62023CC0627
OPINION OF ADVOCATE GENERAL
RICHARD DE LA TOUR
delivered on 5 September 2024 (
1
)
Case C‑627/23
Commune de Schaerbeek,
Commune de Linkebeek
v
Holding Communal SA
(Request for a preliminary ruling from the Cour de cassation (Court of Cassation, Belgium))
(Reference for a preliminary ruling – Directive 2003/71/EC – Admission to trading of securities – Increase in capital – Prospectus to be published – Concept of ‘transferable security negotiable on the capital market’ – Shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors)
I. Introduction
1.
The request for a preliminary ruling concerns the interpretation of Article 2(1)(a) of 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, (
2
) as amended by Directive 2008/11/EC of the European Parliament and of the Council of 11 March 2008. (
3
)
2.
The request has been made in proceedings between the Commune de Schaerbeek (Municipality of Schaerbeek) and the Commune de Linkebeek (Municipality of Linkebeek) (Belgium), on the one hand, and the company Holding Communal SA, on the other, concerning an increase in the capital of that company, decided on without prior publication of a prospectus and to which those municipalities subscribed.
3.
I will propose that the Court’s answer to the Cour de cassation (Court of Cassation, Belgium) should be that the capital-increase transaction at issue, which is regarded as an offer of securities to the public, should have been preceded by the publication of a prospectus, even though the subsequent transfer of those shares is subject to the approval of the board of directors and those shares can be held only by provinces and municipalities.
II. Legal context
A.
European Union law
1. Directive 93/22/EEC
4.
The eleventh recital of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field, (
4
) stated:
‘Whereas the very wide definitions of transferable securities and money-market instruments included in this Directive are valid only for this Directive and consequently in no way affect the various definitions of financial instruments used in national legislation for other purposes such as taxation; whereas, furthermore, the definition of transferable securities covers negotiable instruments only; whereas, consequently, shares and other securities equivalent to shares issued by bodies such as building societies and industrial and provident societies, ownership of which cannot in practice be transferred except by the issuing body’s buying them back, are not covered by this definition.’
5.
Article 1(4) of that directive provided:
‘For the purposes of this Directive:
…
4.
transferable securities shall mean:
–
shares in companies and other securities equivalent to shares in companies,
–
bonds and other forms of securitised debt[,]
which are negotiable on the capital market[,] and
–
any other securities normally dealt in giving the right to acquire any such transferable securities by subscription or exchange or giving rise to a cash settlement[,]
excluding instruments of payment’.
2. The Prospectus Directive
6.
Recitals 5, 10, 12, 16, 18 and 19 of the Prospectus Directive state:
‘(5)
On 17 July 2000, the Council set up the Committee of Wise Men on the regulation of European securities markets. In its initial report of 9 November 2000 the Committee stresses the lack of an agreed definition of public offer of securities, with the result that the same operation is regarded as a private placement in some Member States and not in others; the current system discourages firms from raising capital on a Community-wide basis and therefore from having real access to a large, liquid and integrated financial market.
…
(10)
The aim of this Directive and its implementing measures is to ensure investor protection and market efficiency, in accordance with high regulatory standards adopted in the relevant international fora.
…
(12)
Full coverage of equity and non-equity securities offered to the public or admitted to trading on regulated markets as defined by [Directive 93/22], and not only securities which have been admitted to the official lists of stock exchanges, is also needed to ensure investor protection. The wide definition of securities in this Directive, which includes warrants and covered warrants and certificates, is only valid for this Directive and consequently in no way affects the various definitions of financial instruments used in national legislation for other purposes, such as taxation. Some of the securities defined in this Directive entitle the holder to acquire transferable securities or to receive a cash amount through a cash settlement determined by reference to other instruments, notably transferable securities, currencies, interest rates or yields, commodities or other indices or measures. Depositary receipts and convertible notes, e.g. securities convertible at the option of the investor, fall within the definition of non-equity securities set out in this Directive.
…
(16)
One of the objectives of this Directive is to protect investors. It is therefore appropriate to take account of the different requirements for protection of the various categories of investors and their level of expertise. Disclosure provided by the prospectus is not required for offers limited to qualified investors. …
…
(18)
The provision of full information concerning securities and issuers of those securities promotes, together with rules on the conduct of business, the protection of investors. Moreover, such information provides an effective means of increasing confidence in securities and thus of contributing to the proper functioning and development of securities markets. The appropriate way to make this information available is to publish a prospectus.
