EUROPEAN COMMISSION Brussels, 7.12.2022 SWD(2022) 762 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the documents Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/65/EU to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises and repealing Directive 2001/34/EC



















Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market



















Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises {COM(2022) 760 final} - {SEC(2022) 760 final} - {SWD(2022) 763 final}



Table of contents Table of Figures Glossary 1.Introduction: Political, legal and market context 1.1.Political context 1.2.Legal context 1.3.Market context 2.Problem definition 2.1.What are the problems? 2.1.1. Lack of flexibility for issuers when listing 2.1.2. Unnecessary regulatory burden for companies 2.2.What are the problem drivers? 2.2.1. Unequal opportunities for EU companies regarding governance structure, when listing, due to different national rules on MVR share structures (Pre-IPO phase) 2.2.2. Overly burdensome listing requirements (IPO phase) 2.2.3. Overly burdensome ongoing disclosure requirements (Post-IPO phase) 2.2.4. Stakeholders’ views on problem drivers 2.2.5. Out-of-scope drivers 2.2.6. Lack of diversified funding

2.3.How will the problem evolve? 3.Why should the EU act? 3.1.Legal basis 3.2.Subsidiarity: Necessity of EU action 3.3.Subsidiarity: Added value of EU action 4.Objectives: What is to be achieved? 4.1.General objectives 4.2.Specific objectives 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? 5.2.Description of the policy options 5.2.1. Options addressing unequal opportunities for EU companies regarding governance structure, when listing, due to different national rules on MVR share structures (Pre-IPO phase) 5.2.2. Options addressing the overly burdensome regulatory listing requirements (IPO phase)…… 5.2.3. Options addressing overly burdensome ongoing disclosure requirements (post-IPO phase)…… 5.2.4. Discarded option 6.What are the impacts of the policy options? 6.1.Options addressing unequal opportunities for EU companies regarding governance structure, when listing, due to different national rules on MVR share structures (pre-IPO) 6.1.1. Option 1 - Minimum harmonisation of MVR share structures across the EU 6.1.2. Option 2 - Maximum harmonisation of national legislation to allow for the MVR share structures be adopted across the EU with specific conditions and clauses 6.2.Options relating to overly burdensome regulatory listing requirements (IPO phase)

6.2.1. Option 1 - Scrutiny by exchanges and non-passportable admission documents 6.2.2. Option 2 - Shorter prospectuses with streamlined scrutiny by NCAs 6.3.Options addressing the overly burdensome ongoing disclosure requirements (Post-IPO phase) 6.3.1. Option 1 - Review of the definition of inside information and of the conditions for delaying its disclosure 6.3.2. Option 2 - Introduction of a closed list of events which qualify as inside information for the purposes of disclosure 7.How do the options compare? 7.1.Options addressing unequal opportunities for EU companies regarding governance structure, when listing, due to different rules on MVR share structures (Pre-IPO) 7.2.Options relating to overly burdensome regulatory listing requirements (IPO phase) 7.3.Options addressing the overly burdensome ongoing disclosure requirements (Post-IPO) 8.Preferred option 8.1.Overall impact of preferred options 8.2.The scale of magnitude of the expected impacts of the accompanying measures 8.3.Coherence of the preferred options 8.4.REFIT (simplification and improved efficiency) 9.How will actual impacts be monitored and evaluated? Annex 1: Procedural information 1.Lead DG, Decide Planning/CWP references 2.Organisation and timing 3.Consultation of the RSB 4.Evidence, sources and quality

Annex 2: Stakeholder consultation 1.Public and targeted consultations on the listing act: making public capital markets more attractive for EU companies and facilitating access to capital for SMEs 2.Technical workshop with industry stakeholders Annex 3: Who is affected and how? 1.Practical implications of the initiative 2.Summary of benefits and costs 3.SME Test Annex 4: Analytical methods 1.Data sources and data limitations 2.The use of equity funding by corporations 3.The value of keeping control of the firm: role of MVR share structures 4.Issuance costs and costs for producing a prospectus 4.1. Estimates of issuance costs required for an IPO 4.2. Costs of producing a prospectus 4.3. Cost savings from the use of different types of prospectuses or documents as well as from exemptions 4.4. Primary issuances: offers of securities to the public or admission to trading on regulated markets 4.5. Primary issuances: offers of securities to the public and listing on SME growth markets ………………………………………………………………………………………... 4.6. Secondary issuances 5.The costs of being listed 5.1. Estimates of the magnitude of the costs of staying listed

5.2. The potential for cost savings – orders of magnitudes and assumptions 5.2.1. Cost savings for issuers 5.2.2. Cost savings for public authorities Annex 5: Analysis of the pre-IPO phase: MVR share structures 1.What are MVR share structures 2.Loyalty shares vs MVR share structures 3.Current situation in the EU Member States and in other jurisdictions outside of the EU 3.1. Situation in the EU Member States 3.2. Situation outside the EU 4.EU Legislation on voting rights 5.Advantages and disadvantages of MVR share structures 5.1. Advantages of MVR share structures 5.2. Disadvantages of MVR share structures 6.Merits of introducing MVR shares in the EU Annex 6: Analysis of the IPO phase: Prospectus Regulation 1.Objectives and key changes introduced by the Prospectus Regulation 2.Subsequent amendments to the Prospectus Regulation 3.The evolution of prospectus approval in the EEA 4.Evaluation of the key measures of the Prospectus Regulation 4.1. The standard prospectus for equity and non-equity securities

4.2. The Prospectus summary 4.3. The EU Growth prospectus 4.4. Simplified prospectus regimes for secondary issuances 4.4.1. Simplified prospectus for secondary issuances 4.4.2. The EU Recovery prospectus 4.5. The Universal Registration Document (URD) 4.6. Exemptions from the prospectus for small offer of securities to the public. 4.7. Scrutiny and approval of the prospectus 4.8. Supplements to the prospectus 4.9. Equivalence regime 5.Conclusions Annex 7: Analysis of IPO-phase: the Listing Directive 1. Introduction and problem description 2. Description of the options 3. What are the impacts of the options? 4. How do the options compare 5. Preferred option Annex 8: Analysis of the post-IPO phase: MAR 1.Overview of MAR 2.Analysis of the key measures

2.1. Definition of inside information 2.2. Delayed disclosure of inside information 2.3. Administrative measures and sanctions 2.4. Market soundings 2.5. Insider lists 2.6. Cross-market order book surveillance 3.Conclusions Annex 9: Analysis of Rules on Investment Research 1.Introduction 2.The EU regulatory environment 3.Developing an investment research of quality for SMEs: the way forward Annex 10: Accompanying measures 1.Other MAR measures A) Review of the rules on Market soundings. B) Extension of the alleviations on insiders lists to all types of markets. 2.Other prospectus measures A) Simplify and alleviate the universal registration document (URD) regime. B) Harmonise the upper prospectus exemption threshold for small offers of securities to the public (no national discretion) and remove lower threshold. C) Reduce the current minimum six day-period between the publication of a prospectus and the end of an offer of shares. D) Make the CMRP amendments to the supplement regime permanent.

