The Listing Act and the Prospectus Regulation: A Potent Mix to Revitalize European Capital Markets or an Overly Diluted Formula?

The Prospectus Regulation: A First Step Towards Simplification

The Prospectus Regulation, along with its Delegated Regulations, marked a significant advancement in the harmonization and simplification of the information regime preceding the public offering of securities. By reducing bureaucracy and establishing clearer and more concise criteria for the preparation of prospectuses, this regulation helped companies, including SMEs, access capital markets more efficiently.

Among the key innovations introduced by the Prospectus Regulation are:

• Greater flexibility for smaller offerings: The thresholds below which a prospectus is not required were expanded, thereby facilitating crowdfunding and other alternative forms of financing.
• More harmonized standards for prospectus evaluation: A common framework for the examination and approval of prospectuses was established, reducing differences among Member States and increasing legal certainty for issuers.
• Greater focus on relevant information: The preparation of more concise prospectuses focused on the most relevant aspects for investors was promoted, avoiding the inclusion of excessively detailed or generic information.

The Listing Act: A New Phase in the Evolution of the Regulatory Framework

The Listing Act represents a further step in the reform of European capital markets, complementing and deepening the measures introduced by the Prospectus Regulation. This regulation aims primarily to reduce barriers to listing, especially for SMEs, by simplifying admission requirements and improving market transparency.

The main objectives of the Listing Act are:

• Reducing administrative burdens: The aim is to simplify listing procedures and reduce associated costs, particularly for smaller companies.
• Increasing legal clarity: The goal is to establish a clearer and more predictable regulatory framework, facilitating decision-making for issuers and investors.
• Ensuring investor protection: Despite the simplifications introduced, the Listing Act maintains an adequate level of investor protection, ensuring that investors have the necessary information to make informed investment decisions.

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Keys and Regulations for Listed Companies in Regulated Markets

Listed companies are public limited companies whose shares are traded on a Spanish regulated market. The general provisions apply to them, with certain particularities, such as the minimum percentage for exercising certain shareholder rights and the deadlines for challenging corporate resolutions.

Uncertainties and Challenges of the Listing Act

While the Listing Act and the Prospectus Regulation represent significant advances in simplifying the regulatory framework for IPOs, they also present some uncertainties and challenges. Notable among these are:

• Balancing simplification and investor protection: It is crucial to find the right balance between the need to reduce administrative burdens and the obligation to protect investors. Excessive simplification could compromise the quality of information available to investors and increase market risks.
• Convergence of national practices or “gold-plating”: The implementation of the Listing Act will require close collaboration among national competent authorities to ensure a harmonized interpretation of the rules and avoid divergences in their application.
• Market evolution: The dynamics of capital markets are constantly evolving, making it necessary to adapt the regulatory framework to new challenges and opportunities that arise.

Conclusion

The Listing Act and the Prospectus Regulation constitute a fundamental tool for revitalizing European capital markets and facilitating companies’ access to financing. However, the success of these regulations will depend on their proper implementation and the ability of European and national authorities to strike the right balance between simplification and investor protection.