(19)
Investment in securities, like any other form of investment, involves risk. Safeguards for the protection of the interests of actual and potential investors are required in all Member States in order to enable them to make an informed assessment of such risks and thus to take investment decisions in full knowledge of the facts.’
7.
Article 1 of the Prospectus Directive provides:
‘1.   The purpose of this Directive is to harmonise requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market situated or operating within a Member State.
2.   This Directive shall not apply to:
…
(d)
securities unconditionally and irrevocably guaranteed by a Member State or by one of a Member State’s regional or local authorities;
…’
8.
Article 2(1)(a), (d) and (e)(ii) of that directive provides:
‘For the purposes of this Directive, the following definitions shall apply:
(a)
“securities” means transferable securities as defined by Article 1(4) of Directive [93/22] with the exception of money market instruments as defined by Article 1(5) of Directive [93/22], having a maturity of less than 12 months. For these instruments national legislation may be applicable;
…
(d)
“offer of securities to the public” means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. This definition shall also be applicable to the placing of securities through financial intermediaries;
(e)
“qualified investors” means:
…
(ii)
national and regional governments, central banks, international and supranational institutions such as the International Monetary Fund [IMF], the European Central Bank [ECB], the European Investment Bank [EIB] and other similar international organisations.’
9.
Under Article 3 of the Prospectus Directive:
‘1.   Member States shall not allow any offer of securities to be made to the public within their territories without prior publication of a prospectus.
2.   The obligation to publish a prospectus shall not apply to the following types of offer:
(a)
an offer of securities addressed solely to qualified investors; and/or
(b)
an offer of securities addressed to fewer than 100 natural or legal persons per Member State, other than qualified investors; and/or
(c)
an offer of securities addressed to investors who acquire securities for a total consideration of at least EUR 50000 per investor, for each separate offer; and/or
(d)
an offer of securities whose denomination per unit amounts to at least EUR 50000; and/or
(e)
an offer of securities with a total consideration of less than EUR 100000, which limit shall be calculated over a period of 12 months.
…’
10.
Article 4(1) of that directive sets out the types of securities whose offer to the public is not subject to the obligation to publish a prospectus.
11.
Under Article 13(1) and (4) of that directive:
‘1.   No prospectus shall be published until it has been approved by the competent authority of the home Member State.
…
4.   If the competent authority finds, on reasonable grounds, that the documents submitted to it are incomplete or that supplementary information is needed, the time limits referred to in paragraphs 2 and 3 shall apply only from the date on which such information is provided by the issuer, the offeror or the person asking for admission to trading on a regulated market.
In the case referred to in paragraph 2 the competent authority should notify the issuer if the documents are incomplete within 10 working days of the submission of the application.’
12.
Article 25(1) of that directive provides:
‘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.’
3. The MiFID I Directive
13.
Recitals 1 and 44 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC, (
5
) as amended by Directive 2006/31/EC of the European Parliament and of the Council of 5 April 2006, (
6
) state:
‘(1)
… Directive [93/22] sought to establish the conditions under which authorised investment firms and banks could provide specified services or establish branches in other Member States on the basis of home country authorisation and supervision. To this end, that Directive aimed to harmonise the initial authorisation and operating requirements for investment firms including conduct of business rules. It also provided for the harmonisation of some conditions governing the operation of regulated markets.
…
(44)
With the [twofold] aim of protecting investors and ensuring the smooth operation of securities markets, it is necessary to ensure that transparency of transactions is achieved and that the rules laid down for that purpose apply to investment firms when they operate on the markets. In order to enable investors or market participants to assess at any time the terms of a transaction in shares that they are considering and to verify afterwards the conditions in which it was carried out, common rules should be established for the publication of details of completed transactions in shares and for the disclosure of details of current opportunities to trade in shares. These rules are needed to ensure the effective integration of Member State equity markets, to promote the efficiency of the overall price formation process for equity instruments, and to assist the effective operation of “best execution” obligations. These considerations require a comprehensive transparency regime applicable to all transactions in shares irrespective of their execution by an investment firm on a bilateral basis or through regulated markets or [multilateral trading facilities (MTFs)]. The obligations for investment firms under this Directive to quote a bid and offer price and to execute an order at the quoted price do not relieve investment firms of the obligation to route an order to another execution venue when such internalisation could prevent the firm from complying with “best execution” obligations.’
14.
Points (14), (17) and (18) of Article 4(1) of the MiFID I Directive provide:
‘For the purposes of this Directive, the following definitions shall apply:
…
(14)
“Regulated market” means a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III;
…
(17)
“Financial instrument” means those instruments specified in Section C of Annex I;
(18)
“Transferable securities” means those classes of securities which are negotiable on the capital market, with the exception of instruments of payment, such as:
(a)
shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;
(b)
bonds or other forms of securitised debt, including depositary receipts in respect of such securities;
(c)
any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.’
