The EU Listing Act: Key takeaways for listed companies and companies contemplating IPOs

Insights|December 4, 2024

On 8 October 2024, the Council of the European Union officially adopted the EU Listing Act, a legislative package adopted to make EU capital markets more attractive for companies and to facilitate access to capital for small and medium-sized enterprises (SMEs) (the “Listing Act”).

Key takeaways

Generally, amendments to the Prospectus Regulation and the Market Abuse Regulation (“MAR”) will enter into force on 4 December 2024. However, many of the amendments will only be applicable after a 15- or 18-month transitional period, i.e. as of 5 March or 5 June 2026, and will be further specified and clarified in delegated acts and guidelines. Certain amendments are also subject to national discretion.
Key changes to the MAR include a change in the disclosure obligation of so-called protracted processes and delayed disclosure of inside information, broader exemptions for transactions executed by persons discharging managerial responsibilities (“PDMRs”) during closed periods and an increase of the notification threshold for PDMR transactions. Additional changes are made to clarify the safe harbor nature of the market sounding regime, and to reporting of share buy-backs. The key amendments apply as follows:
- the PDMR notification threshold is raised to EUR 20,000 per year – applied as of 4 December 2024;
- broader exemptions for PDMR transactions executed during closed periods – applied as of 4 December 2024;
- changes to the reporting obligation of share buy-backs – applied as of 4 December 2024;
- clarifications to the safe harbor nature of the market sounding regime – applied as of 4 December 2024; and
- the abolition of the requirement for issuers to disclose inside information related to intermediate steps of a protracted process, provided that such intermediate steps remain confidential – applied as of 5 June 2026.
Amendments to the Prospectus Regulation impacting both IPOs and secondary issuances of securities. The Listing Act provides for new exemptions and expands existing exemptions to prospectus requirements. The key amendments apply as follows:
- expansion of the secondary issuance exemption to both public offers and admission to trading and increasing the applicable threshold from 20 % to 30 % of the same kind of securities as already listed – applied as of 4 December 2024;
- new exemptions for i) listings of securities of the same kind as already listed on a regulated market for at least 18 months, and ii) public offerings of securities of the same kind as already listed on a regulated market or an SME Growth Market for at least 18 months preceding the offer of the new securities, provided that certain conditions are met – applied as of 4 December 2024; and
- higher EUR 12 million (or EUR 5 million) threshold for public offers triggering the obligation to prepare a prospectus during the 12-month period preceding the offer – applied as of 5 June 2026.
In addition, amendments to the Prospectus Regulation include a shortening of the IPO offer period, introduction of new prospectus formats (the EU Follow-on prospectus and EU Growth Issuance Prospectus), standardization of prospectus disclosure, and introduction of a maximum page limit for equity prospectuses. Such key amendments apply as follows:
- minimum IPO offer period is shortened from six (6) to three (3) working days – applied as of 4 December 2024;
- the EU Follow-on prospectus and EU Growth Issuance Prospectus replace the previous simplified prospectus and EU Growth Prospectus regimes – applied as of 5 March 2026; and
- standardized format and sequence of full prospectus and its summary as well as 300-page limit for standard equity prospectuses and related exemptions – applied as of 5 June 2026.

Key practical considerations

Changes to the MAR and the Prospectus Regulation are expected to have a positive impact on Finnish and Swedish listed companies as well as companies considering an IPO. The Listing Act alleviates some of the compliance burden and enhances legal clarity. Furthermore, several of the legislative amendments are estimated to imply cost-savings for companies in connection with raising equity financing. New and broader exemptions and simplified requirements for issuers and SMEs will mean that fewer transactions will require a full standard prospectus.

In many respects, the practical implications of e.g., standardized formats, sequencing and disclosure requirements applicable to different prospectus types remain to be seen once the Commission delegated regulations and ESMA guidelines on comprehensibility and plain language are published.

However, some practical implications should already be considered, which have been summarized below. We are happy to discuss these matters in further detail and assist listed companies considering what actions should be undertaken with respect to their current internal policies and procedures, as well as companies contemplating an IPO in preparing their own listed company-compliant governance documentation and procedures.

