The Listing Act: Comprehensive Modernization of EU Capital Markets

In recent months, several initiatives aimed at bolstering market competitiveness and attracting capitals spread through the European Member States. Among the regulatory changes reshaping the Italian capital markets landscape, “Legge Capitali”, effective since March 2024, introduced various reforms including provisions on multiple and voting rights, loyalty shares, appointed representatives, lists of board of directors’ members. The mentioned legislation also grants authority for a comprehensive reform of the Consolidated Law on Finance (t.u.f.), slated for completion by March 2025.

Against this backdrop, the Listing Act Package, entered into force on December 4, 2024, represents a significant milestone in the modernization of EU financial markets. As part of the broader Capital Markets Union initiative launched in 2015, this legislative reform aims to simplify access to European capital markets, especially for SMEs, by reducing the regulatory burden. The Listing Act is composed of:

1. Regulation (EU) 2024/2809, (the “Listing Act Regulation”), which amends (i) Regulation (EU) 2017/1129 (the “Prospectus Regulation”); (ii) Regulation (EU) 2014/596 (the “Market Abuse Regulation” or “MAR”); and (iii) Regulation (EU) 2014/600 (“MiFIR”);

   
   

2. Directive (UE) 2024/2811, (the “Directive Amending MiFID II”), which amends Directive 2014/65/EU (“MiFID II”) and repeals Directive 2001/34/EC (the “Listing Directive”); and

   
   

3. Directive (UE) 2024/2810 (the “Multiple-Vote Shares Directive”), establishing rules on multiple-vote share structures for companies seeking admission to trading on a multilateral trading facility (“MTF”).

Member States have (a) 18 months to transpose the Directive Amending MiFID II and (b) 2 years to transpose the Multiple-Vote Shares Directive. While the Listing Act’s provisions officially came into force in December 2024, with many relevant core provisions becoming operational between 2025 and 2026. This timeline raises significant questions about the immediate impact and scope of the reform.

Amendments to the Prospectus Regulation

The Listing Act Regulation introduces significant amendments to the Prospectus Regulation, focusing on simplifying the disclosure requirements for IPOs and admissions to trading on regulated markets.

1. Exemptions and new prospectus’ scheme

   
   

The European legislature has expanded the scope of exemptions from the requirement to publish a prospectus, increasing the thresholds for existing exemptions and introducing simplified schemes.

(i) Regarding the existing exemptions related to offering prospectuses, the Listing Act has increased the compensation threshold for exemptions. The threshold for public offers exempted from the prospectus requirement rises from €8 million to €12 million (over a 12-month period). Member States, however, retain the option to lower this threshold to €5 million, thereby requiring a prospectus for all offers exceeding €5 million.

(ii) As for the exemptions related to listing prospectuses, the Listing Act has raised the threshold from the 20% to 30% for the percentage of fungible securities already traded and for which the admission to trading on a regulated market is required. This exemption is typically applicable in cases of reserved capital increases.

Additionally, the Listing Act Regulation introduces new exemptions, which now include public offerings and admissions to trading of securities fungible with securities already admitted to trading on a regulated market or an SME growth market for at least 18 months, subject to filing a brief summary (up to 11 pages) with the relevant competent authority. Additionally, public offerings of securities fungible with those already admitted to trading on a regulated market or an SME growth market are exempted, provided they represent less than 30% of the securities already admitted to trading on the market thereof.

2. Simplified scheme

   
   

The Listing Act aims to simplify regulatory requirements by both broadening the exemptions from the obligation to prepare a prospectus and introducing new streamlined formats for prospectuses.

Notably, it establishes two simplified prospectus schemes: the “EU Follow-on Prospectus” (limited to 50 pages and requiring only one year of historical financial data) for secondary offerings and securities traded continuously for at least 18 months; and the “EU Growth Prospectus” (limited to 75 pages) designed for SMEs or issuers not listed on regulated markets, provided that these entities do not have securities admitted to trading on a regulated market.

3. Other simplifications

   
   

The simplification is achieved by introducing a standardized format for equity and non-equity securities, limiting equity prospectuses to 300 pages. Articles 21(11) and 27(1) of the Prospectus Regulation, as amended by the Listing Act Regulation, respectively mandate electronic distribution and drafting exclusively in English, ensuring consistency and accessibility.

Additional information can now be included by reference, such as a universal registration document (or a section thereof) approved by or filed with a competent authority, or the new summary disclosure document (of up to 11 pages) set out in Annex IX of the Prospectus Regulations.

Historical financial information to be included in the prospectus has been reduced to two years for equity prospectuses (instead of three), and one year for non-equity prospectuses (instead of two).