15.
Article 40(1) of that directive provides:
‘Member States shall require that regulated markets have clear and transparent rules regarding the admission of financial instruments to trading.
Those rules shall ensure that any financial instruments admitted to trading in a regulated market are capable of being traded in a fair, orderly and efficient manner and, in the case of transferable securities, are freely negotiable.’
16.
Under Article 69 of that directive:
‘Directive [93/22] shall be repealed with effect from 1 November 2007. References to Directive [93/22] shall be construed as references to this Directive. References to terms defined in, or Articles of, Directive [93/22] shall be construed as references to the equivalent term defined in, or Article of, this Directive.’
17.
Annex I to the MiFID I Directive establishes the ‘list of services and activities and financial instruments’. Section C of that annex, which lists ‘financial instruments’, includes ‘transferable securities’ in point 1.
4. Regulation (EC) No 809/2004
18.
The second paragraph of Article 3 of Regulation (EC) No 809/2004, (
7
) as amended by Commission Regulation (EC) No 1289/2008 of 12 December 2008, (
8
) provides:
‘A prospectus shall contain the information items required in Annexes I to XVII depending on the type of issuer and securities involved …’
B.
Belgian law
19.
Article 3(1) of the loi relative aux offres publiques d’instruments de placement et aux admissions d’instruments de placement à la négociation sur des marchés réglementés (Law on offers of investment instruments to the public and admissions of investment instruments to trading on regulated markets) of 16 June 2006, (
9
) provides:
‘For the purposes of this Law, “public offer” means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the investment instruments to be offered, so as to enable an investor to decide to purchase or subscribe to those investment instruments, and which is made by or on behalf of the person who is able to issue or transfer the securities.
Any person who directly or indirectly receives remuneration or benefit in connection with the offer is presumed to be acting on behalf of the person who is able to issue or transfer the investment instruments.’
20.
Article 4(1)(1) and (10) of that law provides:
‘For the purposes of this Law, “investment instruments” means:
(1)
securities;
…
(10)
all other instruments enabling financial-type investment to be made, whatever the underlying assets.’
21.
Under Article 5(1) of that law:
‘For the purposes of this law, “transferable securities” means all classes of investment instruments which are negotiable on the capital market (with the exception of payment instruments), such as:
(1)
shares in companies and other investment instruments equivalent to shares in companies, partnerships or other entities, including investment instruments issued by collective investment undertakings, constituted under the law of contract or trust law, as representing the rights of the participants in such an undertaking over its assets, and depositary receipts in respect of shares;
(2)
bonds or other forms of securitised debt, including depositary receipts in respect of such securities and property income certificates;
(3)
any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement, the amount of which is determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.’
22.
Title IV of the Law of 16 June 2006 concerns ‘the prospectus’. Within Chapter 1 of that title, entitled ‘Obligation to publish a prospectus’, Section 1, relating to the ‘scope’, contains Article 17, which provides:
‘This chapter shall apply to any offer to the public of investment instruments made in Belgian territory and to any admission to trading of investment instruments on a Belgian regulated market.’
23.
Within Section 2 of that chapter, entitled ‘Publication of a prospectus’, Article 20 of that law is worded as follows:
‘Any transaction referred to in this chapter requires the prior publication of a prospectus by the issuer, the offeror or the person asking for admission to trading on a regulated market, as the case may be.’
III. The facts of the dispute in the main proceedings and the question referred for a preliminary ruling
24.
Holding Communal, formerly known as ‘Crédit communal de Belgique’, was originally set up on 24 November 1860 to finance local authority investments in Belgium. Its shareholders are the Belgian municipalities and provinces, including, in particular, the municipalities of Schaerbeek and Linkebeek, which obtain financing from it.
25.
In 1996, Crédit communal de Belgique merged with Crédit local de France to form the Dexia Group. Two years later, Crédit communal de Belgique was converted into a holding company under its current name, Holding Communal. Holding Communal has a substantial holding in the public limited company Dexia and in the public limited company Dexia Bank, now Belfius Bank.
26.
In the context of the 2008 financial crisis, Holding Communal participated in the increase of capital in the public limited company Dexia of EUR 500 million. In order to be able to meet that commitment and after the failure to obtain a loan during the summer of 2009, the board of directors of Holding Communal decided to appeal to shareholders, proposing, in particular, capital increases by contributions in cash giving rise to the issue of ‘cumulative preference A’ shares (‘the capital-increase transaction at issue’).
