62005CC0430_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
1. Community legislation requires that admission of a company’s securities to stock exchange listing should be conditional on the publication of listing particulars containing certain information including details of the natural and legal persons responsible therefor.
The present reference from the Symvoulio tis Epikratias (Council of State), Greece, concerns the competence of Member States to sanction a company and one of its directors where inaccurate information is provided in listing particulars but neither the company nor that director is mentioned as a person responsible.
Relevant Community legislation
2. Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities (2) codifies inter alia Council Directive 79/279/EEC of 5 March 1979 coordinating the conditions for the admission of securities to official stock exchange listing (3) and Council Directive 80/390/EEC of 17 March 1980 coordinating the requirements for the drawing up, scrutiny and distribution of the listing particulars to be published for the admission of securities to official stock exchange listing. (4)
3. Directives 79/279 and 80/390 were the first and second of four directives harmonising the conditions to be satisfied on and after listing. (5)
4. Directive 79/279 laid down the conditions to be satisfied by a company seeking the listing of its securities on a Stock Exchange in a Member State;
for example, the company must have filed annual accounts in accordance with national law for the three financial years preceding the application for listing;
the foreseeable market capitalisation of the shares for which admission is sought must be above a minimum amount;
the shares must be freely negotiable;
and at least 25% of the class of shares concerned must be in public hands.
5. Directive 80/390 laid down requirements concerning the content, layout, approval and publication of the document to be published on the admission of securities to listing (‘listing particulars’ in English, ‘prospectus’ in French (6) ).
6. As indicated, Directive 2001/34 codifies Directives 79/279 and 80/390. (7)
7. The preamble to Directive 2001/34 states:
‘(5) Initially, this coordination of the conditions for admission of securities to official listing should be sufficiently flexible to enable account to be taken of present differences in the structures of securities markets in the Member States and to enable the Member States to take account of any specific situations with which they may be confronted.
(6) For this reason, coordination should first be limited to the establishment of minimum conditions for the admission of securities to official listing on stock exchanges situated or operating in the Member States, without however giving issuers any right to listing.
(7) This partial coordination of the conditions for admission to official listing constitutes a first step towards subsequent closer alignment of the rules of Member States in this field.
…
(9) Safeguards for the protection of the interests of actual and potential investors are required in most Member States of undertakings offering their securities to the public, either at the time of their offer or of their admission to official stock exchange listing;
such safeguards require the provision of information which is sufficient and as objective as possible concerning the financial circumstances of the issuer and particulars of the securities for which admission to official listing is requested;
the form under which this information is required usually consists of the publication of listing particulars.
(10) The safeguards required differ from Member State to Member State, both as regards the contents and the layout of the listing particulars and the efficacy, methods and timing of the check on the information given therein;
the effect of these differences is not only to make it more difficult for undertakings to obtain admission of securities to official listing on stock exchanges of several Member States but also to hinder the acquisition by investors residing in one Member State of securities listed on stock exchanges of other Member States and thus to inhibit the financing of the undertakings and investment throughout the Community.
(11) These differences should be eliminated by coordinating the rules and regulations without necessarily making them completely uniform, in order to achieve an adequate degree of equivalence in the safeguards required in each Member State to ensure the provision of information which is sufficient and as objective as possible for actual or potential security holders.’ (8)
8. Article 20 of Directive 2001/34 requires Member States to ensure that the admission of securities to listing is conditional on the publication of listing particulars.
9. The principal requirement as to content of listing particulars is now imposed by Article 21(1) of Directive 2001/34, which provides:
‘The listing particulars shall contain the information which, according to the particular nature of the issuer and of the securities for the admission of which application is being made, is necessary to enable investors and their investment advisers to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer and of the rights attaching to such securities.’
10. Article 21(2) of Directive 2001/34 provides:
‘Member States shall ensure that the obligation referred to in paragraph 1 is incumbent upon the persons responsible for the listing particulars as provided for in heading 1.1 of Schedules A and B of Annex I hereto.’
