knowledge 31 January 2025 |

EU Listing Regulation: Important Reforms to EU Debt Capital Markets are Underway

The Listing Regulation is part of a wider legislative package, the “EU Listing Act”, which also includes a new Listing Directive³ and a ‘Directive⁴ on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market’.  For an overview of the Listing Act package, from an equity capital markets perspective, see our previous briefing. The focus of this briefing is the Listing Regulation and the key changes it introduces to the Prospectus Regulation that issuers of debt securities should be aware of.

The Listing Regulation introduces a number of changes to the prospectus regime.  Some of those changes took effect immediately on the entry into force of the Regulation on 4 December 2024, while others will be phased in over the next 18 months.

Key Changes to Prospectus Regulation already in Effect (from 4 December 2024)

Financial Information Updates

Previously, issuers were required to publish a supplement to the base prospectus when new annual or interim financial information is published.  The Listing Regulation amends this position so that new annual or interim financial information that is published electronically can be incorporated by reference into the base prospectus.    It remains to be seen whether a market practice develops around the use of this flexibility or whether issuers prefer to continue to issue supplements as a matter of course.

Risk factors

Risk factors will be presented in prospectuses a little differently.  While still presented in a limited number of categories, instead of being required to be listed from most-to-least material, the revised requirement is that they are “…listed in a manner consistent with the assessment of materiality” carried out by the issuer in respect of such risk factors.

Existing ESMA guidelines have also been codified by a new prohibition on the inclusion of risk factors that are generic, only serve as disclaimers, or do not give a sufficiently clear picture of the specific risk factors of which investors should be aware. 

Walkaway rights

The period for exercise of “walkaway rights” following publication of a supplement was increased from two to three days on a temporary basis as part of the COVID recovery package; this three-day period has been made permanent.

No printed prospectuses

To date, issuers had been obliged to deliver a printed prospectus when requested to do so by certain potential investors.  This has been replaced with an obligation to deliver a copy of the prospectus (free of charge) in an electronic format.

No new types of security

A new provision reflecting what was included in Recital 36 of the original Prospectus Regulation provides that a supplement can no longer be used to introduce a new type of security, unless the necessary information was already included in the base prospectus.  ESMA is due to develop guidelines on this provision by 5 June 2026.  However, some competent authorities have always observed this provision so in some jurisdictions this will not represent a change.

Incorporation by Reference

The list of documents from which information can be incorporated by reference has changed.  This includes a new explicit right to incorporate “sustainability reporting” information (which is now included in management reports pursuant to the Accounting Directive⁵).  The reference to documents approved by or filed with a competent authority (e.g. the Central Bank of Ireland) has also been deleted and so any reliance on such documents should be re-considered.

Exemptions from obligation to issue base prospectus

The Prospectus Regulation requires the issue of a prospectus (i) prior to securities being offered to the public; and (ii) the admission of securities to a regulated market.  That requirement is subject to a number of exemptions and those exemptions have been broadened by the Listing Regulation.  Taking each in turn:

Offer to the public

New exemptions have been introduced, where the offered securities are fungible with securities already admitted to trading on a regulated market or an SME growth market.  Certain conditions must be met for the exemption to apply. 

In the case of an offer of fungible securities which is to be admitted to trading on a regulated market or an SME growth market, the applicable conditions are: 

• the offered securities must represent, over a period of 12 months, less than 30% of the existing securities trading on the relevant market;
• the issuer must not be subject to restructuring or insolvency proceedings; and
• a short-form disclosure document must be filed with the relevant competent authority (e.g. the Central Bank of Ireland) and made available to the public.

In the case of an offer of fungible securities, the second and third bullet points above (relating to restructuring/insolvency and the disclosure document) also apply.  In addition, the offered securities must not be issued in connection with a takeover by means of an exchange offer, a merger or a division.

COVID-era changes for credit institutions have been placed on a permanent footing.  The Listing Regulation permanently increases the exemption threshold for “non-equity securities issued in a continuous or repeated manner by a credit institution…” over 12 months from an aggregate of €75 million to €150 million.

In connection with other changes being made to the small offers exemptions (discussed below), the Listing Regulation also deletes the existing exclusion from the Prospectus Regulation for small public offers up to €1 million.  The stated purpose of this deletion is legal clarity and reduced complexity.

Admission to regulated market

The existing exemption for fungible securities continues to apply but the applicable maximum threshold of 20% (of the number of securities already admitted to trading) has been increased to 30%.

A new exemption has also been introduced for fungible securities where the existing securities have been admitted to trading on a regulated market continuously for at least the previous 18 months.  This exemption applies regardless of the number of the new securities (i.e. the 30% threshold does not apply), provided prescribed conditions are satisfied (namely: the no takeover, no restructuring/insolvency proceedings and the filing/publication of the disclosure document already mentioned above).

Other upcoming amendments introduced by the Listing Regulation

Amendments commencing 5 March 2026

There will be two new types of short-form prospectus which seek to make it easier and less expensive for SMEs to access capital markets (i.e. regulated markets or SME growth markets):

• Follow-on Prospectus for secondary issuance by issuers whose securities have been admitted to trading on a regulated market or SME growth market continuously for at least 18 months.  This will replace the simplified disclosure regime currently in place for secondary issuances.
• Growth Issuance Prospectus for smaller issuers where the total consideration for the securities offered is less than €50 million.  This will be available to SMEs and non-SMEs that have securities admitted to trading on regulated markets or SME growth markets, and will replace the current Growth Prospectus.

Amendments commencing 5 June 2026

Small offers exemption

Small offers of securities to the public, which are below a maximum amount, are exempted from the obligation to publish a prospectus, provided those offers do not require passporting.  The Listing Regulation increases the existing ‘ceiling’ of €8 million (calculated over a 12-month period) to €12 million.

EU Member States retain the discretion to adjust the threshold between a minimum of €5 million and a maximum of €12 million.

ESG-related information requirements

The minimum information requirements for a prospectus will be affected by whether the securities are advertised as taking into account ESG factors or pursuing ESG objectives.  Where they are, the information to be included in the prospectus will need to be included by reference to the EU Green Bond Regulation.⁶  Depending on the offering, the prospectus schedules may need to incorporate (by reference) the relevant information included in the European Green Bond factsheet, or the relevant optional disclosures under the EU Green Bond Regulation. 

The European Commission is required to adopt further delegated acts by 5 June 2026.  These should set out further detail of what is required, including for prospectuses that are not aligned with the Green Bond Regulation, in due course.

Standardisation of prospectuses

The Listing Regulation contains provisions further standardising the format for the prospectus for both equity and non-equity securities, and requiring that information included in the prospectus is disclosed in a standardised sequence.  ESMA has been empowered to develop more detailed technical standards, along with guidelines on comprehensibility and the use of plain language in prospectuses.  ESMA has already consulted on draft technical standards, and will publish in Q2 2025 its final technical advice to the European Commission in two separate final reports.

Grandfathering

Transitional provisions are inserted into the Prospectus Regulation to allow for the ‘grandfathering’ of prospectus that have already been approved.  In general, a prospectus approved before 4 June 2026 will continue to be subject to the version the Regulation in force at that time.

Also contributed to by Eileen Collins and David O’Keeffe Ioiart