27.
In September 2009, an information meeting was organised at which information was provided to shareholders and the timetable for the transaction was adapted to take account of the decision-making process specific to municipalities and provinces. On 30 September 2009, at the general meeting, all Holding Communal shareholders approved that capital increase. With regard to the capital-increase transaction at issue, it was decided that the subscription would take place in two rounds. The municipality of Schaerbeek subscribed for EUR 8 161 689.60, in the first round, and EUR 1 359 011.84, in the second, and its subscription was financed by a loan of EUR 8161698 from Dexia Bank. The municipality of Linkebeek subscribed for EUR 53 575.68 in each of the two rounds.
28.
On 7 December 2011, the extraordinary general meeting of Holding Communal decided that the company should be dissolved and liquidated. Since no liquidating dividends could be distributed, the shareholders lost the whole of their subscriptions.
29.
The municipalities of Schaerbeek and Linkebeek brought an action against Holding Communal before the tribunal de commerce francophone de Bruxelles (Brussels Commercial Court (French-speaking), Belgium) seeking annulment of their subscriptions to the capital-increase transaction at issue on the ground of infringement of the Law of 16 June 2006. They argued that, prior to inviting shareholders to subscribe to that capital increase, a prospectus should have been published in accordance with that law. That court considered that that law, and the Prospectus Directive, governed the offer of securities only in so far as they are negotiable on the capital market and concluded that the shares of Holding Communal did not constitute negotiable securities on such a market.
30.
That decision was upheld by a judgment of the cour d’appel de Bruxelles (Court of Appeal, Brussels, Belgium) on 12 April 2022, which concluded that the law of 16 June 2006, transposing the Prospectus Directive, governs the offer of securities only if they are negotiable on the capital market. However, the shares issued as consideration for the contributions in cash to the capital-increase transaction at issue were securities which were not negotiable on the capital market since they could be held only by municipal and provincial entities and their transfer was subject to the approval by the board of directors.
31.
The municipalities of Schaerbeek and Linkebeek lodged an appeal on a point of law against that judgment with the Cour de cassation (Court of Cassation), arguing that the shares of the companies remain negotiable on the capital market, even though that negotiation results in a transaction limited to the municipal and provincial authorities and is subject to the approval of the board of directors.
32.
In those circumstances, the Cour de cassation (Court of Cassation) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘Must Article 2(1)(a) of [the Prospectus Directive], itself referring to point 18 of Article 4(1) of [the MiFID I Directive], be interpreted as meaning that the concept of transferable security negotiable on the capital market covers the shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors?’
33.
Written observations have been submitted by the municipalities of Schaerbeek and Linkebeek, Holding Communal and the European Commission.
IV. Analysis
34.
By its question, the referring court asks the Court of Justice whether shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors are transferable securities negotiable on the capital market whose offer to the public requires prior publication of a prospectus.
35.
In order to answer that question, it must be noted that since Article 3 of the Prospectus Directive states that Member States are not to allow any offer of securities to be made to the public within their territories without prior publication of a prospectus, it is necessary to define what constitutes, first, ‘securities’, and second, ‘public offer’.
36.
As regards those concepts, it must be borne in mind that, according to settled case-law, it follows from the need for a uniform application of EU law and the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union, having regard not only to the wording of that provision but also to the context in which it occurs and the objectives pursued by the rules of which it is part. (
10
) In the present case, however, there is no express reference to the law of the Member States and therefore those concepts must be given an independent and uniform interpretation.
37.
In the first place, with regard to the concept of ‘public offer’, Article 2(1)(d) of the Prospectus Directive defines it as ‘a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities’. The terms used are very broad, with no restrictions on the persons concerned or the forms of communication. On the other hand, the communication must include sufficient information on the terms for acquiring the securities.
38.
In addition, the Prospectus Directive lists certain types of offers which are not subject to the obligation to publish a prospectus on account of the nature of the persons at whom the offer is directed, the minimum amount of the individual investment or the maximum amount of the total offer (Article 3(2)), or certain types of securities offered to the public or admitted to trading on a regulated market which likewise do not require the publication of such a prospectus (Article 4). The question might arise as to whether the contested offer fulfilled the conditions of one of the exceptions provided for in, inter alia, Article 3(2)(b), (
11
) (c), (
12
) or (d), (
13
) of that directive.
39.