11. Schedule A of Annex I prescribes the ‘Layout for listing particulars for the admission of shares to official stock exchange listing’;
Schedule B prescribes the equivalent layout for the admission of debt securities.
12. Heading 1.1 of Schedule A lists, among the information to be provided, ‘Name and function of natural persons and name and registered office of legal persons responsible for the listing particulars …’.
13. Article 100 of Directive 2001/34 provides:
‘Every significant new factor capable of affecting assessment of the securities which arises between the time when the listing particulars are adopted and the time when stock exchange dealings begin shall be covered by a supplement to the listing particulars, scrutinised in the same way as the latter and published in accordance with procedures to be laid down by the competent authorities.’
14. Article 105(1) of Directive 2001/34 requires Member States to appoint one or more competent authorities.
15. Directive 2001/34 has, since the facts giving rise to the main proceedings, been amended by Directive 2003/71. (9)
In particular, Article 21 of Directive 2001/34 has been deleted and is in effect replaced by Articles 5(1) and 6(1) of Directive 2003/71.
16. Article 5(1) of Directive 2003/71 provides:
‘Without prejudice to Article 8(2), the prospectus shall contain all information which, according to the particular nature of the issuer and of the securities offered to the public or admitted to trading on a regulated market, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities.
This information shall be presented in an easily analysable and comprehensible form.’
17. Article 6 of Directive 2003/71 provides:
‘1.	Member States shall ensure that responsibility for the information given in a prospectus attaches at least to the issuer or its administrative, management or supervisory bodies, the offeror, the person asking for the admission to trading on a regulated market or the guarantor, as the case may be.
The persons responsible shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their names and registered offices, as well as declarations by them that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.
2.	Member States shall ensure that their laws, regulations and administrative provisions on civil liability apply to those persons responsible for the information given in a prospectus.
However, Member States shall ensure that no civil liability shall attach to any person solely on the basis of the summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.’
18. Article 25 of Directive 2003/71, headed ‘Sanctions’, provides:
‘1.	Without prejudice to the right of Member States to impose criminal sanctions and without prejudice to their civil liability regime, Member States shall ensure, in conformity with their national law, that the appropriate administrative measures can be taken or administrative sanctions be imposed against the persons responsible, where the provisions adopted in the implementation of this Directive have not been complied with.
Member States shall ensure that these measures are effective, proportionate and dissuasive.
2.	Member States shall provide that the competent authority may disclose to the public every measure or sanction that has been imposed for infringement of the provisions adopted pursuant to this Directive, unless the disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.’
Relevant national legislation
19. Directive 80/390 was implemented in Greece by Presidential Decree 348/1985, (10) Article 24 of which transposes Article 23 of Directive 80/390 (now Article 100 of Directive 2001/34) verbatim.
20. Article 72(2) of Law 1969/1991 as amended provided at the material time: (11)
‘A fine of up to GRD five hundred million (500 000 000) shall be imposed by the Capital Market Commission on natural or legal persons who publish or disseminate in any way inaccurate or misleading information regarding securities being admitted to listing or already listed on an official stock exchange that by its nature may affect the price of or dealings in those securities …
This provision shall also apply to members of the board of directors of companies applying for admission of their shares to a recognised stock exchange, where the inaccurate or misleading information is contained in the listing particulars required for the purposes of the abovementioned admission or is published or disseminated in any way.’
The main proceedings and the question referred
21. The facts are set out in the order for reference – and echoed in certain of the written observations – in great detail.
For the purposes of answering the question referred, however, they can in my view be pared down to the following.
22. The applicants are Ntionik Anonymi Etaireia Emporias I/Y, Logismikou kai Parochis Ypiresion Michanografisis, a public limited company (‘Ntionik AE’), whose shares are listed on the parallel market of the Athens Stock Exchange, and Ioannis Michail Pikoulas, one of the directors of Ntionik AE.