E) Introduce a reference to environmental, social or governance (ESG) matters in the empowerment for the Commission to adopt delegated acts to lay down the format and content of the prospectus. F) Amend the currently unworkable equivalence regime. 3.Clarify dual listing Annex 11: Accompanying measures on market integrity – Cross-market surveillance of orderbook data 1.Introduction 2.Standardisation of orderbook data formats 3.Mandatory exchange of orderbook data for markets with a cross-border dimension Annex 12: Out-of-scope drivers 1.Tax treatment 2.Debt/equity bias 3.Access to company information 4.Lack of retail investor participation 5.Narrower institutional investor base compared to other developed markets 6.Re-equitisation of funding structures Annex 13: Other ongoing initiatives contributing to improving public markets’ ecosystem Annex 14: Past initiatives Annex 15: Analysis of SPACS



Table of Figures Figure 1. Number of IPOs in different jurisdictions Figure 3. % of IPOs with MVR structures in the US (2y moving average) Figure 4. The listing stages Figure 5. The problem tree

Glossary Term or acronym Meaning or definition CMRP Capital Markets Recovery Package CMU CMU AP CMU HLF High Level Forum on CMU CMU HLF Final report Final report of the High Level Forum on the Capital Markets Union - A new vision for Europe’s capital markets | European Commission (europa.eu) EEA European Economic Area ESAs European Supervisory Authorities ESMA European Securities and Markets Authority EU European Union FESE Federation of European Stock Exchanges GDP Gross Domestic Product IA Impact Assessment Inside Information In the Market Abuse Regulation inside information is defined in Article 7(1)(a) as “information of a precise nature, which has not been made public, relating to the issuer or to a financial instrument, and which, if it were made public, would be likely to have a significant effect on the price of that financial instrument or on the price of a related derivative financial instrument” IPO Initial Public Offering Listing Directive 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. Loyalty Shares Loyalty shares are shares that give enhanced voting power to shareholders that have held them for a specified time period. Market Abuse Directive or MAD Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (market abuse directive). Market Abuse Regulation or MAR Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC. MiFID II Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (Markets in Financial Instruments Directive). MiFIR Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Markets in Financial Instruments Regulation). MTF Multilateral Trading Facility MVR share structures Multiple voting right share structures means the share structure of a company that includes at least two distinct and separate classes of shares with a different number of votes. NCA National Competent Authority Non-Voting Shares A non-voting share is a type of share that does not give the holder any voting rights in the company. It usually constitutes a separate class of share Preferential Shares Preferential shares are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued but that hold no voting power. Prospectus A legal document that a person or a company (unless exemptions apply) needs to draw up and the NCA scrutinise and approve i) where a person or company makes an offer to the public of transferable securities; or ii) where a company applies for its securities to be admitted to trading on a RM (including in the context of secondary issuances). A prospectus needs to contain the information on the company and the securities offered or admitted to trading that an investor needs in order to make an informed investment decision. Prospectus Regulation Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC. Oxera study Oxera Consulting LPP, Primary and secondary equity markets in EU, Final report, November 2020, Oxera-study-Primary-and-Secondary-Markets-in-the-EU-Final-Report-EN-1.pdf SME growth market A new category of trading venues (a multilateral trading facility) dedicated to smaller issuers, introduced in MiFID II. To be eligible as an SME growth market, the venue would have to meet the following criteria: (i) a 50% threshold on the minimum number of SME issuers traded on the SME growth market, (ii) appropriate criteria for initial and ongoing admission to trading, (iii) sufficient information published and appropriate ongoing financial reporting of issuers, (iv) dissemination of information to the public and (v) compliance with systems and controls under MAR. SME listing package Regulation (EU) 2019/2115 of the European Parliament and of the Council of 27 November 2019 amending Directive 2014/65/EU and Regulations (EU) No 596/2014 and (EU) 2017/1129 as regards the Promotion of the use of SME growth markets SMEs Small and Medium-sized Enterprises SPAC Special-Purpose Acquisition Company Trading venue A regulated market, an MTF or an OTF TESG Technical Expert Stakeholder Group on SMEs TESG Final report Final report of the Technical Expert Stakeholder Group (TESG) on SMEs - Empowering EU capital markets - Making listing cool again (europa.eu) TFEU Treaty on the Functioning of the European Union Transparency Directive or TD Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market. URD Universal Registration Document



1.Introduction: Political, legal and market context 1.1.Political context By developing EU capital markets and decreasing their fragmentation along national borders, the CMU project aims to enable companies to tap funding sources other than bank lending and to adapt their financing structure when maturing and growing in size. More diversified financing in the form of debt and equity would decrease risks for individual firms and the overall economy as well as help EU companies, in particular SMEs, realise their growth potential. A core aim of the CMU is to give better access to market-based sources of financing for EU companies at each stage of their development, including for more mature companies seeking access to public markets. Recently-listed companies often outstrip privately-owned companies in terms of annual growth and job creation. By listing on public markets, companies can diversify their investor base, gain easier access to equity capital and debt finance, raise their public profile and increase brand recognition. Since the first CMU Action plan in 2015, progress has been made to make it easier and cheaper for companies, in particular smaller ones, to access public markets (see Annex 14 for more details on the past CMU initiatives). Among others, the Commission has put forward new rules to facilitate financing through capital markets for small businesses. The aim was to cut red tape for SMEs listing on SME growth markets, a new category of trading venues dedicated to smaller issuers, to reduce the regulatory burden while preserving an appropriate level of investor protection and market integrity. Nevertheless, stakeholders continue to argue that more needs to be done on the regulatory side, in particular with respect to streamlining the listing process and rendering the regulatory treatment of companies more proportionate to their size. Such simplifications could encourage companies to access public markets, while safeguarding investor protection and market integrity. This conclusion was shared by the CMU HLF, which, in its final report published in June 2020 recommended the Commission to make targeted modifications of, in particular, the prospectus and market abuse regulatory frameworks to make public listing in the EU more attractive, in particular for SMEs. In July 2020, the Commission adopted the CMRP that introduced targeted amendments to encourage investments and facilitate a more rapid re-capitalisation of companies, notably in the Covid-19 context. However, given the strong recovery focus of the package, in some cases, the amended rules apply for a limited period of time, thus providing only for a temporary relief to companies. Therefore, while the CMRP facilitated the access of companies to public market financing in the Covid-19 context, it did not replace the need to assess carefully and in a more structural way the merit of further and/or permanent adjustments to the overall listing regime to make it easier for businesses to list on EU venues, without undermining market integrity and investor protection.