It follows from those exceptions that an offer made to more than 100 persons, other than qualified investors (which may be national and regional governments under Article 2(1)(e)(ii) of the Prospectus Directive), is subject to the publication of a prospectus. However, the information contained in the request for a preliminary ruling does not make it possible to ascertain the number of municipalities and provinces to which the offer was made for the purpose of the capital-increase transaction at issue and whether the provinces constitute regional governments within the meaning of that directive. It will be for the referring court to verify those matters. In any event, the threshold of 100 persons is very low and, once it is exceeded, a prospectus must be published.
40.
Nor does the request for a preliminary ruling make it possible to determine the total amount of securities acquired by each investor or the nominal amount of the security offered. It is therefore not possible to ascertain whether the threshold of EUR 50000, above which a prospectus is not required, has been exceeded. The referring court will have to carry out that verification. Nevertheless, this shows a contrario that up to that high threshold of EUR 50000 acquired by each investor or EUR 50000 corresponding to the amount of the share offered, a prospectus is required.
41.
Thus, with the exception of the specific offers provided for in Articles 3 and 4 of the Prospectus Directive, any offer of securities must be considered to be public and, consequently, must be preceded by the publication of a prospectus.
42.
The context of that directive confirms this broad interpretation of the concept of ‘public offer’ in order to ensure harmonisation. Recital 5 of that directive recalls that the initial report of 9 November 2000 of the Committee of Wise Men on the regulation of European securities markets stresses the lack of an agreed definition of ‘public offer of securities, with the result that the same operation is [regarded] as a private placement in some Member States and not in others’. That lack of a common definition of ‘public offer’ was noted in the final report of that Committee of Wise Men. (
14
) Moreover, the explanatory memorandum to the Commission’s proposal for a directive (
15
) states, in the section relating to Article 2, that ‘the introduction of a definition of public offer constitutes a major innovation. When [Council] Directive 89/298/EEC [of 17 April 1989 coordinating the requirements for the drawing-up, scrutiny and distribution of the prospectus to be published when transferable securities are offered to the public] (
16
) was adopted, it proved to be impossible to reach an agreement on a common definition (see recital no. 7 of the said Directive’. Consequently, as soon as a harmonised definition is created, the exceptions must be interpreted strictly and the terms of the definition must be interpreted broadly.
43.
The consequence of this lack of definition of the concept of ‘public offer’ was that, depending on the Member State, publication of a prospectus was or was not required for the same type of offer, thus hindering market efficiency within the European Union. Market efficiency is one of the objectives, along with investor protection, pursued by the Prospectus Directive, as recalled in recital 10 thereof. A prospectus is published at the end of a process comprising several stages set out in Article 1(1) of the directive, namely drawing up, approving and distributing the prospectus.
44.
The objective of market efficiency is met by the creation of a prospectus which can serve as a passport within the European Union since minimum information of the same nature is made known, by distribution, in the same type of offers for investors in the European Union and, consequently, a single prospectus can be drawn up for an offer in several Member States.
45.
Investor protection derives not only from the fact that the same information will be given to all potential investors, but also from the fact that the competent authority designated by the Member State will or will not approve the content of the prospectus after requesting, where appropriate, supplementary information, as provided for in Article 13(1) and (4) of the Prospectus Directive. Potential investors can thus be sure that a published prospectus has been verified by that authority.
46.
The pursuit of those two objectives, combined with the general nature of the terms used in the definition of ‘public offer’, suggests that an offer such as that proposed by Holding Communal is a public offer, even if it appears to be reserved for existing shareholders, provided that it does constitute one of the types of public offer exempted from the obligation to publish a prospectus under Article 3(2) of the Prospectus Directive.
47.
In the second place, as regards the concept of ‘transferable securities’, it is defined in Article 2(1)(a) of the Prospectus Directive by reference to the definition set out in Article 1(4) of Directive 93/22.
48.
In that directive, transferable securities were defined as ‘shares in companies and other securities equivalent to shares in companies, bonds and other forms of securitised debt which are negotiable on the capital market and any other securities normally dealt in giving the right to acquire any such transferable securities by subscription or exchange or giving rise to a cash settlement excluding instruments of payment’. Thus, shares were in themselves transferable securities and did not need to be negotiable on the capital market, unlike bonds and other forms of securitised debt.
49.
However, Directive 93/22 was repealed with effect from 1 November 2007 by the MiFID I Directive, Article 69 of which states that ‘references to Directive [93/22] shall be construed as references to this Directive. References to terms defined in, or Articles of, Directive [93/22] shall be construed as references to the equivalent term defined in, or Article of, this Directive’. Since the MiFID I Directive defines the concept of ‘transferable securities’, it is that definition which should be analysed.