They are contesting two decisions taken by the Epitropi Kefalaiagoras (Capital Market Commission, the ‘competent authority’ in Greece for the purpose of Directive 2001/34) imposing fines (i) (in both cases) pursuant to Article 72(2) of Law 1969/1991 and (ii) (additionally in the case of Ntionik AE) for breach of Article 24 of Presidential Decree 348/1985.
23. The Capital Market Commission imposed the fines because it considered that listing particulars issued by Ntionik AE in connection with an increase in share capital in 2001 contained inaccurate and misleading information regarding its profits and losses for the financial year 2000 that by its nature was capable of affecting the price of or dealings in the securities of Ntionik AE.
24. Neither Ntionik AE nor Mr Pikoulas was among those named in the listing particulars as ‘responsible for the listing particulars’ in accordance with heading 1.1 of Schedule A in Annex I to Directive 2001/34.
25. The matter has come before the Council of State.
That court considers that under Article 21 of Directive 2001/34 Member States may, where the information in the listing particulars proves to be inaccurate or misleading, enact administrative penalties only in respect of the issuer and the persons expressly named in the listing particulars as responsible.
Consequently, Article 72(2) of Law 1969/1991 is compatible with Article 21 of the Directive in so far as it permits a fine to be imposed on the issuer.
To the extent, however, that Article 72(2) provides for a fine to be imposed upon me mbers of the issuer’s board of directors regardless of whether they have been identified in the relevant listing particulars as responsible for the accuracy of the information contained therein, that provision appears to be contrary to Article 21 of the Directive.
However, considering that the interpretation of Article 21 of Directive 2001/34 is not entirely clear, the Council of State has referred the following question for a preliminary ruling:
‘In the light of Article 21 of Directive 2001/34/ECXXX, can a national legislature lay down, for cases where the information recorded in listing particulars proves to be inaccurate or misleading, administrative penalties imposable not only upon the persons expressly mentioned in those particulars as responsible but also upon the issuer of the securities being admitted to listing on a stock exchange and, indiscriminately, upon the members of its board of directors, regardless of whether the board members have been identified as responsible in the abovementioned sense?’
26. Written observations have been submitted by Ntionik AE, the Greek, Italian and Portuguese Governments and the Commission.
Ntionik AE, the Greek Government and the Commission were represented at the hearing.
Admissibility
27. The Italian Government submits that the question is inadmissible since it is not clear from the order for reference that Article 21 of Directive 2001/34 applies.
It appears that Ntionik AE was already quoted and that it had simply decided to issue more shares to increase its capital.
Article 64 of the Directive provides that in such circumstances listing particulars are not required (although Member States may, by virtue of Article 8(2) of the Directive, impose such a requirement).
28. I am not convinced by this argument.
Italy appears to assume that, because Ntionik AE was already quoted, its increase in capital did not require an application for admission to listing.
However, it is securities, and not companies, that are listed (although it is a convenient shorthand to refer to ‘listed companies’).
Admittedly, Directive 2001/34 provides for partial or complete exemption from the obligation to publish listing particulars in a number of situations (Article 23) and permits the omission from listing particulars of certain information in other situations (Articles 24 to 34).
However, there is nothing to suggest that in the present case the effect of any of those provisions is that Ntionik AE was either not obliged to issue listing particulars at all or permitted to omit the information required by virtue of paragraph 1.1 of Schedule A.
Moreover Ntionik AE confirmed at the hearing that the shares in question were not ‘automatically admitted’ within the meaning of Article 64, that the increase in capital was an offer to the public subject to the pre-emption rights of existing shareholders, and that heading 1.1 of Schedule A was accordingly applicable.
Assessment
29. Ntionik AE considers that the question referred should be answered in the negative.
The three Governments and the Commission take the contrary view.