In recognition of this, the new CMU Action Plan that was adopted in September 2020 announced that ‘in order to promote and diversify small and innovative companies’ access to funding, the Commission will seek to simplify the listing rules for public markets’. Following up on this, and building on the measures already introduced with the 2019 SME Listing Act, the Commission set up a Technical Expert Stakeholder Group (TESG) on SMEs. The Expert group confirmed the concerns expressed by the stakeholders that further legislative action is needed to support listing of companies and especially of SMEs. In their final report , published in May 2021, the TESG made 12 recommendations to amend the listing legislative framework which applies both on regulated markets as well as on SME growth markets. On 15 September 2021 President Von der Leyen announced in her letter of intent addressed to the Parliament and the Presidency of the Council a legislative proposal to facilitate SMEs’ access to capital, which has been included in the 2022 Commission work programme. The decision to list is affected by a multitude of factors, most of which are outside the regulators’ reach. Geopolitical instability, Brexit, Covid and low interest rates have had an impact on the decision to list and, in particular, on the timing of listing. Other factors relate to the features of the ecosystem that determine the cost of services relevant for listing (underwriting services, due diligence, legal advice, etc.). This Impact Assessment does not claim to address any of those elements directly. It cannot be considered a silver bullet that – on its own – will change remarkably the situation. However, it evaluates a targeted set of measures aiming to reduce the regulatory burden, where it is considered to be excessive (i.e. where regulation does not contribute to investor protection/market integrity in the most cost efficient manner for stakeholders) and increase flexibility for issuers. While the proposed policy options are unlikely to fully revive EU public capital markets on their own and should not be understood as a single remedy in itself, they constitute a step in the right direction. The ultimate aim is to build the necessary conditions for structural improvements to occur over time. A more favourable regulatory regime would encourage the development of a more favourable ecosystem, contributing in a multi-faceted manner to the CMU objective of improving access to financing by companies. Furthermore, this proposal should be analysed in conjunction with other proposed initiatives. The proposed amendments are part of a broader package of measures outlined in the CMU Action Plan, which aim to address other issues currently preventing companies from raising capital on public markets (see Annex 13 for more details). The Listing Act focuses on alleviating the regulatory requirements that can deter a company from deciding to list or to remain listed (‘supply-side’). However, other factors may deter issuers from listing, such as a narrow investor base, especially for SMEs, and a more favourable tax treatment of debt over equity. These elements are addressed by other ongoing initiatives (see Annex 13 for more details). The creation of a consolidated tape through the review of MiFIR will in particular centralise trading information across the Union, contributing to more efficient trading across the EU (by institutional investors). By facilitating access to company data (including trading data), this initiative will make it easier for investors to identify an investment target and the most efficient venue to trade it on, potentially driving up their interest in investing and hence increasing the liquidity and attractiveness of companies’ listed securities. Increased liquidity of listed securities would decrease the illiquidity premium paid by many (in particular smaller) companies when listing, overall decreasing the cost of capital for a listed company and, hence, making listing generally more attractive. The creation of an EU Single Access Point (ESAP) will tackle the lack of accessible and comparable data for investors, making companies more visible. Another legislative proposal will reduce the debt-equity bias for investors (DEBRA), making equity financing more attractive (and less costly) in general, by introducing deductibility of new equity allowance from taxable profit, akin to the deductibility that currently already exists for interest paid on debt. Furthermore, a series of Commission initiatives will further seek to strengthen the investor base for listed equity. The EU SME IPO Fund will play the role of an anchor investor to attract more private investment in SMEs’ public equity by partnering with institutional investors and investing in funds focused on SME issuers. CRR and Solvency II reviews will increase the investor base for issuers by facilitating investments from banks and insurance companies in public (long-term) equity. Lastly, the forthcoming Retail Investment Strategy will improve disclosures and distribution of investment products to retail investors in a way that promotes investors’ trust, further contributing to the demand for listed securities and their liquidity on public markets. Most of these initiatives are currently in the legislative phase (e.g. the MiFIR review, ESAP proposal, proposal on a debt-equity bias reduction allowance). As the final contours of the political agreement on these files are not known yet, it would be impossible to measure their individual or combined impact, and the extent to which they will contribute to a more favourable listing environment in the EU (including to the number of potential additional IPOs). 1.2.Legal context Companies can raise capital through the issuance of equity or non-equity securities either on regulated markets or on MTFs. While both types of markets are accessible to companies of all sizes, regulated markets are generally more appropriate for large and mature businesses. Regulated markets require companies to comply with a wide range of EU requirements. This ensures that investors are given sufficient, timely and accurate information, both at the time of listing and on a continuous basis while listed, so that they can make informed investment decisions. For companies, especially SMEs, these requirements imply high administrative costs, thereby potentially reducing the relative benefits of listing. However, they also carry benefits (and potentially reduce their cost of capital) by fostering market confidence in these companies and by facilitating risk pricing by investors of securities issued by these companies. The Prospectus Regulation harmonises requirements for the prospectus which has to be published when securities are offered to the public or admitted to trading on a regulated market. Using this document, investors can decide whether to invest in the securities issued by a company. The Listing Directive, a minimum harmonisation directive adopted in 2001, provided the basis for listing on European markets before the adoption of the Prospectus Directive and the TD, that have subsequently replaced most of the provisions harmonising the conditions for the provision of information regarding requests for the admission of securities to official stock exchange listing and the information on securities admitted to trading (See Annex 7 for more details). Once admitted to trading, issuers must ensure disclosure of ongoing and periodic regulated information and its dissemination to the public. The regulated information comprises, among other, financial reports and information on major holdings of voting rights, pursuant to the TD, as well as information disclosed pursuant to MAR. MAR is a comprehensive legislative framework that aims to foster investor confidence and market integrity, by prohibiting, among others, to (i) engage or attempt to engage in insider dealing; (ii) recommend that another person engage in insider dealing or induce another person to engage in insider dealing; (iii) unlawfully disclose inside information or (iv) engage in or attempt to engage in market manipulation. Issuers are also subject to several disclosure and record-keeping obligations and, notably, under a general obligation to disclose inside information to the public “as soon as possible”. Under EU law, issuers seeking admission to trading or listing on the same type of trading venue, irrespective of their size, are subject to the same requirements. In such a way, investors on the same type of a market feel confident that all companies listed thereon are subject to a single set of rules. Smaller companies can however choose to list on an MTF to benefit from a lighter regulatory regime. Issuers on MTFs are largely subject to listing rules of market operators/investment firms that operate them, usually enjoying more flexibility around the listing criteria and more streamlined disclosure requirements. MiFID II created the SME growth market, a subcategory of MTFs, in order to facilitate access to capital for SMEs or smaller issuers, and enable them to attract more investment and grow. For an MTF to qualify as an SME Growth Market, at least 50% of the issuers whose financial instruments are traded on the MTF need to be SMEs, defined under MiFID II as companies with an average market capitalisation of less than EUR 200 million . In order to ensure the appropriate level of investor protection, the listing rules on SME Growth Markets must satisfy certain quality standards, including the need to draw up an appropriate admission document (when a prospectus is not required) and to comply with periodic financial reporting. MiFID II also anticipated that ‘[a]ttention should be focused on how future regulation should further foster and promote the use of that market so as to make it attractive for investors, and provide a lessening of administrative burdens and further incentives for SMEs to access capital markets through SME growth markets’. The Prospectus Regulation then introduced the EU Growth prospectus – an alleviated form of a standard prospectus - for SMEs listed on SME growth markets. It aimed to reduce the costs of preparing a prospectus by smaller issuers, while providing investors with material information to assess the offer and take an informed investment decision. Issuers listed on an SME growth market can also use a simplified prospectus to transfer subsequently to regulated markets. MAR included specific alleviations for SMEs whose shares are listed on SME growth markets. These issuers obtain regulatory relief, for example, in terms of an exemption from the requirement to produce insider lists on an ongoing basis. The CMRP strengthened the measures around the visibility of companies, looking for additional funding on public markets. These measures in particular aimed at addressing the issue of the low level of research coverage, in particular of SMEs, and included alleviations to the unbundling rules under MIFID II. 1.3.Market context

EU capital markets remain underdeveloped in size, notably in comparison to public markets in other major jurisdictions. Since the financial crisis of 2008-2009, EU capital markets have been experiencing a negative trend, lagging increasingly behind the US and having been more recently surpassed by Asia in relevance and size. The negative trend experienced by the EU capital markets was exacerbated after the departure of the UK from the EU: at that time the UK had been the largest capital market in the EU and the prevalent listing venue for EU companies. Several factors explain the state of EU capital markets, such as a pronounced bank financing bias (over market based funding) by EU companies, shallower pools of long-term capital (specifically pension assets), burdensome listing rules and the fragmentation of capital markets along national borders (resulting in a high number of national trading venues with fragmented liquidity and insufficient scale). Underdeveloped public capital markets prevented some EU companies, particularly SMEs, from raising funding on capital markets, translating into a significant opportunity cost for the EU economy, in terms of foregone economic growth, job creation and innovation. Companies that issue securities are known to grow faster in terms of assets, sales and number of employees than companies that do not. The difference in growth rate is even larger for SMEs. IPOs have been following a negative trend in the EU over the last decade (notwithstanding a rebound from Q3 2020 to Q4 2021). The EU has gone from surpassing the US in number of IPOs per year in 2011 to, ten years later, being behind the US, with around one third of global IPOs taking place in the US in 2021 (Figure 1). In 2021 only 11% of global IPOs took place in the EU, while 38% were in the US, 18% in China and 4% in the UK alone. Source: Jay Ritter, Fese, PWC & LSE In terms of IPO proceeds the value of capital raised through IPOs in the EU declined from 0.9‰ of GDP in 2015 to 0.3‰ in 2020. These figures are much lower than those of the US or the UK. Furthermore, the structural issues of EU capital markets are not only observed in the decline in IPOs but also in the increase of companies delisting from EU public markets. While there could be multiple reasons to a company’s delisting, such as the company’s acquisition by another company, buy-out by a private equity firm or NCA’s or exchange’s request due to non-compliance with obligations, the majority of delistings were voluntary (i.e. not mandatory). In a survey conducted by Oxera, companies mainly cited: (i) challenges associated with meeting regular financial reporting requirements; (ii) time and cost associated with compliance and administration; (iii) annual fees paid to advisers, brokers and exchanges; and (iv) requirements to disclose sensitive information (under MAR). In short, for those companies, the benefits of remaining listed simply no longer outweighed the costs associated with remaining listed. Since 2012, the amount of delistings in EU capital markets has more than doubled (Figure 2). Source: Commission services based on FESE data Delistings have been heavily outpacing listings, therefore reducing the total number of listed companies in the EU and with it - the overall size of EU public markets. Shrinking public markets risk triggering a vicious cycle, where investors stop investing due to less investment opportunities and lower liquidity (and higher spreads), which in turn discourages companies from seeking public listing due to less investors (or narrower investor-base). Underdeveloped EU public markets push EU companies to list in other jurisdictions, with a few EU companies having recently chosen this option. If EU public markets cannot provide the scale and services that issuers are looking for, EU companies will look elsewhere for funding and EU competitiveness and innovative capacity may be seriously impaired as a result. Efficient and attractive public capital markets are therefore central to making the EU economy more globally competitive and resilient, thus underpinning the EU’s open strategic autonomy. 2.Problem definition 2.1.What are the problems? 2.1.1.Lack of flexibility for issuers when listing Founders of companies are more likely to choose to list on public markets if it allows them to continue shaping the business in accordance with their respective original ideas and aspirations. Flexibility for issuers to choose how to distribute voting rights may therefore influence their decision on whether to list or not. Fear of losing control over one’s company appears to constitute a deterrent to getting listed and tapping public markets for founders and family owned companies. Existing owners rarely want to cede control of their business, but new investors will want to have control over their future investment and EU law fosters responsible engaged share-ownership., Multiple voting right (“MVR”) share structures are one of the most effective ways to allow founders and families to retain control post-listing while raising a larger amount of funds and enjoying the benefits associated to listing. The implementation of this type of structures has been supported in several reports and studies. The CMU HLF recommended that companies are allowed to implement a MVR share structure with a view to allowing the owners to maintain control of their company. The Oxera study suggested that regulators could ease restrictions on control-enhancing mechanisms (such as MVR share structures) to encourage companies to list without owners having to relinquish control of their companies. The TESG echoed this, noting that MVR share structures have been used in a number of countries, where they were seen as an efficient way for founders to go public, while retaining control of their company. In the targeted consultation, the overwhelming majority of the respondents (76%) considered that shares with MVR encourage firms (especially family-owned and high-growth, innovative companies) to go public as they allow founders to access public equity financing while retaining control of their business.