50.
Article 4(1)(18) of the MiFID I Directive defines transferable securities as: ‘those classes of securities which are negotiable on the capital market, with the exception of instruments of payment’ and gives a list of examples including ‘shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares’. In that new definition, shares constitute ‘transferable securities’ within the meaning of the directive only if they are negotiable on the capital market, unlike what was provided for in Directive 93/22 and in the Commission proposal which led to the Prospectus Directive. (
17
) Henceforth, the negotiability of shares on the capital market must be taken into account in order to classify them as ‘transferable securities’ within the meaning of the MiFID I Directive.
51.
First, from a literal point of view, the classification of ‘transferable securities’ is based on two concepts: ‘negotiability’ and ‘capital market’.
52.
On the one hand, the adjective ‘negotiable’ can be defined as that which can be negotiated or be the subject of negotiation, and especially in the stock market field: it is used to describe a transferable security or public sector security which is the subject of current transactions and is not subject to any particular restriction on transfer. (
18
)
53.
Thus, the literal interpretation of the word ‘negotiable’ refers to the possibility of a transfer in general terms or to the absence of any particular restriction on transfer. Accordingly, it does not, by itself, allow the referring court’s question to be answered since the approval by the board of directors could be regarded as constituting a restriction on transfer.
54.
On the other hand, with regard to the concept of ‘capital market’, in the stock exchange field the market means various forms of agreement governing transactions in securities. (
19
) Thus, the capital market has a very broad definition and does not refer solely to the regulated market or to a stock exchange listing: it refers to the concept of transactions in a category of goods, in this case transferable securities.
55.
Second, the interpretation of the concepts of ‘negotiability’ and ‘capital market’ must take account of the context in which they are used.
56.
On this point, recital 12 of the Prospectus Directive clearly states that ‘full coverage of equity and non-equity securities offered to the public or admitted to trading on regulated markets as defined by [Directive 93/22], and not only securities which have been admitted to the official lists of stock exchanges, is … needed …’.
57.
In addition, the second paragraph of Article 3 of Regulation No 809/2004 implementing the Prospectus Directive states that a prospectus is to contain the information items required in Annexes I to XVII thereof depending on the type of issuer and securities involved. Thus, point 21.2.3 of Annexes I and X to that regulation states that the restrictions attaching to each class of existing shares must be described. More specifically, point 4.8 of Annex III to that regulation requires a description of any restrictions on the free transferability of the securities. (
20
) The same obligation to provide a description exists in the case of a lock-up agreement relating to transferable securities: the prospectus must identify the parties involved, describe the content and exceptions of the agreement, and indicate the period of the lock up. (
21
)
58.
However, as the Commission points out, such restrictions or lock-up agreements should not make it impossible or extremely difficult to transfer the securities since in that situation the securities could not be considered as being transferable. Such a situation could exist if it were impossible to effect a transfer to a third party, with only the issuer being able to acquire the security issued.
59.
It is therefore clear that, in the context of the Prospectus Directive, restrictions on the negotiability of transferable securities, or even lock-up agreements, do not in themselves prevent the securities in question from falling within the definition of securities subject to the obligation to publish a prospectus in the case of a public offer, provided that those restrictions and agreements do not make a transfer impossible or extremely difficult.
60.
In the context of Directive 93/22, in which the definition of transferable securities has been replaced by that in the MiFID I Directive, applicable in this case, the interpretation must be the same, namely a broad view of the concept of ‘transferable securities’. Thus, while the eleventh recital of Directive 93/22 recalled that the definition of transferable securities used was very wide, it also pointed out that it covered negotiable instruments only and that shares ownership of which cannot, in practice, be transferred except by the issuing body, such as building societies or industrial and provident societies, buying them back, were therefore not covered by this definition. This is still a situation envisaged in respect of certain crypto-assets. (
22
)
61.
In addition, although it relates to admission to a regulated market, the second subparagraph of Article 40(1) of the MiFID I Directive states that securities must be freely negotiable on a regulated market.
62.
That vision was reinforced by the Commission itself in frequently asked questions relating to that directive. It stated, on that occasion, that the essence of the definition of transferable securities was to be, as a category, negotiable on capital markets. (
23
) It added, regarding those markets, that their definition included all contexts where there was an intersection between interests selling and buying securities. (
24
)
63.