Matters to be considered in preparing IPO and other share prospectuses:

The standardized format and sequencing as well as limited lengths of the new prospectuses may enable more efficient and less costly preparation processes. However, the more restricted formats will highlight the importance of companies and their advisors focusing on only the most material information, and to prevent redundant or marginally relevant information from excessively expanding prospectus disclosures and making the contents of the prospectus relevant for investors.
- Any pre-marketing materials or other communications by or on behalf of the company preceding an IPO or other offer of securities should consider what information is relevant and capable of being included in the prospectus. This should be adequately addressed e.g., in publicity guidelines prepared for the transaction by the company’s legal advisor.
- The more detailed requirements on e.g. plain language and comprehensibility may result in increased scrutiny by regulators reviewing and approving prospectuses. This should be considered by companies and all advisors participating in the drafting process for prospectuses and marketing materials for offers, to ensure a smooth prospectus review and approval process.
The shorter and more condensed EU Growth Issuance Prospectus compared to the current will provide a more cost-effective way for SMEs and companies seeking a listing to the Nasdaq First North market or another SME Growth Market.
Likewise, the shorter and more condensed EU Follow-on prospectus can entail cost savings and more efficient processes for listed companies in e.g., issuances of shares in connection with M&A transactions, as well as transferring their listing from an SME Growth Market to a regulated market.
The potential ability to prepare prospectuses only in English without needing to streamline prospectus drafting processes, particularly in IPO processes.
- However, some translation work may still be required for the prospectus summary, as well as possible marketing materials prepared in Finnish (which are customarily reviewed by the Finnish Financial Supervisory Authority (the “FIN-FSA”) in connection with Finnish IPOs).
The shortening of the minimum length of the subscription from six (6) to three (3) working days will enable efficient book-building and faster closing of IPOs oversubscribed early in the subscription period.
Companies that could benefit from the use of an EU Growth Issuance Prospectus or EU Follow-on prospectus may wish to consider the timing of listings, rights offerings or other share transactions, if they could fall close to the application of the new prospectus requirements (after 15 months of the Listing Act entering into force, i.e. as of 5 March 2026).
The expansion of the prospectus exemptions for securities of the same kind as already listed securities will enable larger private placements, issuances of shares as consideration in M&A transactions and share conversions of debts and derivative instruments without a need to publish a prospectus.
- For Finland, we note that listed companies should in their disclosures on secondary share issuances also consider the recent recommendation by the Finnish Securities Market Association on directed share issues.
Non-listed growth companies with a need to obtain equity financing through successive financing rounds have broader opportunities to issue shares without a prospectus due to the 12-month offer threshold exemption being increased to EUR 12 million, and can utilize the shorter and more condensed EU Growth Issuance Prospectus for offers not exceeding EUR 50 million in the aggregate over 12 months.

Matters to be addressed in pre-IPO preparations as well as reviews and updates of listed companies’ existing insider guidelines, disclosure policies and related internal policies and procedures:

The changes to the prohibition of PDMR transactions during a closed period will alleviate previously quite restrictive exemptions, and could potentially enable closed period transactions based on predetermined trading programmes executed by independent brokers or asset managers.
- However, companies and PDMRs should exercise caution in applying the exemptions, noting that the FIN-FSA has been active in its enforcement of the closed period trading prohibitions, and has recently imposed a penalty on a previous listed company Board member for violating the closed period transaction prohibition.
The increase in the notification threshold for PDMR transactions will remove smaller transactions from the notification and disclosure obligations.
- However, companies should ensure PDMRs are appropriately instructed about their obligations to ensure transactions are not inadvertently left unreported (e.g. due to several subsequent smaller transactions resulting in exceeding the notification threshold), noting that the FIN-FSA has been active in its enforcement of the obligations, and recently imposed penalties for late notifications.
The removal of the individual MAR disclosure obligation and requirement to separately delay disclosure of inside information related to intermediate steps in a protracted process (while retaining its potential as inside information) and related confidentiality obligations generally moves the disclosure obligation to a later point in time, whereas MAR currently links the timing of the inside information arising and the related disclosure obligation.
- For Finland, this represents a return to a set-up more closely resembling the pre-MAR regime, where decisions being prepared were not subject to a disclosure obligation, but could still constitute inside information subject to trading prohibitions and confidentiality obligations before the disclosure obligation arose.
- In Sweden, similar rules to the current obligations in the MAR were in place regarding the disclosure of inside information relating to intermediate steps in a protracted process also prior to the MAR entering into force. However, the way the rules should have been applied was also at the time uncertain and subject to discussion.
Companies should consider the amendment on intermediate steps in protracted processes in their insider management e.g. to large transactions constituting insider projects, and address the amendments in pre-IPO preparations and through reviews and updates of existing insider guidelines, disclosure policies and other related internal policies and procedures.