) 2017/1129. Nothing in this Regulation should prevent those Member States from introducing rules at national level which allow the operators of multilateral trading facilities (MTFs) to determine the content of the admission document which an issuer is required to produce upon initial admission to trading of its securities or the modalities of its review.

(9) Cross-border offers of securities to the public that are exempted from the obligation to publish a prospectus should be subject to the national disclosure requirements set out by the concerned Member States, where applicable. However, issuers, offerors or persons asking for the admission to trading on a regulated market of securities which are not subject to the obligation to publish a prospectus should benefit from passporting where they choose to draw up a prospectus on a voluntary basis.

(10) Regulation (EU) 2017/1129 contains several provisions that refer to the total consideration of certain offers of securities to the public, including ongoing offers of securities to the public, to be calculated over a period of 12 months. To provide clarity to issuers, investors and competent authorities, and to avoid divergent approaches across the Union, it is necessary to specify how the total consideration of those offers of securities to the public are to be calculated over a period of 12 months.

(11) Article 1(5), point (a), of Regulation (EU) 2017/1129 contains an exemption from the obligation to publish a prospectus for the admission to trading on a regulated market of securities fungible with securities already admitted to trading on the same regulated market, provided that the newly admitted securities represent over a period of 12 months less than 20 % of the number of securities already admitted to trading on the same regulated market and provided that such admission is not combined with an offer of securities to the public. To reduce complexity and to limit unnecessary costs and burdens, that exemption should also apply to an offer to the public under Article 1(4) of that Regulation. For the same reasons, the percentage threshold that determines the eligibility for the exemption should be increased in both the offer to the public and the admission to trading on a regulated market. In addition, the exemption for offers of securities to the public should encompass an offer to the public of securities to be admitted to trading on a regulated market or an SME growth market and that are fungible with securities already admitted to trading on the same regulated market or the same SME growth market. Considering that subscription rights are intrinsically linked to the issuance of new shares, the right to subscribe for shares fungible with existing shares should also be covered by that exemption. To ensure investor protection, in particular for retail investors, a short-form document with key information for investors should be made available to the public when an offer of fungible securities is made under the exemption. The document should be made available to the public and filed with the competent authority of the home Member State, but not be subject to its approval.

(12) Article 1(5), point (b), of Regulation (EU) 2017/1129 contains an exemption from the obligation to publish a prospectus for the admission to trading on a regulated market of shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, provided that the newly admitted shares represent, over a period of 12 months, less than 20 % of the number of shares of the same class already admitted to trading on the same regulated market. That 20 % threshold should be aligned with the threshold for the exemption for securities fungible with securities already admitted to trading on the same regulated market since the two exemptions are equivalent in scope.

(13) Companies whose securities are admitted to trading on a regulated market or on an SME growth market are to comply with the periodic and ongoing disclosure requirements that are laid down in Regulation (EU) No 596/2014, Directive 2004/109/EC and, for issuers on SME growth markets, in Commission Delegated Regulation (EU) 2017/565 (10). Where those companies issue securities fungible with securities already admitted to trading on those types of trading venues, they should be exempted from the obligation to publish a prospectus, as much of the required content of a prospectus will already be publicly available and investors will be able to trade on the basis of that information. However, such exemption should be subject to safeguards to ensure that the company issuing the securities has complied with the periodic and ongoing disclosure requirements under Union law and is not subject to a restructuring or to the opening of insolvency proceedings, as defined under Union law. Furthermore, to ensure the protection of investors, in particular retail investors, a short-form document with key information for investors should still be made available to the public. The document should be filed with the competent authority of the home Member State, but not be subject to its approval. Where subscription rights are connected to securities covered by the exemption for the offer to the public or the admission to trading on a regulated market the exemption should, consequently, also be applicable to subscription rights representing the preferential right of existing shareholders to subscribe for the securities covered by the exemption. Where the scope of the new exemption makes other existing exemptions redundant, those other exemptions should be removed.

(14) Article 1(4), point (j), of Regulation (EU) 2017/1129 exempts credit institutions from the obligation to publish a prospectus in the case of an offer or admission to trading on a regulated market of certain non-equity securities issued in a continuous or repeated manner up to an aggregated consideration of EUR 75 000 000 over a period of 12 months. Regulation (EU) 2021/337, as part of the Capital Markets Recovery Package, increased that threshold to EUR 150 000 000 for a limited period to foster fundraising for credit institutions and give those institutions breathing space to support their clients in the real economy. To continue to support fundraising through capital markets of issuers, including credit institutions, the increased threshold introduced by Regulation (EU) 2021/337 should be made permanent.

(15) To reduce the complexity of the prospectus documentation, and to make the prospectus a more harmonised document thus improving its readability for investors across the Union, irrespective of the jurisdiction where securities are offered to the public or admitted to trading on a regulated market, it is necessary to introduce a standardised format for the prospectus for both equity and non-equity securities and to require that the information included in the prospectus is disclosed in a standardised sequence while taking care that prospectuses are not overloaded with redundant or marginally relevant information.

(16) In certain cases, the prospectus or its related documents reach considerable sizes, becoming unfit for investors to be able to take an informed investment decision and too expensive for issuers to produce due to the inherent expense associated with lengthy prospectuses. In addition, the length of prospectuses and their format varies greatly across the Union, which is contrary to the objective of fostering convergence within the CMU. To improve the readability of prospectuses, reduce the costs for issuers related to the drafting of prospectuses, create convergence across the Union, and make it easier for investors to analyse and navigate through prospectuses, it is necessary to set a maximum page limit. However, such page limit should only be introduced for offers to the public or admissions to trading on a regulated market of shares. A page limit would not be appropriate for equity securities other than shares or non-equity securities, which include a broad range of different instruments, including complex ones. Furthermore, the following should be excluded from the page limit: the summary; information incorporated by reference, including a universal registration document approved by or filed with a competent authority; information included in a universal registration document that is used as a constituent part of a prospectus; and information to be provided where the issuer has a complex financial history or has made a significant financial commitment, or in the case of a significant gross change as defined in Commission Delegated Regulation (EU) 2019/980 (11).

(17) The standardised format and the standardised sequence of the information to be disclosed in a prospectus should be set out in this Regulation, irrespective of whether a prospectus, or a base prospectus, is drawn up as a single document or is composed of separate documents, except where information is included in a universal registration document. It is therefore necessary that Annexes I, II and III to Regulation (EU) 2017/1129 set out the standardised sequence of the sections for the information to be disclosed in the prospectus or, separately, in the registration document and in the securities note. Those Annexes should be the basis for the Commission to amend any delegated acts that impose a standardised format and sequence of sections of the prospectus, the base prospectus and the final terms, including on disclosure items within those sections. Furthermore, it is necessary to set out the standardised sequence of the information to be disclosed in the prospectus summary.

(18) In order to reduce the burden for issuers who seek admission to trading on a regulated market in the Union and simultaneously offer or privately place securities with investors in a third country, and who would otherwise be required to draw up several documents, the page limit as well as the standardised format and standardised sequence should not apply to a prospectus relating to the admission to trading of such securities.