It follows from that interpretation, taking account of the context, that the restrictions on the negotiability of Holding Communal’s shares arising from the need to have the approval of the board of directors in order to transfer its shares to a limited number of categories of persons (the provinces and the municipalities) are not such as to prevent, as a matter of principle, any negotiability of the shares within those categories, unless the referring court establishes that it is impossible or extremely difficult to effect a transfer. Furthermore, I consider that there is a capital market for those shares on account of the number of legal persons who can be shareholders. The Commission notes that there are 581 municipalities and 10 provinces in Belgium: they are legal persons which are shareholders or are likely to become shareholders by buying back shares belonging to other shareholders. As I pointed out in point 39 of this Opinion, the Prospectus Directive requires a prospectus to be drawn up where there are more than 100 potential investors, which confirms that the small number of shareholders, and thus the limited size of the secondary market where the shares are resold, is not in itself an obstacle to regarding the shares as negotiable. Those shares consequently fall within the definition of securities whose offer to the public requires the publication of a prospectus.
64.
Third, the concepts of ‘negotiability’ and ‘capital market’ must be interpreted in the light of the objectives of the Prospectus Directive and the MiFID I Directive, which contains the definition of transferable securities.
65.
As recalled in point 43 of this Opinion, the Prospectus Directive pursues two objectives: to ensure investor protection and to ensure market efficiency. Those objectives are also those sought by the MiFID I Directive. (
25
)
66.
Therefore, those objectives lead to a broad definition of ‘negotiability’ and ‘capital market’ since a prospectus ensures better information for investors given that the same minimum information must be provided in the prospectus, the content of which is checked by a national authority, and greater market efficiency since a prospectus can be used in several Member States.
67.
The Court has held previously that the aim of recitals 10, 18 and 19 of the Prospectus Directive is ‘to ensure investor protection and market efficiency’, that the provision of full information concerning securities ‘provides an effective means of increasing confidence in [those] securities and thus of contributing to the proper functioning and development of securities markets’ and that ‘[s]afeguards for the protection of the interests of actual and potential investors are required in all Member States in order to enable them to make an informed assessment of [the] risks [involved in investment in securities] and thus to take investment decisions in full knowledge of the facts’. (
26
)
68.
It has also held that, in view of those objectives, the publication of a prospectus is intended, first, to enable investors to assess the risks linked to the offer of securities to the public or the admission of those securities to trading, so as to enable them to make an informed decision, and, second, to ensure that the proper functioning of the markets concerned is not hindered by irregularities. (
27
)
69.
In the case which gave rise to the judgment of 17 September 2014, Almer Beheer and Daedalus Holding, (
28
) the Court relied on those objectives in order to rule that a forced sale of securities at the request of a creditor did not require the publication of a prospectus since it did not have the same objectives as those pursued by the Prospectus Directive. However, a similar line of reasoning cannot be applied in the context of the question referred to the Court in the present case since, first, the sale took place under normal conditions, without court proceedings at the request of a third party and, second, Holding Communal was indeed responsible for drawing up any prospectus as the issuer of the securities and had all the information necessary to do so.
70.
Thus, a teleological interpretation also leads to a broad view of the concepts of ‘negotiability’ and ‘capital market’.
71.
Consequently, the shares of Holding Communal, which can only be transferred to Belgian provinces or municipalities with the agreement of the board of directors, fall within the category of transferable securities within the meaning of the Prospectus Directive and the issue thereof should have been preceded by the publication of a prospectus since they can be exchanged between 581 municipalities and 10 provinces.
72.
Nevertheless, it will be for the referring court to ascertain a number of points: first, whether or not the conditions for the exceptions laid down in Article 3(2) of the Prospectus Directive are fulfilled; second, whether or not the conditions for the approval of the board of directors and transfers being possible only between Belgian provinces and municipalities make any transfer impossible or extremely difficult because of other factors not referred to in the request for a preliminary ruling; and, third, whether, in accordance with Article 25(1) of that directive, the administrative measures or sanctions implemented by the Member States in the event of failure to comply with the provisions of that directive are effective, proportionate and dissuasive.
73.
In the light of all of the foregoing, I propose that the answer to be given to the referring court should be that Article 2(1)(a) of the Prospectus Directive must be interpreted as meaning that the concept of ‘transferable security negotiable on the capital market’ covers the shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors, provided that those restrictions do not make the negotiability of those shares on the capital market impossible or extremely difficult.
V. Conclusion
74.
In the light of all of the foregoing considerations, I propose that the Court should answer the question referred by the Cour de cassation (Court of Cassation, Belgium) for a preliminary ruling as follows:
Article 2(1)(a) of 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, as amended by Directive 2008/11/EC of the European Parliament and of the Council of 11 March 2008,
must be interpreted as meaning that the concept of ‘transferable security negotiable on the capital market’ covers the shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors, provided that those restrictions do not make the negotiability of those shares on the capital market impossible or extremely difficult.
