Council Adopts ‘Listing Act’ to Streamline Listings on the European Stock Exchange

In a landmark decision, the Council has officially adopted the “Listing Act,” a comprehensive legislative package designed to revamp and streamline the listing process on European stock exchanges. This move is set to make EU public capital markets far more appealing to companies across the continent, especially small and medium-sized enterprises (SMEs) eager to expand their reach.

By easing the complexities of listing and slashing administrative burdens, the Listing Act aims to enhance transparency, protect investors, and uphold market integrity.

However, the adoption of the Listing Act marks the final step in a decision-making journey that began nearly two years ago, in December 2022. Following the Council’s approval, the act will soon be published in the Official Journal of the European Union. Just 20 days later, it will enter into force, giving member states an 18-month window to integrate these changes into national law, particularly those related to amending the Markets in Financial Instruments Directive.

Meanwhile, the directive on multiple-vote shares will have a two-year integration period, setting the stage for sweeping changes in how companies approach European stock exchanges.

What is the Listing Act & Why is it Necessary?

The Listing Act is a response to a growing need for simpler, more accessible listing processes within the EU. For years, companies aiming to go public have faced complicated regulatory hurdles, costly compliance requirements, and lengthy procedures. These factors deterred many from seeking public listing on European exchanges, particularly SMEs.

GTN / By reducing certain listing barriers, the Listing Act positions itself as a catalyst for growth, particularly for businesses seeking to expand within the EU.

So, the primary aim is to reduce the heavy administrative burden on companies while maintaining essential transparency and investor protections. This shift reflects a broader EU strategy to invigorate public markets and make them more attractive compared to their international counterparts.

With this reform, the Council hopes to see a renewed surge of activity and competition within European stock exchanges. Thus, it will help create a vibrant marketplace that can stand toe-to-toe with other major global markets.

What Key Changes the Listing Act Brings?

One of the standout features of the Listing Act is its approach to administrative simplification. Gone are many of the redundant forms, documents, and processes that companies previously had to contend with when listing on EU stock exchanges. By streamlining the listing process, the Council aims to cut down on both time and cost.

The act reduces the duplicative layers of paperwork and compliance. Thus, it allows companies to focus on strategic growth rather than grappling with red tape.

Another major aspect of the Listing Act is its emphasis on transparency. While the act alleviates certain reporting requirements, it ensures that investors have access to clear, accurate, and timely information.

Times / Through the newly adopted act, companies get a more efficient pathway to public markets, while investors retain access to the information they need to make informed decisions.

So, it is a win-win that prioritizes both growth and integrity in equal measure.

How Will the Act Impact Small and Medium-Sized Enterprises (SMEs)

Small and medium-sized enterprises stand to benefit immensely from the Listing Act. Historically, the high costs and regulatory complexity associated with going public have acted as significant barriers for SMEs. However, by introducing measures specifically designed to cater to the needs of smaller businesses, the Listing Act is likely to encourage a wave of new listings from this segment.

The act aims to democratize access to public markets by making it feasible for businesses of all sizes to consider a listing as a viable growth strategy. By simplifying the process, the Listing Act empowers SMEs to leverage public markets for funding, expansion, and innovation.

For these businesses, access to a broader investor base can mean new opportunities to scale, compete, and succeed on a larger stage.