MVR share structures have proven to be especially popular among high-tech companies with Facebook, Google, Alibaba and Snap – to name a few – using MVR share structures in their IPOs. Overall, about 46% of US tech companies chose these structures for their IPOs in 2021 (this contrasts with just 9% in 2001). MVR share structures are also gaining popularity among non-tech companies. At the moment, most of the largest financial centres allow for MVR share structures in IPOs (e.g. US, China/Hong-Kong, UK, and Singapore). The UK has recently further flexed its rules, allowing for MVR share structures in companies listing on the premium segment of the London Stock Exchange. As part of the review, the UK also introduced safeguards to mitigate concerns regarding the protection of minority shareholders’ rights. There is evidence that absent such safeguards, there is risk that minority shareholders may be consistently outvoted by controlling shareholders on important decisions. For more information see Annex 5. Figure 3. % of IPOs with MVR share structures in the US (2y moving average) 2.1.2.Unnecessary regulatory burden for companies When making a decision on whether or not to list, companies weigh expected benefits against the costs. If costs prevail, or if alternative sources of financing offer a less costly and easier option, companies will not seek access to public markets. Feedback from the market indicates that the initial and ongoing costs of becoming a public company have risen considerably in recent decades, both in absolute terms and relative to private equity funding, in particular for SMEs. The costs of listing can be broadly categorised into direct and indirect costs, as well as initial (one-off) and ongoing costs. The direct costs mostly derive from fees paid to parties involved in supporting a company through the listing process and once listed (such as underwriters, accountants, legal advisers, listing venue). Alongside fees, issuers face a range of indirect costs stemming, among others, from the efforts (and the management time) required to comply with the requirements associated with the listing process as well as the ongoing regular reporting and disclosure requirements. The sources that quantify IPO costs point to a range of 3-10% of the issuing amount. There is, however, little quantitative information about the ongoing costs and in particularly about the costs of complying with the obligations stemming from MAR. Annex 4 provides further analysis on the costs of listing and staying listed. The direct costs of listing (i.e. underwriting and legal fees) are largely fixed and generally (but not entirely) influenced by a high degree of fragmentation and hence a limited degree of competition in the EU listing ecosystem. Such ecosystem is represented by investment banks, brokers, market-makers and other third party advisors specialised in listing/listed companies. Regional fragmentation of EU markets and different languages lead to a rather small market for legal experts and financial intermediaries that accompany companies in the issuance process and, where necessary, after listing. For this reason, and despite representing a considerable share of the overall listing costs the level of these costs largely reflects the limitations of the established market structure, which would not be possible to address directly in the short term with regulatory measures. These direct costs may nevertheless be reduced in the longer-term. As regulatory measures address some barriers, more companies would be expected to list on EU markets, driving up the scale and creating room for entry by competitors, hence driving down the level of fees charged by financial intermediaries and legal experts. This IA focuses mainly on the indirect costs of listing, i.e. the costs induced by the initial and ongoing listing requirements, as well as in part on the direct costs related to the production of listing documents (such as prospectus). Contrary to most types of direct costs, indirect costs can be more easily reduced through targeted legislative amendments aimed at streamlining and clarifying existing rules. Regulatory burden, in particular related to ongoing compliance, is usually considered an indirect cost of listing. Compliance with these requirements requires companies to hire additional (expert) staff. This can prove particularly burdensome, especially for SMEs. Extensive regulatory requirements also typically increase liability and litigation risks for issuers and their advisors as well as the amount of time spent by the management on the listing process (and on the subsequent compliance with post-listing rules). Finally, they often force issuers to look for external legal advice, thus further contributing to higher legal, accounting and advisory fees. The drawing up of a prospectus (as a pre-condition for a public offer/admission to trading) is, in turn, a direct cost, notably when it is (entirely) outsourced to an external legal counsel. Both the CMU HLF and the TESG confirmed that the listing process and ongoing requirements for companies, and in particular for listed SMEs, have become excessively burdensome over time. Similarly, the Oxera study stressed that the indirect ongoing costs of being listed are often cited as having the most significant impact on the decision to seek a listing, or, indeed, deciding to delist. Several industry practitioners have highlighted the efforts required to comply with the regulatory requirements associated with the listing process, and the related litigation risk, as the most significant costs of listing. Furthermore, they confirmed that management time and other indirect costs associated with an IPO have increased over time. This view is backed by the results of the public consultation as well as by feedback received from stakeholders in the context of workshops organised with stakeholders, such as representatives of exchanges, issuers and investors (See Annex 2 for more details). 2.2.What are the problem drivers? This IA focuses on the selected drivers related to the specific barriers in the regulatory framework. The ‘out-of-scope’ drivers are briefly described in section 2.2.6. below and more extensively in Annex 12. The listing cycle is made up of three stages: the pre-IPO stage, the IPO process itself and the post-IPO stage. The regulatory environment impacts all three stages of the process and is among the main driving forces for the problems described in the previous section. To make it more attractive for firms to list and remain listed in the EU would require that the regulatory barriers in all stages of the listing cycle are addressed. Figure 4. The listing stages Pre-IPO: Company Law The decision to list for a company is made after analysing the cost-benefit of listing in public capital markets when compared to other sources of funding. Currently, many EU companies do not find the prospect of being listed as beneficial when compared to attracting funding from other sources such as private equity or bank loans. There are several drivers that impact the decision to list at this stage, one of which is the flexibility accorded under company law to use various share structures, such as MVR share structures, and thus allowing the issuer to retain more control post-listing. IPO: Prospectus Regulation Once a company makes the decision to list, it must go through the IPO process. During this process the regulatory regime is very relevant as it determines the information that must be published by the company (Prospectus Regulation). The requirements to produce such documentation can be quite onerous in some cases and this may act as a deterrent from listing. Post-IPO: MAR