30. Ntionik AE submits that Directive 2001/34 sets clear and precise limits on the margin of discretion allowed to the national authorities in its implementation.
Article 21(2) shows clearly that that margin of discretion is limited to the choice of the mechanism for imposing sanctions.
A literal interpretation of Article 21(2) shows clearly that any sanctions for infringements committed in the drafting of the listing particulars are to be imposed exclusively on those responsible therefor and not on directors or the issuing company.
If the Directive had genuinely intended to extend responsibility for the content of the prospectus to all directors and the company itself, it would not have required in Annex I that information on the persons responsible for the listing particulars should be provided.
31. I do not agree.
32. First, as the Greek and Portuguese Governments and the Commission submit, the preamble to Directive 2001/34 makes it abundantly clear that the aim of the legislation is to set minimum standards.
Recital 11 in particular states that the differences between the safeguards required in each Member State to ensure the provision of information which is sufficient and as objective as possible for actual or potential security holders ‘should be eliminated by coordinating the rules and regulations without necessarily making them completely uniform, in order to achieve an adequate degree of equivalence ’. (12)
33. That approach is to my mind unsurprising.
As I have indicated, Directive 2001/34 codifies Directive 80/390.
The proposal for Directive 80/390 dates back to 1972. (13)
Recital 11 in the preamble to Directive 2001/34 traces a direct lineage to this proposal. (14)
In 1972 the level of disclosure required on admission to listing varied widely. (15)
Against that background, it would have been wildly ambitious for the Commission to have sought an advanced level of harmonisation in its first legislative step.
34. This was recognised in the Initial Report of the Committee of Wise Men on the Regulation of European Securities Markets (the Lamfalussy Report), (16) which stated in the first paragraph of Chapter III, entitled ‘The main shortcomings of European regulation today’, that the ‘current EU legislative framework for securities markets … is based on minimum harmonisation’. (17)
35. It seems to me that, as the Italian Government submits, the literal interpretation of Article 21(2) of Directive 2001/34 also suggests that the legislation seeks to impose minimum standards rather than wholesale harmonisation.
Article 21(2) requires Member States to ensure, in effect, that responsibility for the accuracy of the information in listing particulars lies on ‘the persons responsible for the listing particulars as provided for in heading 1.1 of Schedules A and B of Annex I’.
Heading 1.1 of those schedules simply requires information concerning those responsible for the listing particulars to be included therein.
I do not see that the combined effect of those provisions precludes Member States from determining the categories of person responsible for that information.
The requirement in heading 1.1 that those responsible should be mentioned in the listing particulars is manifestly designed to protect investors who rely on the information, (18) rather than to shield from liability persons clearly defined as responsible by national law who are not, for whatever reason, mentioned in the listing particulars.
36. Moreover, there is in my view nothing in Directive 2001/34 to suggest that a Member State which has defined certain categories of person as responsible for inaccurate or misleading information in listing particulars may not impose criminal or administrative sanctions, such as those at issue, on such persons where inaccurate or incomplete information is published.
37. Finally, I should note that Article 21 of Directive 2001/34 has, since the facts giving rise to the main proceedings in the present case, been replaced by Articles 5(1) and 6(1) of Directive 2003/71. (19)
Both the Greek and Italian Governments attach some significance to Directive 2003/71.
The Greek Government submits that that directive, which manifestly seeks the highest possible level of harmonisation, none the less does not uniformly regulate the question of responsibility for information given in listing particulars, but leaves it to the Member States.
Moreover Directive 2003/71 does not exhaustively list the persons responsible, simply requiring that responsibility ‘attaches at least to’ (20) the persons listed.
The Italian Government submits that a system of administrative sanctions was established only by Article 25 of Directive 2003/71, in terms which clearly do not limit application of such sanctions to those formally ‘responsible’ for the listing particulars.
38. It is indeed the case that Article 6(1) of Directive 2003/71 is explicit in providing that Member States may impose liability for the information given in a prospectus on a wider class of persons than those there listed and that Article 25(1) is also drafted in broad terms.