(
1
)	Original language: French.
(
2
)	OJ 2003 L 345, p. 64.
(
3
)	OJ 2008 L 76, p. 37; ‘the Prospectus Directive’.
(
4
)	OJ 1993 L 141, p. 27.
(
5
)	OJ 2004 L 145, p. 1.
(
6
)	OJ 2006 L 114, p. 60; ‘the MiFID I Directive’.
(
7
)	Commission Regulation of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements (OJ 2004 L 149, p. 3).
(
8
)	OJ 2008 L 340, p. 17; ‘Regulation No 809/2004’.
(
9
)	Moniteur belge of 21 June 2006, p. 31352; ‘the Law of 16 June 2006’.
(
10
)	See judgment of 30 April 2024, M.N. (EncroChat) (C‑670/22, EU:C:2024:372, paragraph 109 and the case-law cited).
(
11
)	An offer of securities addressed to fewer than 100 natural or legal persons per Member State, other than qualified investors.
(
12
)	An offer of securities addressed to investors who acquire securities for a total consideration of at least EUR 50000 per investor and for each separate offer.
(
13
)	An offer of securities whose denomination per unit amounts to at least EUR 50000.
(
14
)	See the final report of the Committee of Wise Men on the regulation of European securities market, available, in English, at the following internet address: https://www.esma.europa.eu/sites/default/files/library/2015/11/lamfalussy_report.pdf (pp. 12 and 15).
(
15
)	Proposal for a Directive of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading (COM(2001) 280 final).
(
16
)	OJ 1989 L 124, p. 8.
(
17
)	See Article 2(1)(a) of the proposal for a directive referred to in footnote 15 to this Opinion: ‘For the purposes of this Directive, … “securities” means any shares in companies and other transferable securities equivalent to shares in companies, bonds and other forms of securitised debt which are negotiable on a regulated market and any other transferable securities normally dealt in giving the right to acquire any such transferable securities by subscription or exchange or giving rise to cash settlement.’
(
18
)	See Dictionnaire de l’Académie française.
(
19
)	See Dictionnaire de l’Académie française.
(
20
)	The same applies to a certain number of other securities; see Annex V, point 4.13; Annex X, points 27.10 and 28.10; Annex XII, point 4.1.10; Annex XIII, point 4.14; and Annex XIV, point 1.8, to Regulation No 809/2004.
(
21
)	See Annex III, point 7.3, and Annex X, point 27.14, to Regulation No 809/2004.
(
22
)	See, in that regard, the consultation paper of 29 January 2024 of the European Securities and Markets Authority (ESMA) on the draft Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, available in English at the following internet address: https://www.esma.europa.eu/sites/default/files/2024-01/ESMA75-453128700-52_MiCA_Consultation_Paper_-_Guidelines_on_the_qualification_of_crypto-assets_as_financial_instruments.pdf (point 109).
(
23
)	See Commission questions and answers on the MiFID I Directive, available at: https://finance.ec.europa.eu/system/files/2020-01/mifid-2004-0039-commission-questions-answers_en_0.pdf (p. 22): ‘The essence of the definition of transferable securities [in] Article 4(18) MiFID is that, as a class, they are negotiable on the capital markets. … Interests in partnership shares that are not “negotiable on the capital markets” are not equivalent to negotiable shares. The key determinant, therefore, is whether such interests in partnerships and LLPs are negotiable on the capital markets. If the securities in question are of a kind that is capable of being traded on a regulated market or MTF, this will be a conclusive indication that they are transferable securities, even if the individual securities in question are not in fact traded. Conversely, if they are not capable of being traded in such multilateral systems this may indicate that they are not transferable securities, but this is not conclusive. … The concept of negotiability contains the notion that the instrument is tradable. If restrictions on transfer prevent an instrument from being tradable in such contexts, it is not a transferable security.’
(
24
)	See the questions and answers referred to in footnote 23 to this Opinion (p. 1).
(
25
)	See recitals 5, 44 and 71 of the MiFID I Directive.
(
26
)	See judgment of 17 September 2014, Almer Beheer and Daedalus Holding (C‑441/12, EU:C:2014:2226, paragraph 31).
(
27
)	See judgment of 17 September 2014, Almer Beheer and Daedalus Holding (C‑441/12, EU:C:2014:2226, paragraph 33).
(
28
)	C‑441/12, EU:C:2014:2226.