Once a company has listed, it may enjoy the benefits associated with public listing such as superior growth in terms of assets, revenues and employees and a higher brand recognition. At the same time, the company must also comply with a number of requirements and failure to properly comply with these requirements could lead to sanctions and litigations for the firm (MAR). Both a lack of clarity regarding such requirements and a disproportionate sanctions regime could lead to companies refraining from listing in the first place (or trigger delisting for the already listed companies). In addition, listed companies, especially SMEs, need to make themselves known to possible investors: the current low level of investment research on such issuers, driven by many underpinning factors, leads to their low visibility and scarce investors’ interest, further limiting the liquidity for the already listed companies (See Annex 9 for more details). The drivers and, subsequently, proposed policy options follow the order of the listing cycle and hence focus on addressing regulatory barriers that emerge at various stages of the listing process, i.e. those stemming from company law (rules on MVR share structures), Prospectus Regulation and MAR. Annexes 5, 6 and 8 provide elements of an evaluation of the legislative framework applying to each of these stages. Annex 5 provides for an overview of the current national rules on MVR share structures and sets out positive and negative aspects of these share structures. Annexes 6 and 8 take a critical look at whether the regulation applying at the IPO and post-IPO stages is fit for purpose and delivers its intended objectives at minimum cost (i.e. avoiding unnecessary costs or burdens). 2.2.1.Unequal opportunities for EU companies regarding governance structure, when listing, due to different national rules on MVR share structures (Pre-IPO phase) While there are different ways to protect shareholder control across Member States, there is currently fragmentation in the EU as regards MVR share structures, in particular, which leads to unequal opportunities for EU companies when listing. MVR share structures are currently available in twelve Member States, while the remaining fifteen do not allow them. Loyalty shares are allowed only in 5 Member States. Table 1 in Annex 5 provides an overview of the Member States’ legislation regarding MVR share structures. Some Member States (banning MVR share structures) provide for alternative share structures, such as loyalty shares, preferential shares and non-voting shares. These alternative structures can allow a founder to preserve control in the company. Nevertheless, being more rigid in their set-up, they naturally constrain the amount of equity that can be raised at the IPO stage and through follow-on issuances (since further ordinary shares issuances would inevitably dilute the founder’s interest, due to a fixed (lower) voting right ratio). MVR share structures by contrast allow founders to maintain majority-voting control while only retaining a minority of the cash-flow rights (and therefore selling a larger portion of their investment in the company). Furthermore, while MVR share structures are meant to increase the allure of public markets for founder driven company and to isolate their decision-making from market pressures, loyalty shares, are issued to reward long-term investors who hold on to the company’s stock for a long time (i.e. any shareholder can obtain additional voting rights if they hold the stock for the designated time) and are not generally used at the moment of the IPO. Loyalty shares are thus expected to lead to a more stable, long-term-oriented ownership base that would benefit companies’ development, protecting it from the influence of short-term investors. While the link between the flexibility to list with MVR share structures and the decision to IPO is difficult to demonstrate empirically (and the decision to IPO is obviously a complicated process, taking into account a lot of different factors), Sweden (a Member State with one of the most flexible MVR share structure regimes in the EU) has consistently had a high number of IPOs relative to its size across the years, reporting the highest number of IPOs in the EU in 2021. Furthermore, in the US, 31.7% of all IPOs in 2021 used MVR share structures with 46.2% of tech companies using this structure. Nevertheless, it would not be possible to ascertain that those companies that listed in the US or in Sweden in 2021 with MVR shares would not have listed if these share structures had not been allowed in the US or in Sweden (or would have listed elsewhere). It can, however, be assumed with a reasonable degree of certainty that the ability to list with MVR shares was an important consideration in the overall decision to list. Annex 5 further elaborates on the link between MVR share structures and the decision to go public. The prohibition of MVR share structures in some Member States leads to a situation where some companies (based in those Member States and that wish to list with MVR share structures) are put in a situation of a comparative disadvantage versus companies in other Member States that allow MVR share structures. In fact, these companies are faced with a choice of either remaining private or moving to another Member State or third country to benefit from this added flexibility. This results in higher costs either in terms of a missed IPO opportunity for those companies (and foregone EU growth and future tax revenues for the Member States in question) or an increased burden associated with listing in another Member State or in a third country (allowing MVR share structures). To the extent that these firms would decide to list on a trading venue outside the EU, capital market development in the EU is also negatively affected. Annex 5 provides for an overview of the current national rules on MVR share structures and sets out positive and negative aspects of these share structures. 2.2.2.Overly burdensome listing requirements (IPO phase) Companies issuing securities on public markets need to publish a prospectus, unless an exemption applies. Many stakeholders indicated, as a driver for the high cost of listing, a considerable length and complexity of the prospectus documentation. This refers to both instances where companies seek access to public markets for the first time (IPO) and where they access public markets for follow-on or secondary issuances of equity and/or non-equity securities. ESMA collected data on the length of the different types of prospectuses in 2021, also distinguishing between EU Member States. A notable difference between the mean and the median length of prospectuses is indicative of discrepancies between the shortest and the longest prospectuses or, more generally, of a wider divergence and, consequently, of the lack of uniformity of prospectuses in the EU. The scenario highlighted in Figure 8 of Annex 6 confirms that the length of prospectuses may significantly vary depending on the Member State where the prospectus is approved. The length of the prospectus makes its drawing up, as well as its scrutiny and approval process time-consuming, expensive and complex, in particular for companies offering their securities cross-border (and hence preparing multiple-language documents). Feedback interviews conducted by Oxera indicate that senior management of firms seeking to list now spend a significantly higher proportion of their time on the listing process than before—between 30% and 50% of the CEO and CFO time in the six months prior to listing. When assessing the specific costs of preparing a prospectus, available data proved to be limited (see section 6.1. below and Annex 4 for more details). The collected data show that a standard prospectus for equity remains to be the most expensive type of a prospectus (reaching up to EUR 300 000 for large issuers), with the costs of EU Growth prospectus and simplified prospectuses being on average up to 25% lower. While the data on the EU Recovery prospectus is even more limited, given its rather recent introduction, the obtained figures suggest on average up to 40% cost savings (compared to the simplified prospectus for secondary issuances) for companies. The costs of non-equity prospectuses are lower than those of equity, and the difference in costs incurred by SMEs and large companies is less pronounced than for equity. Data and responses from stakeholders confirm that the current rules that lead to excessive disclosure contribute to both very lengthy and also very divergent prospectuses across Member States. For example, in some cases the Prospectus Regulation requires information that may not be indispensable for investors to make an informed investment decision (i.e. not justified from the investor protection point of view). In other cases, a prospectus is required when a lot of information is already available in the public domain. Feedback to the public consultation (echoed during the stakeholders’ meetings) confirmed the view that neither the standard prospectus nor the EU Growth prospectus strike an appropriate balance between effective investor protection and the proportionate administrative burden for issuers. For secondary issuances, the majority of the respondents indicated that a significantly simplified prospectus focusing on essential information only should be available, considering that information on issuers is already available at that point via other sources (See Annexes 2 and 6 for more details). The excessive length of the prospectus can discourage some, in particular smaller, investors from consulting it or even considering investing. In the case of larger investors, the laborious analysis of lengthy prospectuses would translate into a higher cost of investing in these companies. It also requires a longer period of time for the NCA to scrutinise and approve the prospectus, albeit the complexity and quality of the prospectus are also important factors that can impact the overall length of the scrutiny and approval process. An additional problem stems from the fact that the current rules do not sufficiently frame supervisory scrutiny by NCAs. This leads to further differences in NCAs’ treatment of prospectuses, contributing to overly lengthy prospectuses, in particular in some Member States. When inquired about their satisfaction with the length and outcome predictability of the NCA scrutiny and approval process, the prevalent opinion among the issuers’ representatives who took part in a stakeholder workshop on the Listing Act was that they are not satisfied. The representatives of exchanges and investors were more neutral in their reaction. Furthermore, in the context of the targeted consultation, 53% of the respondents (23 stakeholders) argued that there is divergence in the way NCAs assess the completeness, comprehensibility and consistency of prospectuses, calling for more alignment in terms of the documentation required and length of the process. Furthermore, the ESMA peer review of the scrutiny and approval procedures of prospectuses by competent authorities of 21 July 2022 highlighted some areas of material differences in NCAs’ approaches to scrutiny and approval of prospectuses, such as deadlines imposed by NCAs for issuers to respond to comments, NCAs’ procedures for the approval of prospectuses and additional criteria that NCAs apply for the scrutiny of the completeness, comprehensibility and consistency of the prospectus. The Evaluation of the Prospectus Regulation, set out in Annex 6, highlights that current prospectus requirements place unnecessary burden on issuers and that the intended objectives of the Prospectus Regulation could be delivered with less costly requirements for issuers while maintaining an adequate level of investor protection. 2.2.3.Overly burdensome ongoing disclosure requirements (Post-IPO phase) Once admitted to trading/listing, issuers must ensure regular disclosure of periodic and ad hoc information and its dissemination to the public. The information to be published includes yearly and half-yearly financial reports, major changes in the holding of voting rights as well as ad hoc inside information which could affect the price of securities. The Fitness Check on financial and sustainability public reporting by companies, published by the Commission in 2021, covered a large group of the public reporting obligations that are relevant for listed companies (including, in particular, the obligations stemming from the Transparency Directive). Its conclusion highlighted that the EU framework for public reporting is generally fit for purpose and that the cost of regular public reporting stemming from the EU framework seems a relatively modest “cost of doing business” for companies. In the targeted consultation, when asked whether there is potential to simplify the Transparency Directive’s rules, 11% of the respondents (9 out of 79) replied “no”, while 71% (56 out of 79) either did not reply or did not express an opinion. Therefore this IA only focuses on the disclosure obligation stemming from MAR, which did not fall in the scope of the Fitness check on financial and sustainability public reporting by companies. Feedback from stakeholders collected in the context of public consultations as well as of expert groups and by means of bilateral exchanges, highlighted that some aspects of the MAR disclosure regime place a particularly high burden on issuers listed on regulated markets as well as on SME growth markets. Stakeholders notably perceive as burdensome the obligation to disclose as soon as possible all inside information given the broadness of the notion of inside information and the fact that the same notion applies both for the purpose of prohibition of insider dealing as well as disclosure (see Annex 2 and 8, paragraph 2.1. for further details).

