Listing Act: Lower Costs and More Opportunities for SMEs

The approval of the package of proposals known as the "Listing Act" represents a significant step towards simplifying and making stock-market listings more accessible for European SMEs. This piece of legislation, introduced by the European Commission in December 2022 and approved by the European Parliament in February 2024, aims to make capital markets more attractive and accessible, especially for small and medium-sized enterprises (SMEs).

Objectives of the Listing Act

The main objective of the Listing Act is to reduce the regulatory burden and compliance costs for companies looking to go public. This is particularly important for SMEs, which often find the cost and complexity of the listing process prohibitive. The new rules promise to save European companies around 100 million euros per year, with a 67 million euro reduction coming from the simplification of prospectus rules alone.

Greater Flexibility and Control

A key element of the Listing Act is the introduction of greater flexibility in corporate governance structures. The new rules allow the use of multiple-vote shares, enabling founders and owners to retain control of their companies even after going public. This is particularly advantageous for innovative companies in a growth phase, which can raise capital while retaining the ability to pursue their long-term vision (read the Clifford Chance study).

Impact on SMEs

SMEs will also benefit from greater visibility with investors thanks to the new provisions on investment research and a more proportionate sanctioning regime for minor breaches of market abuse rules. These measures make it easier for SMEs to access capital markets, diversify their funding sources and grow. These new rules, coming into force alongside the new rules on the dematerialisation of securities, are, in our view, set to give fresh impetus to the search for funding that has become difficult in ordinary banking channels.

Review of Existing Rules

The Listing Act amends several existing regulations, including the Prospectus Regulation (Regulation EU 2017/1129), the Market Abuse Regulation (Regulation EU 596/2014) and the Markets in Financial Instruments Regulation (Regulation EU 600/2014). In addition, it introduces a new directive on multiple-vote share structures, enabling companies to go public while retaining greater control, and at the same time ensuring transparency and investor protection.

Conclusion

In conclusion, the Listing Act represents a significant turning point for European SMEs, making stock-market listings more accessible and less costly. These measures will not only stimulate economic growth but will also help SMEs find new funding opportunities and strengthen their position in the European market.