As highlighted in the SME Strategy for a sustainable and digital Europe presented by the Commission in March 2020, small businesses struggle more than large enterprises to get finance.
In their letter of intent to European Parliament President David Maria Sassoli and Prime Minister Janez Janša, Ursula von der Leyen and Maroš Šefčovič announced that a legislative proposal to facilitate small and medium sized enterprises (SMEs) access to capital would be among the key new initiatives of the European Commission for 2022.
The Commission pointed to three problem drivers that need to be tackled by this initiative: companies, particularly SMEs, do not consider listing in the EU as an easy and affordable means of financing and may find it difficult to stay listed due to listing requirements and costs; EU public markets are not flexible enough to accommodate companies’ financing needs; and the lack of available company research and insufficient liquidity discourage investors from investing in some listed securities.
Between 19 November 2021 and 25 February 2022, the Commission organised in parallel an open consultation to gather evidence on regulatory barriers to companies’ listing (covering only general questions), and a targeted consultation covering more technical issues. The call for evidence for an impact assessment took place during the same period.
On 7 December 2022, the European Commission put forward several measures to further develop the EU´s Capital Markets Union (CMU). Besides proposals to make EU clearing services more attractive and harmonise certain corporate insolvency rules across the EU, the Commission made three interconnected proposals to improve access to public funding for companies, in particular SMEs, through alleviating the administrative burden of listing on stock exchanges:
- a proposal to amend the regulation on (i) Prospectus Regulation that harmonise requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (1129/2017), (ii) regulation on Market Abuse (MAR) aimed at prevent and detect market abuse, market manipulation and insider dealing (596/2014), and (iii) regulation on markets in financial instruments (MiFIR) that provides a legal framework for securities markets, investment intermediaries, and trading venues (600/2014);
- a proposal to amend the directive on markets in financial instruments, known as MiFID II, designed to regulate financial markets and improve protections for investors (2014/65/EU), and repealing the Listing Directive coordinating the conditions for admission of securities to official stock-exchanges listings and the information to be published on those securities (2001/34/EC);
- a proposal for a new directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market. The proposal aims to address the regulatory burden faced by companies at the pre-IPO phase and the imbalance across the EU when choosing appropriate governance structures when they list (2022/0406).
In January 2023, Alfred Sant from S&D was appointed as rapporteur of those proposals.
On 19 April 2023, the Council adopted its mandate on multiple-vote share structures for negotiations with the European Parliament. On 9 June 2023, the Council completed its negotiating mandate with an adopted position for amending the regulation (+ annexes) and the directive.
On 16 June 2023 ,the European Parliament adopted its draft report on the directive. On 24 October 2023 the ECON Committee agreed on changes to the three legislative proposals:
- The text amending the Prospectus Regulation, the regulation on market abuse (MAR) and the regulation on markets in financial instruments (MiFIR) – adopted with 52 votes for and 1 abstention;
- The text amending the Markets in Financial Instruments Directive (MiFID) – adopted unanimously with 53 votes;
- The new directive on multiple-vote share structures – adopted with 43 votes for and 10 abstentions;
The mandates to start interinstitutional negotiations were confirmed by Parliament during the November I plenary session. The Council had agreed on a negotiating mandate on the listing act in June 2023.
On 1 February, the Council and the Parliament have reached a provisional agreement on the listing act. The agreement on the amending regulation, the amending directive and on multiple-vote-share structures are available online. On 22 February, the ECON committee adopted the trialogue agreement on the Listing package.
In its last plenary before the European Parliament elections 2024, the Parliament adopted the listing package. The amended regulation and directive as well as the new multiple vote share directive will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
References:
- European Commission, Proposal for a Regulation amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises, COM(2022) 762.
- European Commission, Proposal for a Directive amending Directive 2014/65/EU to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises and repealing Directive 2001/34/EC, COM(2022) 760.
- European Commission, Proposal for a Directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market, COM(2022) 761.
- EP Legislative Observatory, Making public capital markets in the Union more attractive for companies and facilitating access to capital for small and medium-sized enterprises, 2022/0411(COD)
- EP Legislative Observatory, Making public capital markets in the Union more attractive for companies and facilitating access to capital for small and medium-sized enterprises, 2022/0405(COD)
- EP Legislative Observatory, Multiple-vote share structures, 2022/0406(COD)
- European Commission, Proposal for a directive to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises, Have you Say portal.
- European Commission, Listing Act – making public capital markets more attractive for EU companies and facilitating access to capital for SMEs, Have you Say portal.
- European Commission, An SME Strategy for a sustainable and digital Europe, COM(2020)103, 10 March 2020
- European Council, SME access to capital: Council adopts negotiating mandate on multiple-vote share structures, Press release, 19 April 2023
- European Parliament, amending regulation, amending directive and multiple-vote-share structures, Provisional agreements, February 2024.
Further reading:
EPRS, Listing act, Legislation in progress briefing, December 2023
Author: Martin Höflmayr, Members’ Research Service, legislative-train@europarl.europa.eu
As of 20/05/2024.