While the broad notion of inside information caters for a comprehensive (and very early) prohibition of insider dealing, when applied in the context of the disclosure obligation, it creates legal uncertainty and comes at a cost of either disclosing information that is not yet mature enough or risking high sanctions for a non-timely disclosure. Several respondents to the consultation carried out by ESMA highlighted that the notion of inside information lacks legal clarity. Hence issuers encounter difficulties when delineating between what is and what is not inside information. This has multiple consequences, which span from increased compliance costs – including consultants’ and legal advisors’ fees – to the risk that issuers either qualify the information as being inside information when in doubt, or, on the contrary, postpone or avoid such classification. Stakeholders sought clarifications both on the general interpretation of certain MAR provisions, relevant for determining when the information needs to be disclosed (for instance, as regards intermediate steps, or the level of certainty needed to consider the information precise), and on concrete types of events (or scenarios) triggering possible disclosure (See Annexes 2 and 8 for more details). The CMU HLF noted that the current notion of inside information is extremely costly when events are preliminary (e.g. a CEO harbouring plans to potentially step down, board members discussing potential ideas of a merger, preliminary risks of litigation, etc.) and recommended that the Commission narrows down the definition to reduce unnecessary disclosure. This was echoed by the TESG that stressed the need to clarify what constitutes inside information and when inside information needs to be disclosed by distinguishing between “a definition of inside information for the purposes of market abuse prohibition, and a more ‘advanced’ notion of inside information, typically linked to a higher degree of certainty of the information, triggering the disclosure obligation”. Annex 8 points to wide divergences across Member States in the number of disclosures of inside information which are not explained by the size of the Member State in question. For instance, in France in Q1 2022 the number of public disclosures per issuer was 6.76 whereas in Spain it was 0.27. This is illustrative of the fact that there are important differences in how stakeholders interpret the current rules, with stakeholders from some Member States having a stricter interpretation than stakeholders from others. As the notion of inside information triggers a varying level of disclosure, it is likely to give rise to costs of legal interpretation, rendering the compliance with the current rules very costly for issuers. The high costs stemming from the obligation to disclose all inside information are accompanied by a lack of legal clarity around the conditions that issuers need to meet in order to delay disclosure. While the delay mechanism could counterbalance the broadness of the notion of the inside definition, in particular when timely disclosure is likely to prejudice the legitimate interests of the issuers, the lack of clarity around the conditions of its application defeats this objective. As the data in Annex 8 show, in some Member States, issuers regularly rely on the mechanism for delaying the disclosure of inside information, while in others issuers do so only on an exceptional basis. From July 2016 to June 2019, the possibility to delay has been evoked in about 14 000 cases with significant discrepancies across the EU. For instance, in some Member States, in a 3-year period, issuers have never notified delay to their respective NCAs, whereas in others the average number of delays per quarter was above 100. As a result of the ensuing lack of clarity under MAR, companies are likely to either over-disclose information and over-submit requests to NCAs for delays, to avoid the risk of being sanctioned, or bear the risk of being sanctioned. Both over-disclosure and over-submission of delay requests to NCAs are likely to increase the costs to companies that often prepare the necessary documentation with the help of external (or internal) legal advisors. Furthermore, too early disclosure of information could actually mislead investors and trigger action on his/her part that could prove to be suboptimal in hindsight (e.g. divesting the stock too soon or not divesting soon enough). This is likely to increase the opportunity (both direct and indirect) cost for the investor. Finally, too frequent requests for delays to NCAs are likely to drive up the costs for NCAs who would have to review them. Conversely, the potential cost of being sanctioned might be unacceptable for issuers, not only because of the level of administrative pecuniary sanctions, but also because of indirect costs, like reputational damage. While ESMA in its Final Report on the MAR Review concluded that the notion of inside information should be left unchanged and that ESMA’s guidance would suffice to provide the necessary clarification, a majority of the stakeholders (52%) that expressed an opinion on this question considered that ESMA’s guidance would not be fully sufficient (See Annexes 2 and 8 for more details). Similarly, both the CMU HLF and the TESG concluded that changes to the level 1 text would be needed in order to instil full legal clarity and reduce compliance costs for issuers. Annex 8 summarises the assessment carried out by the Commission in relation to the most relevant MAR provisions for which ESMA’s conclusions are not in line with the feedback received from experts and stakeholders, including the definition of inside information (Article 7), and delayed disclosure (Article 17(4)). The burden stemming from the MAR disclosure obligation are amplified by a disproportionate sanctioning regime for disclosure-related infringements, in particular for SMEs. The TESG highlighted in their report that the risk of an inadvertent breach of MAR and the associated administrative sanctions are seen as important factors that may lead to companies delisting or even dissuade companies from listing at all. Half of the respondents to the public consultation (22 out of 44) indicated that they do not find the current MAR punitive regime proportionate to the objectives sought by the legislation nor to the type and size and entities potentially covered. Under EU legislation, which is not prescriptive on the matter, SMEs may potentially be sanctioned at the same level as a large company. In the case of SMEs, breaches of the MAR disclosure obligations may, however, occur due to insufficient resources afforded by those SMEs to regulatory compliance and be of an accidental nature, rather than the result of malicious intent on their part. While the sanctions regime should serve as an effective deterrent for companies not to commit infringements, in the case of SMEs, where breaches are often not intended but rather result from weaker ongoing compliance mechanisms due to the lack of resources, a higher level of sanctions would not necessarily be associated with a higher level of compliance. As SMEs can be imposed a prohibitively high level of sanctions, the current sanctions regime serves rather as a deterrent not to list and not as an effective deterrent not to infringe law, defeating entirely the purpose of the legislation. This appears to be corroborated by evidence provided by an issuers’ representative who reported that since MAR entered into force (July 2016), the number of listed companies in its Member State declined (in net terms) by 86 companies (i.e. by 10%) with 53 on the regulated market and 33 on an SME growth market. The same stakeholder attributed the decline to the disproportionate sanctioning regime. An indirect impact of the excessive and disproportionate sanctions regime is that it acts as a disincentive for companies to list de facto preventing them from accessing public equity markets (and generally having less alternative funding sources which may have an impact on the cost of capital for those companies). In addition, the choice not to list could lead to an opportunity cost for these companies (foregone development opportunities), as well as for the EU economy (foregone growth and job creation). Member States might also lose out on foregone tax revenue. Under MiFID II, investment firms and brokers became subject to the so called “unbundling requirement”, whereby execution commissions should have been invoiced to clients separately from payments for research. While the CMRP introduced some alleviations in this respect, to tackle the issue of the low research in particular for SMEs, these measures did not effectively address the problem: many investment firms and brokers continued to follow the unbundling rule for the majority of their clients. Therefore, the level of SME research continued to be low in the EU even after the CMRP (See Annex 9 for more details). Considering the effects of the ongoing energy crisis, companies increasingly struggle with finding investors to finance their operations. Their visibility to investors, including through research, hence becomes ever more important. 2.2.4.Stakeholders’ views on problem drivers Different groups of stakeholders responded to the consultation and despite diverging interests, their views converged when asked about the different problem drivers. Pre-IPO phase: MVR share structures For the pre-IPO phase of the listing process, the majority of stakeholders (75% or 34 respondents out of 45 that responded to the public consultation) answered that, where allowed, the use of MVR shares has effectively encouraged more firms to seek a listing on public markets (this included issuers, exchanges, NCAs and financial intermediaries). 36% (four out of the eleven) investors and investor associations replying to this question agreed that the ability by companies to use MVR share structures would support more public listings (five of the responding investors (46%) raised concerns around engagement of minority shareholders). A large majority of exchanges (88%) that responded to the public consultation (seven out of eight) considered that MVR share structures can contribute to companies’ transitioning from private financing to public markets. Representatives of issuers and private companies shared this view. Three investors’ associations that replied to this question also stressed that MVR share structures encourage firms to go public with only one stating the contrary and three not giving an answer. Two NCAs noted that the lack of mechanisms to preserve control acts as a strong disincentive for companies to seek a listing, while two other NCAs noted that they were still weighing advantages and disadvantages of MVR share structures. One NCA stressed the importance of leaving sufficient room for manoeuvre to Member States while ensuring that MVR shares can be marketed and admitted to public trading within the EU. 27% of stakeholders (9 respondents out of 33) reacted negatively to the possibility to introduce MVR share structures across the EU. An (institutional) investors’ association expressed a concern about the disappearance of the ‘one share – one vote’ principle, considering that MVR share structures may allow a minority shareholding to gain control of a company, therefore leading to the abuse arising from the dichotomy between shareholder power and economic risk. IPO and post-IPO stages: Prospectus Regulation and MAR A vast majority of respondents (72%, i.e. 66 respondents out of 91) believed that excessive compliance costs linked to regulatory requirements in the IPO and post-IPO phase were rather or very important factors in explaining the lack of attractiveness of EU public markets. This included the vast majority of issuers, exchanges, investors and some NCAs. On the IPO stage, one investor association singled out the length, thresholds (from which publication is required), the deadline and passporting rules of the Prospectus regulation as a large source of general compliance burden that make it unattractive for many businesses to go public. An exchange stated that the costs and burdens associated with the regulatory requirements applicable to companies admitted to regulated markets are the most significant barrier to listing. Several stakeholders stated that the listing burden is similar for large companies and SMEs, therefore making the burden very disproportionate for an SME. The majority of respondents argued that both listing and post-listing rules lead to a burden disproportionate with the investor protection objectives that these rules are meant to achieve (52%, i.e. 42 respondents out of 80, and 57%, i.e. 45 respondents out of 78 of respondents, respectively).

