Prospectus and Market Abuse Rules (PolicyBrief)
The European Commission wants to give small and medium-sized enterprises (SMEs) better access to the capital markets, in part by reducing bureaucracy. The Centre for European Policy (cep) has assessed the proposal on the so-called Listing Act as largely positive.
"The Commission is trying to walk a tightrope. On the one hand, it wants to increase the incentives for more companies to venture into the public markets with less strict rules for issuing securities. On the other hand, it wants to avoid neglecting investor protection and damaging market integrity. Many provisions manage this balancing act, but not all of them," says Philipp Eckhardt. The cep financial market expert has analyzed the proposed amendments to the Prospectus Regulation and the Market Abuse Regulation.
One of the controversial points concerns the exemption from the prospectus obligation for securities offerings with a volume of less than 12 million euros. Eckhardt rejects such a threshold as a matter of principle. It suggests that investor protection is less important for such offers. However, investments in smaller offers are not necessarily less risky. Instead of thresholds, prospectus requirements should apply to all offers, which would then be linked to the complexity and risks of the respective issue.
Eckhardt welcomes the proposals to reduce legal uncertainty for issuers. In particular, he welcomes the exemption from the obligation to immediately publish intermediate steps in a protracted process that qualify as inside information. However, he criticizes the fact that Member States will be able to unilaterally impose stricter requirements on insider lists. This would run counter to the objective of a Capital Markets Union.
The proposals are part of a comprehensive legislative package aimed at facilitating access to capital for EU companies and supporting SMEs. Back in 2015, the Commission presented an Action Plan for the creation of a Capital Markets Union, the main objective of which was to improve EU companies' access to market-based sources of finance. Despite initial progress, the Commission considers that further efforts are needed to move closer to this goal.