On Tuesday 24 October, MEPs on the European Parliament Committee on Economic and Monetary Affairs (ECON) adopted their position for the forthcoming interinstitutional negotiations (‘trilogues’) on the various aspects of the legislation on the listing of companies on stock exchanges (Listing Act). During their voting session, they also approved the provisional political agreements on the MiFID and MiFIR texts, which establish rules for the EU’s markets in financial instruments.
“The stock exchange listing act is a programme designed to make it more attractive and less burdensome for European SMEs and other companies to raise investment funds by issuing shares. It does this in particular by reducing the complications associated with listing, by facilitating compliance with regulatory requirements and by authorising the issue of multiple-vote share structures”, commented the rapporteur, Alfred Sant (S&D, Maltese).
In detail, the MEPs reached a compromise on the fact that the prospectus, which must contain the detailed information that a company must produce in order to issue securities to the general public, should be easier to read and less costly.
The mandatory content has been reduced and a page limit has been introduced. The format used would be standardised. MEPs also agreed that Member States would not be able to require a prospectus when the aggregate total consideration in the European Union for the securities offered is less than €5 million per issuer, calculated over a 12-month period. The maximum threshold would be set at €12 million.
During the discussions, the Greens/EFA Group obtained the inclusion of information on taxonomy in the prospectus and for important environmental issues be specified in the warnings.
The European Commission, for its part, is due to publish a report on the responsibility for the information contained in the prospectus.
“With this report, the European Parliament is sending out a strong message: we need to cut red tape and complete the capital markets union”, commented Eva Poptcheva (Renew Europe, Spanish).
Insider lists regime maintained
On the question of market abuse, the European Parliament’s approach maintains the insider lists regime in order to guarantee the responsibility of insiders and to simplify the work of the competent authorities investigating manipulative practices.
Also on the subject of potential abuses, the Commission was counting on a threshold set at €50,000 for the disclosure of transactions by managers on their own account. Parliament believes this threshold should be set at €10,000.
The European Securities and Markets Authority (ESMA), for its part, would be responsible for developing regulatory technical standards to specify the conditions under which the disclosure of certain information could be delayed.
MEPs also adopted a position on the unbundling of research and execution costs. According to the European Parliament’s approach, investment firms should have “greater flexibility to choose how they organise payments for execution and research services”, while “promoting the maintenance of an appropriate level of transparency vis-à-vis clients”.
The S&D and Greens/EFA groups argued in favour of maintaining the MiFID rules, the general principle of which is that research and execution costs should be unbundled in order to avoid conflicts of interest on the part of brokers, who are obliged to act in the client’s best interests. The compromise, supported by the rapporteur - against his political group - as well as the EPP, Renew Europe, ID and ECR groups - removes bundling thresholds, but introduces requirements in terms of transparency and information, in particular the amounts paid, objectives and consequences.
No time limit for multiple votes
Finally, MEPs also approved the compromise on the last part of the Listing Act relating to companies with multiple-vote share structures. SMEs requesting admission to trading for the first time could be allowed to use this process to ensure that a company’s founders and directors retain control over it.
Provisions have been introduced to ensure that the limitation on multiple voting rights does not apply to issues relating to the impact of the company’s activities or to human rights and the environment.
However, several groups, including the Greens/EFA, regretted that the scope was not limited to SME markets, but was extended to regulated markets, and that no time limit had been introduced. This means that SMEs would be able to retain the multiple-vote share system even if they become large companies within the EU.
“Although the result does not guarantee the protection of small and medium-sized shareholders as we would have wished, we have nevertheless limited the damage and have therefore chosen to abstain. The business model of SMEs must be protected when they enter the financial markets, but multiple voting must be limited to this emergence phase”, said Claude Gruffat (Greens/EFA, French).
The interinstitutional negotiations on the Listing Act can now begin, as the EU Council adopted its position on 14 June.
Provisional political agreements on MiFIR/MiFID approved
During the voting session, the members of the European Parliament’s ECON Committee also approved the provisional political agreements on the revision of the MiFID and MiFIR texts, which govern the markets in financial instruments.
The co-legislators reached a provisional political agreement on 29 June (see EUROPE 13212/14). Several technical meetings were then held to finalise the dossiers (see EUROPE 13256/12). (Original version in French by Thomas Mangin)