John I. Sanders and Will Reeves, alongside Luca Valerio Silviani della Valle and Federico Montinaro co-authored the article titled: EU Listing Act: Broadened Exemptions for Secondary Issuances
Moore & Van Allen (MVA) Head of International Capital Markets John I. Sanders and Finance Associate Will Reeves, alongside Luca Valerio Silviani della Valle and Federico Montinaro of Gianni & Origoni co-authored the article titled: "EU Listing Act: Broadened Exemptions for Secondary Issuances."
The EU Listing Act (the “Act”), published in November 2024 in the Official Journal of the European Union, introduces legislative changes designed to improve capital markets access for European issuers. The changes include issuer-friendly amendments to the Prospectus Regulation (“PR”) that expand the prospectus exemptions in relation to secondary offerings.
As an initial matter, PR Article 1(5)(a) and 1(5)(b) were amended to broaden the scope of the exemptions for admission to trading on a regulated market of (a) securities fungible with securities already admitted to trading on the same regulated market and (b) shares resulting from the conversion or exchange of other securities, where the resulting shares are of the same class as the shares already admitted to trading. The exemptions are now available if the new securities represent, over a 12-month period, less than 30% of the existing securities. Previously, the exemption was available only if the new securities represented less than 20% of the existing securities. For an issuer with just €50 million in existing securities, the change allows an additional €5 million in securities to be issued.
In addition, the Act introduces an exemption in Articles 1(4) and 1(5) that applies to both public offerings and admission to trading, regardless of offering size, for securities fungible with securities already admitted to trading on a regulated market (or, in the case of offerings, on a SME growth market) continuously for at least 18 months prior to the new offer. Issuers may utilize this exemption if the following conditions are met: (i) an informational document of no more than 11 pages containing information referred to in PR Annex IX, which is not subject to regulatory approval, is filed with the competent regulatory authority and published; (ii) the offering is not made in connection with a public exchange offer, merger, or demerger; and (iii) the issuer is not subject to insolvency or restructuring proceedings.
The Act also introduces an exemption in Article 1(4)(d-bis) that applies to offerings of less than 30% of securities that are fungible with securities already admitting to trading on a regulated market or a SME growth market. Issuers can utilize this exemption if the following conditions are met: (i) an informational document is prepared, filed, and published as described above; and (ii) the issuer is not subject to insolvency or restructuring proceedings.
The exemptions described above were effective as of December 4, 2024. Consequently, we anticipate that European issuers may soon explore with their financial advisors and legal counsel the possibility of leveraging these new exemptions to efficiently obtain capital from the issuers’ home jurisdictions and internationally.
The Act also includes other exemptions that will be effective 18 months after December 4, 2024. Specifically, the threshold for exempting small securities offerings will be raised to €12 million within a 12-month period with Member States having the option to reduce the threshold to €5 million within a 12-month period.
This article is a summary prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice with respect to the laws the United States, Italy or any other jurisdiction.
For information about the participation of U.S. institutional investors in the international capital markets or the use of U.S. law to facilitate securities offerings by international companies, contact the U.S. qualified team led by John I. Sanders at Moore & Van Allen PLLC.
For further information about the Listing Act and Italian corporate law more generally, contact Luca Valerio Silviani della Valle and Federico Montinaro at Gianni & Origoni.