The majority of respondents (59%, i.e. 35 respondents out of 59) considered that the standard prospectus in its current form does not strike an appropriate balance between effective investor protection and the proportionate administrative burden for issuers, and that it should be significantly alleviated. This included the majority of issuers and exchanges as well as banks and an NCA. The same view was also expressed by 44% of respondents (21 respondents out of 48) with respect to the EU growth prospectus. In contrast, 48% of respondents (20 respondents out of 42) believed that the prospectus regime for non-equity securities has been successful in facilitating fundraising through capital markets. Regarding secondary issuances, respondents’ views were split. While a slight majority of respondents (51%, i.e. 31 respondents out of 61) considered that the prospectus requirement should not be lifted for secondary issuances, a significant minority (43%, i.e. 26 respondents out of 61) considered that issuers listed continuously for at least 18 months on a regulated market or an SME growth market, should not have to publish a prospectus for subsequent issuances. Finally, a majority of respondents (54%, i.e. 23 respondents out of 43) did not think that there is alignment/convergence in the way NCAs assess the completeness, comprehensibility and consistency of draft prospectuses that are submitted to them for approval. On the post-IPO phase of the listing process, as mentioned earlier, a vast majority of stakeholders, composed of representatives of issuers, trading venues, banks, financial intermediaries, institutional and retail investors, that replied to the consultations believed that excessive compliance costs linked to regulatory requirements were also an important factor in explaining the lack of attractiveness of EU public markets. Overall respondents found most aspects of the current MAR regime burdensome. The most burdensome requirements were the ones related to the definition of inside information (64%, i.e. 28 respondents out of 44, said it was very burdensome or rather burdensome) and the conditions for delay of disclosure (70%, i.e. 28 respondents out of 40, mainly representatives of banks, trading venues, issuers, institutional investors, financial intermediaries and legal advisors, said it was very burdensome or rather burdensome). When asked about the most important costs of remaining listed, respondents specifically pointed to fees to auditors, to ensure compliance with the listing regulation (20% of respondents, i.e. 13 respondents out of 65, replied “very important” and 32% of respondents, i.e. 21 respondents out of 65, - “rather important”). Respondents also pointed to significant corporate governance costs (8%, i.e. 5 respondents out of 65, stated that this cost is “very important” and 29%, i.e. 19 respondents out of 65, - “rather important”) and ongoing fees to legal advisors (17%, i.e. 11 respondents out of 64, replied “very important” and 23%, i.e. 15 respondents out of 64, “rather important”). Respondents’ views were split, when asked if ESMA’s clarifications on the notion of inside information would be sufficient. Almost half of those who expressed an opinion nevertheless believed that ESMA’s guidelines would not be sufficient to provide the necessary clarifications around the notion of inside information (54%, i.e. 27 respondents out of 50, including representatives of banks, trading venues, issuers, legal advisors as well as two NCAs). Half of respondents (50%, i.e. 22 respondents out of 44), including representatives of banks, trading venues, issuers and legal advisors, shared the opinion that the current punitive regime under MAR is not proportionate to the objective sought by the legislation. 2.2.5.Out-of-scope drivers Beyond the problem drivers listed above, access to EU public equity markets is also constrained by other factors, such as a more favourable tax treatment of debt over equity, SMEs’ lack of knowledge of capital markets and generally a more narrow investor base, when compared to other developed capital markets, which is further constrained by a strong home bias (reinforced by lengthy and cumbersome withholding tax reclaim procedures). Tax incentives are also often quoted as an important element in promoting companies’ access to public markets. Stakeholders also expressed concern regarding the narrow application of exemptions under the state aid rules. Furthermore, the level of EU retail investor participation in capital markets remains very low compared to other developed economies. This translates into lost opportunities in terms of the return on long-term savings for EU citizens but also in terms of less funding available for EU companies and less deep public capital markets more generally, which in turn decreases the pace of economic recovery and future growth potential. These and other out-of-scope drivers (See Annex 12 for more details) are not addressed in the current initiative focusing on regulatory barriers, but are nevertheless considered in the wider plan to facilitate companies’ access to public markets (see section 1 on political context as well as Annex 13). Figure 5. The problem tree Companies will opt in favour of (or against) a public listing of their shares/bonds by weighing the costs and benefits of such a decision. Although it would be exaggerated to claim that low listing levels are the direct consequence of only the regulatory issues described above, the latter do contribute to reducing the relative attractiveness of public markets: they increase the regulatory burden imposed on companies when listing on public markets and reduce the possibilities for founders and families to retain control of their company when listing. The reduced relative attractiveness of EU public markets could lead to EU companies choosing to list or raise funding in third countries, depriving the EU of the full growth and employment potential, or to delist, when already listed in the EU. The broader consequence would be lower scale and competitiveness of EU capital markets and less efficient risk sharing in the EU economy with impact on, resilience to financial shocks. 2.2.6.Lack of diversified funding Reduced companies’ access to public equity and bond markets also results in limited opportunities for EU companies to diversify their sources of funding and reduce their overreliance on bank loans. An unbalanced funding structure (between bank and market-based funding) of a company makes it more exposed to market volatility and makes it less resilient in periods of shocks. Studies have demonstrated that in economies with more bank-based financial structures such as the EU, an increase in bank financing increases systemic risk, while an increase in market financing decreases systemic risk. By contrast, an economy reliant more on market-based funding, such as the US, is overall more resilient to systemic risk when increasing overall financing in the system. Source: OECD 2.3.How will the problem evolve? Although the regulatory impediments identified in this impact assessment do not explain on their own the low levels of IPO activity in the EU, they contribute to the costs that further disincentive companies to raise capital on public markets and exacerbate unfavourable market conditions. If no EU action is taken, the existing regulatory shortcomings would remain. As companies’ access to public capital markets would be impeded, companies, especially SMEs, would continue to be largely dependent on bank financing. On the one hand, smaller family-owned companies and entrepreneurs may have incentives to keep their companies private, not only hampering their own access to finance and the development of the local capital market, but also preventing public shareholders from enjoying the benefits associated with investing in many successful businesses. On the other hand, larger founder-led and high tech companies would most likely continue to choose listing in the UK or the US over listing in the EU to scale up and grow. The gap between the EU capital markets and capital markets from other developed economies would continue to widen.

