The EU Listing Act Introduces Amendments, Including Changes to Reporting of PDMR Transactions and Buy-Back Programmes, Effective as of 4 December 2024

Highlights

• New notification threshold of EUR 20,000 per year for managers’ transactions (PDMR)

• Issuers must report buy-back programme transactions to FIN-FSA if Finland is considered the most relevant market for the issuer in terms of liquidity for its shares and when safe-harbour protection is applied

• “Private placement/fungibles” exemption increased to 30%, and new “fungibles” exemption for seasoned issuers with no upper size limit

The EU Listing Act has entered into force on 4 December 2024. It introduces several amendments to the Prospectus Regulation (PR) and the Market Abuse Regulation (MAR) taking effect immediately, while some of the amendments become applicable 15 or 18 months later.  Issuers should note that the new notification threshold confirmed by the Finnish Financial Supervisory Authority (FIN-FSA) is EUR 20,000 per year for managers’ transactions (PDMR) applicable as of 4 December 2024. As, for practical reasons, many of the Finnish issuers have instructed all PDMR transactions to be notified regardless of the threshold, and while they may continue to do so, it is recommended that non-compliance with this instruction is not, by default, sanctioned by their insider policy. The new threshold may also warrant a revision of the insider policy as the threshold is significantly higher with the aim to reduce reporting and disclosure of transactions that are not meaningful to investors.

Further, while the reporting of buy-back programmes is simplified when safe-harbour protection is applied in accordance with MAR Article 5 so that the reporting is done to the competent authority of the most relevant market in terms of liquidity by the end of the seventh trading day following the execution date, Finnish issuers are still required to report such trades in their own shares separately to Nasdaq Helsinki prior to the following trading day pursuant to the Finnish Securities Markets Act (746/2012, as amended). Issuers can also choose to report such trades to the FIN-FSA on a daily basis. The FIN-FSA will publish further information about the reporting.  

Following up on our previous blog post covering the key changes in more detail, below we have recapped some of the key amendments to PR and MAR taking effect immediately.

Key changes to PR applicable from 4 December 2024 include:

• Broadened exemptions from the requirement to produce a prospectus.

1. 1. Current “fungibles exemption” is raised from 20% to 30% and is also extended to public offers (subject to certain safeguards and requiring filing of a short “Annex IX” document)

   2. New fungibles exemption: A new, broader public offer and admission to trading exemption is being introduced, with no size limit, for securities fungible with securities that have been admitted to trading on a regulated market or SME growth market for at least the previous 18 months (subject to certain safeguards and requiring filing of a short “Annex IX” document)

• The minimum IPO offer period is shortened from six to three working days.

• Withdrawal rights (supplements). The statutory walk-away period for investors when a prospectus supplement is published is extended from two working days to three working days.

• Withdrawal rights (final offer price and number of securities). There is a similar extension from two working days to three working days where the final offer price and/or number of securities to be offered to the public cannot be included in the prospectus.

• The list of documents which may be incorporated by reference to be expanded slightly:  

1. 1. A document filed in accordance with the Annex IX requirements and sustainability reports included in management reports

   2. Issuers may also include additional, voluntary information into a prospectus by reference (subject to satisfaction of the Article 19 criteria)

• Slight relaxation to ranking risk factors. The risk factors are to be “listed in a manner that is consistent with” an assessment of materiality (replacing the idea of the most material being mentioned first).

• Publication of prospectus. A copy of the prospectus is now required to be provided in an electronic format only, and the obligation to provide a paper copy at a potential investor’s request has been removed.

• Languages. Issuers of equity or retail denomination debt will be awarded more scope to select the language of a prospectus. Moreover, only a summary will need to be translated and not the prospectus.

• Future financial information can be incorporated into a base prospectus by reference during the 12-month life of the prospectus.

• No new securities to be added into a base prospectus via supplement. As a clarification, a supplement to a base prospectus cannot be used to introduce a new type of security, save for where an issuer is complying with capital requirements under EU law.

Key changes to MAR applicable from 4 December 2024 include:

• Raising the notification threshold for managers’ transactions (PDMR) from EUR 5,000 to EUR 20,000 per year while also giving NCAs the option to either increase the threshold at national levels to EUR 50,000 or decrease it to EUR 10,000. In Finland, the threshold is set at EUR 20,000 per year;

• Clarifying that the prohibition on PDMR transactions during a closed period does not apply to transactions or trade activities that do not relate to active investment decisions by the PDMR. Transactions resulting exclusively from external factors or actions of third parties, or transactions or trade activities, including the exercise of derivatives, based on predetermined terms are thus clarified to be permitted during a closed period;

• Clarifying the optional safe-harbour nature of market soundings by confirming that disclosing market participants (DMPs) carrying out market soundings in accordance with certain information and record-keeping requirements, as set out in MAR, are granted full protection against the allegation of unlawful disclosure of inside information (safe-harbour protection). Moreover, it is specified that the market sounding regime under MAR is a mere option for DMPs and non-compliance does not lead to a presumption that the DMP has disclosed inside information unlawfully. However, only DMPs that choose to comply with the requirements under MAR are afforded safe-harbour protection;

• Simplifying the reporting mechanism that issuers shall follow in relation to buy-back programmes when safe-harbour protection is applied in accordance with MAR Article 5. The issuer is required to report information on the buy-back programme transactions only to the competent authority of the most relevant market in terms of liquidity for its shares (to the FIN-FSA in the case of Finland). The disclosure obligation is also simplified by allowing an issuer to only disclose to the public aggregated information which indicates the aggregated volume and the weighted average price per day and per trading venue.

Our Capital Markets Team is closely following the impact of the adopted Listing Act on the capital markets and will gladly discuss any related questions. Hannes Snellman advises issuers, sponsors, financial advisers, and other market participants in connection with all types of capital markets transactions, including IPOs, public tender offers, share issues, securities offerings, private placements, debt instruments, share buy-backs, and other regulatory matters.