New EU Listing Act Brings Changes and Alleviations to Secondary Issues, IPOs and Market Abuse Regulation

On 4 December 2024, the EU Listing Act entered into force, introducing new and broadening existing prospectus exemptions and consequently making it easier for listed companies to raise equity via both rights issues and accelerated bookbuilding offerings. It also aims to simplify the IPO process. In addition, it introduces changes to the Market Abuse Regulation (“MAR”), such as increased threshold for managers’ transaction notification, changes to disclosure requirements of protracted insider projects and clarifications of the market sounding regime.

The broadened prospectus exemptions became applicable on 4 December 2024, while the new prospectus types, such as the new follow-on and EU growth issuance prospectus, will be available from March 2026 and the increased threshold (EUR 12 million) for public offerings without a prospectus from June 2026. The MAR amendments mostly became applicable on 4 December 2024, while those related to disclosure of insider information will apply from June 2026.

In the previous prospectus regime, a simplified prospectus was required in connection with a rights issue. However, certain issuers viewed this regime somewhat burdensome, which probably reduced the popularity of rights issues, especially in comparison with accelerated book-buildings, for example. This situation may change with the amendments brought by the Listing Act.

With the new prospectus exemptions introduced by the EU Listing Act, companies may choose to publish an 11-page exemption document instead of a prospectus. The exemption document is available if:

In addition, the issuer may not be subject to a restructuring or to insolvency proceedings.

The exemption document is not subject to the FIN-FSA’s approval or review and may therefore be drafted and published relatively quickly. The document must include a responsibility statement, the reason for the issuance and use of proceeds, the risk factors specific to the issuer, the characteristics of the securities, a statement of continuous compliance with reporting and disclosure obligations throughout the period of being admitted to trading, the dilution and shareholding after the issuance, as well as certain general information.

The EU Listing Act also introduces a new follow-on prospectus for seasoned issuers, that is, issuers whose securities have been traded on a regulated market or SME growth market continuously for at least 18 months. The follow-on prospectus will be available to issuers from March 2026 and may be used, among other things, in connection with rights issues.

The follow-on prospectus may not exceed 50 A4-sized pages (not including the summary) and requires the inclusion of only one year of financial information. In comparison, simplified rights issue prospectuses in the current prospectus regime have often exceeded 100 pages.

The changes described above aim to reduce administrative burden and increase accessibility, particularly for seasoned companies. Importantly, in the future, seasoned issuers may choose between the shorter exemption document and a more extensive follow-on prospectus. While a full prospectus may in some instances be justified from a commercial and liability standpoint, a lighter and faster process should be welcome for smaller issuances.

The comprehensive nature of a prospectus, while making it time-consuming to publish, provides assurance and transparency. The process of publishing a prospectus often requires a comfort process with an auditor and a disclosure opinion from a legal advisor. The process provides a safeguard for all parties involved, which is why it is unlikely that an 11-page document will completely displace a prospectus. Further, larger investments may require a certain level of disclosure and due diligence in connection with rights issues, in which case the exemption document will not be an ideal alternative. The issuers may consider combining a separate event such as a capital markets day with the lighter disclosure regime in order to provide a full picture of the issuer. As before, a prospectus or an exemption document cannot contain any undisclosed information on the issuer.

Considering the above, the follow-on prospectus may just strike a perfect balance between a full prospectus and the 11-page exemption document. With the FIN-FSA’s review, comfort process and disclosure opinions, the follow-on prospectus materially corresponds to a simplified prospectus within the current prospectus regime while allowing for certain alleviations.

Accelerated bookbuilding offerings (ABBs) will also benefit from the new prospectus exemptions. The Listing Act increases the current 20 per cent threshold on the prospectus-exempted ABBs on the main market to 30 per cent. This means that an issuer does not need to publish a prospectus when listing additional shares, provided that they represent, over a period of 12 months, less than 30 per cent of the number of shares already admitted to trading. This also requires that shares are offered solely to qualified investors.

In addition, the new exemption document may be used in connection with an ABB. As the exemption document does not require the FIN-FSA’s review, it may be drafted and published quickly in connection with an ABB where the shares represent over 30 per cent of the number of shares already admitted to trading.

Whether these eased requirements will lead to an increase in the size of ABBs remains to be seen. So far, First North has not had the 20 per cent threshold, and very rarely have we seen ABBs of over 20 per cent. Further, the share issue authorisations in force at a company limit the size of a potential ABB, and these authorisations are often capped at 10 per cent of the company’s total shares.

Currently, issuers may delay the disclosure of insider information at their own discretion, and this is applied to protracted processes as well (e.g. M&A transactions). In practice, this means that issuers have the obligation to disclose inside information relating to an ongoing process or project but they may choose to delay its disclosure in accordance with MAR’s requirements. The EU Listing Act removes the obligation to delay disclosure when it relates to a protracted process, and only the final events/circumstances need to be disclosed. An individual step can, however, constitute inside information on its own. Further, the confidentiality and insider trading obligations remain in force, even if the issuer is not obliged to disclose the intermediate steps of a protracted process. The Commission will publish a list of examples considered as final events/circumstances through a delegated act on the matter.

Further, the Listing Act amends one of the requirements of delaying disclosure of inside information; the inside information may not be materially different from the previous public announcement of the issuer on the matter to which the inside information refers to. This requirement was already stated in ESMA’s guidelines, so its practical relevance may be limited. Again, the Commission will publish a list of examples of circumstances where inside information is materially different from the previous public announcement of the issuer through a delegated act.

Both of the above disclosure amendments will apply from June 2026.

The EU Listing Act raised the transaction notification threshold of persons discharging managerial responsibilities (“PDMR”) from EUR 5,000 to EUR 20,000. Although national competent authorities could, when specific market conditions exist, raise the threshold to EUR 50,000, the FIN-FSA has stated that no such market conditions exist in Finland. The EUR 20,000 threshold became applicable on 4 December 2024.

Further, the EU Listing Act expanded the exemptions from a trading prohibition during a closed period. Previously, the exemptions extended only to trades and shares, but as a result of the Listing Act, other transactions as well as other financial instruments are within the scope of the exemptions. As a new exemption, issuers may allow PDMR’s transactions or trade activities which do not imply active investment decisions by the PDMR, or result from external factors or third parties, or are the exercise of derivatives based on predetermined terms.

The EU Listing Act makes market sounding possible in connection with communications which are not followed by a specific announcement of a transaction. This means that the “safe harbour” nature of market sounding can be relied upon even if a transaction does not end up going through. Further, persons conducting market sounding no longer need to notify the recipients after the shared information is no longer considered to constitute inside information, if such information has already been publicly disclosed.

Additionally, the Listing Act clarifies the optional nature of the market sounding procedure. Persons conducting market sounding must always assess whether the information constitutes inside information and notify the recipient that the information no longer constitutes inside information (if such information has not already been publicly disclosed), but other requirements of market sounding are optional. Therefore, persons conducting market sounding can choose to follow the market sounding requirements if they wish to enjoy the “safe harbour” nature of the regime. Non-compliance does not in itself mean that sharing the information was unlawful.

The amendments of the market sounding regime became applicable on 4 December 2024.

We are happy to advise you in prospectus, Market Abuse, and IPO matters. Please feel free to contact us for more information.