- Making listed companies more visible, in particular SMEs
- Reducing the costs of the prospectus
- Address fragmentation in national laws with regards to multiple-vote share structures to provide minimum harmonization
MEPs agreed on changes aimed at streamlining the listing process and making it more proportionate to a company’s size.
On Tuesday, in three separate votes, the Economic and Monetary Affairs Committee adopted changes to EU legislation that would enable companies to access funding sources other than bank lending and to adapt their financing structure when they grow in size.
Provision of investment research
MEPs agreed to amend rules on provision of investment research by third parties, in order to revitalise this market and make listed companies more visible. They support that investment firms should have more flexibility to choose the way in which they organise the payments of execution services and research, while favouring maintaining an appropriate level of transparency vis-a-vis clients. The issuers should also abide by the EU’s code of conduct, be transparent about research costs and reduce conflicts of interests.
The text amending the Markets in Financial Instruments Directive (MIFID) was adopted unanimously with 53 votes.
MEPs support that a prospectus, which is published when securities are offered to the public or admitted to trading on a regulated market should be more readable and less costly. They therefore back reduced content, a maximum page limit and using the standardised format of the EU Follow-on prospectus and the EU Growth prospectus. They also agree that member states should be able to decide not to require a prospectus where the total aggregated consideration in the European Union for the securities offered is less than EUR 5 000 000 per issuer, calculated over a period of 12 months, up to a threshold of EUR 12 000 000.
Multiple-vote share structures
Fear of losing control of a company deters controlling shareholders in SMEs and family-owned companies from trading on public markets. MEPs stress that multiple-vote shares may provide an incentive for companies to raise investment funds by issuing shares while protecting a company from focussing too much on short-term interests, by giving a stronger voice to founders and long-term shareholders. They are of the view, however, that such companies should be required to have a stock name that ends with the marker ‘WVR’ (weighted voting rights) to clearly indicate to the public that their shareholder structure and liquidity profile is different to that of traditional companies. In addition, safeguards are proposed to protect the interests of the shareholders who do not hold multiple-vote shares.
The text on multiple-vote share structures (a new directive) was adopted with 43 votes for and 10 abstentions.
Alfred Sant (S&D, MT), the lead MEP, said after the vote: “The Listing Act amounts to a programme that aims to make it more attractive and less burdensome for European SMEs and other firms to raise investment funds by issuing shares. It does this among others, by lightening the complications attached to listing, making observance of regulatory prescriptions easier to follow and allowing the issuance of multiple-vote share structures. The challenge was to do this without in any way loosening up on investor protection and I think we have met this challenge quite well. Amendments to the MIFID, MIFIR and the MAR regulations are included in the Act, as well as a recast of the Prospectus Regulation and the establishment of a new Multi Voting Share Structure directive. The Listing Act is a necessary but not sufficient reform on the way to getting CMU done, a process that has been dragging”.
The MEPs steering the negotiations on behalf of Parliament are now ready to start negotiations with the Council, which has already agreed its mandate on the three texts.
Dorota KOLINSKAPress Officer