However, since neither of those provisions is directly at issue in the present case, I do not propose to dwell on their possible interpretation.
Conclusion
39. In the light of the above, I consider that the question referred by the Symvoulio tis Epikratias should be answered as follows:
Article 21 of Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities does not preclude a national legislature from laying down, for cases where the information recorded in listing particulars proves to be inaccurate or misleading, administrative penalties imposable not only upon the persons expressly mentioned in those particulars as responsible but also upon the issuer of the securities being admitted to listing on a stock exchange and, indiscriminately, upon the members of its board of directors, regardless of whether the board members have been identified as responsible in the abovementioned sense.
(1) .
(2)  –	OJ 2001 L 184, p. 1.
(3)  –	OJ 1979 L 66, p. 21.
(4)  –	OJ 1980 L 100, p. 1.
(5)  –	The other two being Council Directive 82/121/EEC of 15 February 1982 on information to be published on a regular basis by companies the shares of which have been admitted to official stock-exchange listing (OJ 1982 L 48, p. 26) and Council Directive 88/627/EEC of 12 December 1988 on the information to be published when a major holding in a listed company is acquired or disposed of (OJ 1988 L 348, p. 62).
(6)  –	Confusingly, ‘prospectus’ in English has traditionally referred to the (until recently, separately regulated) document issued when previously unlisted securities, whether or not they are subsequently to be listed, are offered to the public for the first time.
That document is also ‘prospectus’ in French, although a distinction is drawn between a ‘prospectus d’émission’ and a ‘prospectus d’admission’.
The requirements for the content, layout, approval and publication of both documents have now been harmonised (and both documents are now referred to in English, at least in the Community legislation, as a ‘prospectus’) by Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ 2003 L 345, p. 64).
The facts giving rise to the main proceedings in the present case occurred before the entry into force (and indeed adoption) of Directive 2003/71.
(7)  –	See recital 1 in the preamble.
The substantive provisions were accordingly not changed.
Annex III to Directive 2001/34 contains a Correlation Table showing, for each provision in that directive, the source provision from the four codified directives.
(8)  – Recitals 5 to 7 are in identical terms to recitals 4 to 6 in the preamble to Directive 79/279;
recitals 9 to 11 are in identical terms to recitals 2 to 4 in the preamble to Directive 80/390.
(9)  –	Cited in footnote 6.
(10)  –	Official Gazette A 125.
(11)  –	Article 72(2) of Law 1969/1991 has in the mean time been repealed by Law 3340/2005.
However, this has no bearing on the present case.
(12)  –	Emphasis added.
(13)  –	Proposition de directive du Conseil concernant le contenu, le contrôle et la diffusion du prospectus à publier lors de l’admission à la cote officielle d’une bourse de valeurs de titres émis par des sociétés au sens de l’article 58 alinéa 2 du traité (JO 1972 C 131, p. 61).
(14)  –	See the fourth recital in the preamble to the proposal, which is in virtually identical terms to recital 11 in the preamble to Directive 2001/34.
(15)  –	See Samuel Suckow, ‘The European Prospectus’, American Journal of Comparative Law
1975, p. 50, at 52, Richard M. Buxbaum and Klaus Hopt, Legal Harmonisation and the Business Enterprise (1988), pp. 189-192, Vanessa Edwards, EC Company Law
(1999), p. 233, and Niamh Moloney, EC Securities Regulation (2002), p. 64.
(16)  –	Dated 9 November 2000, available on the Commission’s website via the link http://ec.europa.eu/internal_market/securities/docs/lamfalussy/wisemen/initial-report-wise-men_en.pdf.
(17)  –	At p. 15.
(18)  –	See recitals 9 to 11 in the preamble to Directive 2001/34.
(19)  –	See Article 27(1) of Directive 2003/71.
(20)  –	Emphasis added.