To further enhance clarity, the inclusion of generic risk factors merely used as disclaimers is discouraged, shifting the focus on providing a clear representation of the specific and actionable risks. Additionally, prospectuses must now include information on corporate social responsibility and ESG objectives, with delegated acts to specify the scope and the contents to be disclosed.

Amendments to the Market Abuse Regulation

The Market Abuse Regulation aims to safeguard market integrity and investor confidence. However, the reform introduced by the Listing Act Regulation eases the regulatory burden on issuers and enhances the competitiveness of European markets. The key amendments to MAR are outlined as follows:

(i) Disclosure of inside information in protracted process: issuers are no longer required to disclose intermediate steps of a protracted process, where such steps are connected to the subsequent materialization or occurrence of specific circumstances or a particular event. The disclosure requirement will, therefore, apply only to inside information related to the final event or circumstances of the protracted process. Nonetheless, issuers must still ensure confidentiality of intermediate-step information.

(ii) Delay the disclosure of inside information: the delay procedure for intermediate steps of a protracted process is not required since disclosure of such steps is no longer mandatory. Moreover, the conditions for delaying public disclosure of inside information have been clarified: the disclosure of inside information must not contradict the latest information disclosed to the public, or any other type of communication by the issuer related to the same situation to which the inside information relates.

(iii) Market sounding, providing legal exemption from the prohibition of disclosing inside information, remains optional and, outside the exemptions thereof, issuers may in any case demonstrate that the disclosures made outside the regime were lawful. The Listing Act addresses the rules on cleansing of information, i.e., the obligation to inform relevant parties when certain information no longer qualifies as inside information under MAR. It also specifies that this obligation does not apply in cases where the information has already been made public through other means, such as a press release.

(iv) Internal dealing: the notification threshold for transactions by insiders, i.e., persons discharging managerial responsibilities and persons closely associated to them increases from €5,000 to €20,000. However, national authorities retain some discretion, with the option to increase such threshold to €50,000 or decrease it to €10,000.

Amendments to the MiFID II

The directive introduces targeted changes to make capital markets more attractive for SMEs and to strengthen the regulatory framework for SME Growth Markets (such as Euronext Growth Milan).

Specifically, Member States shall ensure that regulated markets require a minimum foreseeable market capitalization of €1 million; and a 10% floating rate, i.e., the percentage of capital held by the public.

Stricter requirements are also introduced for the preparation of issuer-sponsored research. Specifically, the research must be accurate, clear, and not misleading.

Moreover, the use of the label “issuer-sponsored research” is restricted to content produced in compliance with a new EU code of conduct, ensuring independence and objectivity.

Lastly, the definition of “SME Growth Market” is broadened to include both an MTF and a specific market segment. Member states have until June 2026 to transpose these provisions.

Multiple Vote Shares Directive

The final component of the Listing Act is the Multiple-Vote Shares Directive, designed to incentivize companies, especially SMEs, to access capital markets without the founding shareholders having to fear a loss of control post-IPO. The directive establishes a harmonized EU framework for multiple-vote shares, addressing disparities across Member States that have historically hindered the free movement of capital and fostered regulatory arbitrage. These differences have often prompted issuers to relocate their headquarters to jurisdictions with more flexible regimes than the “one share, one vote” principle.

The directive applies to companies seeking to list on an MTF (including Euronext Growth Milan) and allows multiple-vote share structures to be adopted even prior to seeking admission to trading on an MTF. However, Member States may condition the exercise of the multiple voting rights on the admission of the company’s shares being traded on an MTF.

To ensure adequate protection of the interests of shareholders who do not hold multiple-vote shares, the Multiple-Vote Shares Directive mandates several safeguards, such as:

(i) Adoption or amendment of multiple voting shares must receive approval by qualified majority at the general meeting of shareholders;

(ii) Member States may impose a maximum voting ratio (i.e., a cap on the percentage of share capital allocable to the category) and provide for so-called sunset clauses or other protective measures.

Member states must transpose the directive by December 2026, reflecting the phased implementation of the broader Listing Act Package. While the Package came into force in December 2024, its practical impact is delayed due to lengthy transition periods since its core provisions will only apply from March and June 2026. Similarly, the directive amending MiFID and the directive introducing multiple voting rights must be transposed into national law by June and December 2026, respectively, giving Member States flexibility and market participants the time to prepare for the changes.

This staggered timeline, while pragmatic, delays the tangible effects of these reforms and, given the ever-evolving nature of financial markets, predicting the environment in which these measures will operate — without the benefit of foresight — remains a significant challenge.

CC: Alessandro Vicari, Marta Menegato