On 18 March 2015, the Chancellor of the Exchequer, the Rt. Honourable George Osborne MP commissioned a review into the European Listings Regime. TheCityUK as a cross-sectoral representative body for financial and related professional services was asked to lead this review which had two clear objectives.
The first objective was a comprehensive, fair and balanced response to the Prospectus Directive consultation which closed on 13 May 2015. The second objective is a ‘blue skies’ report identifying areas of the European Listings Regime that could be improved to the benefit of issuers and investors across the whole of the European Union, with a particular focus on SME growth companies.
In order to undertake the technical work TheCityUK established a practitioner working group. The group consists of senior practitioners from both the buy and sell side of the listing process and includes individuals with significant experience of both debt and equity markets. The group has been supported by King & Wood Mallesons (KWM) and Slaughter and May in their capacity as chair of the City of London Law Society.
Our response to the Prospectus Directive Consultation, which is the result of extensive thought and consultation with a wide variety of stakeholders, supported the various submissions being presented by trade associations and firms within the market, while seeking to add its own value to the PD review process. The response made a number of focussed recommendations that we believe will help to streamline the EU prospectus process and encourage listings and capital raising throughout the EU. The recommendations included:
- Making it easier for companies that are already listed to undertake further capital raisings by reducing the information required for secondary issuances and by advocating greater use of incorporation by reference;
- Preserving the separate regimes that currently exist for MTFs and allowing them to continue to operate outside the Directive unless they undertake a public offering;
- Improving the quality of the disclosure in prospectuses by making it more specific (particularly in relation to risk factors) and moving towards a free form summary, which is required to cover the key information for the relevant company;
- Encouraging greater use of the tri-partite prospectus in order to facilitate fundraising activity;
- Adjusting the current exemption thresholds in the Directive to facilitate capital raising without the need for a prospectus; and
- Positive action to remove the perceived requirement for a blackout period during an IPO process between the publication of a broker’s research note and the publication of the prospectus itself.
- The wider report, scheduled to be published in July 2015, will build on the recommendations made in the Prospectus Directive consultation response, examine potential barriers to the implementation of these recommendations and focus more specifically on what could be done to encourage growth companies who are in a position to consider listing to make this leap.
We are keen to stress test the wider report amongst senior practitioners by convening a European Practitioner Consultation Group and we would welcome expressions of interest from TheCityUK members.