3.Why should the EU act? There is a policy imperative for the EU to act swiftly. Policy options set out in this impact assessment would address the issues that have been repeatedly highlighted by stakeholders over the past years as holding back the EU companies, and especially SMEs, from accessing public markets (see Annex 2 for more details). No other policy measures taken by the Commission separately would address the specific problems identified in this impact assessment, which stem from a concrete regulatory failure that can only be addressed by a legislative amendment of the relevant regulation. Market developments, such as the emergence of FinTech and other recent trends in the financial services industry, are not expected to substantially improve the situation regarding the problems at hand. The problem therefore requires a legislative intervention. Furthermore, waiting longer before taking action would be unlikely to bring better insight and would push back even further the entry into application of the new streamlined regime. The options proposed respect the principle of proportionality, are adequate for reaching the objectives and do not go beyond what is necessary. They aim at striking an appropriate balance between reducing the administrative burden and increasing flexibility for issuers and ensuring adequate and effective investor protection as well as safeguarding market integrity. 3.1.Legal basis The legal basis of the Prospectus Regulation and MAR is Article 114 of the Treaty on the Functioning of the European Union (TFEU) which confers to the European institutions the competence to lay down appropriate provisions that have as their objective the establishment and functioning of the single market. Article 114 TFEU would also be relevant for the introduction of EU rules on MVR share structures. The fact that rules are different across Member States creates an uneven playing field for companies incorporated in different Member States. In fact, companies seated in the Member State banning MVR share structures would be forced to transfer seat to another Member State, in the case of listing with a MVR share structure (to comply with the law of a given Member State), hence raising costs of listing for these companies. In contrast, a similar company already incorporated in the Member State which allows MVR share structures would not have to incur these costs. Furthermore, in some cases, because of these additional costs/considerations, companies might even decide against listing (i.e. accessing public equity markets) altogether, depriving them of an alternative source of financing and putting them in a situation of competitive disadvantage vis-à-vis companies from the Member State which allows MVR share structures. Finally, the growing trend of EU companies to operate cross-border calls for common European company law mechanisms, including the possibility to depart from the “one share, one vote” principle through the issuance of MVR shares. There is therefore a significant obstacle to the creation of a single market that an EU rule on MVR share structures would seek to remedy. Article 50(1) TFEU and in particular Article 50(2)(g) TFEU, may also be relevant for the introduction of EU provisions on MVR share structures. They provide for the EU competence to act in order to attain freedom of establishment as regards a particular activity, in particular “by coordinating to the necessary extent the safeguards which, for the protection of the interests of members and others, are required by Member States of companies or forms within the meaning of the second paragraph of Article 54 TFEU with a view to making such safeguards equivalent throughout the Union”. Recourse to this provision is possible if the aim is to prevent the emergence of current or future obstacles to the freedom of establishment resulting from the divergent development of national laws. The emergence of such obstacles must be likely and the measure in question must be designed to prevent them. 3.2.Subsidiarity: Necessity of EU action Under Article 4 of TFEU, EU action for completing the internal market has to be appraised in light of the subsidiarity principle set out in Article 5(3) of the Treaty on European Union (TEU). According to the principle of subsidiarity, action at EU level should be taken only when the objectives of the proposed action cannot be achieved sufficiently by Member States alone and thus mandate action at EU level. Legislation applying to issuers and trading venues is largely harmonised at EU level, leaving limited flexibility for Member States to adapt this legal framework to local conditions. As a consequence, modifications of the EU legislation are necessary to bring about desired improvements. In addition, an EU action is more appropriate as the initiative seeks to support cross-border listing and securities trading activity across the whole EU, in order to further integrate and achieve scale on EU capital markets. With respect to MVR share structures, unless action at the EU level is taken, there is very low likelihood that all Member States that currently do not allow MVR share structures would unilaterally and with no external incentive amend their rules in the near future. It is so because of a number of reasons, starting from historical reasons, stakeholder pressures, past experience and the fact that changing company law, which was developed over centuries, is often seen as complex. Any delays in allowing these structures across the whole of the EU would risk to continue to deprive some companies (i.e. in those Member States that ban those structure) of eligible funding opportunities or impose additional costs on them, ultimately pushing them to list in and relocate to third countries. Finally, even if Member States decided to take action, the approaches could differ significantly, potentially leading to further fragmentation. 3.3.Subsidiarity: Added value of EU action It has to be considered whether the objectives would be better achieved by action at EU level (the so-called ‘test of European added-value’). As there is almost no flexibility to adapt MAR and Prospectus Regulation to local conditions, a legislative action at EU level would seem the most appropriate to reduce the administrative burden placed on companies accessing public markets. By its scale, EU action could reduce the administrative burden for issuers, while at the same time safeguarding market integrity and investor protection, thus ensuring a level-playing field. 4.Objectives: What is to be achieved? 4.1.General objectives In response to the identified problems, the general objective is to make listings on EU capital markets more attractive through streamlined and clear regulatory obligations in order to make capital-raising on public markets by companies of all sizes less costly. This would in turn diversify funding sources for companies in the EU by facilitating access to alternative sources of financing and help increasing investment, economic growth, job creation and innovation in the EU. Public markets should be made more attractive for companies that seek a first-time listing and for firms that are already listed. Larger and more liquid EU public markets, in turn, would also help improve risk sharing in the EU, with positive effects on financial stability. 4.2.Specific objectives The 3 major specific objectives that would contribute to the general objectives set out above are the following: 1.Reduce regulatory and compliance costs for companies seeking to list or already listed with a view to streamline the listing process and enhance legal clarity;

2.Ensure investor protection and market integrity; 3.Provide more incentives for issuers to list. 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? Under the baseline scenario, no amendments are introduced to the legislative framework governing the rules for listing and already listed companies. The excessive regulatory requirements associated with burdensome listing documentation and ongoing disclosures, paired with excessive and disproportionate punitive measures, fragmented legal regimes along national borders, and low SME visibility vis-à-vis investors would continue to weigh on companies’ decision to list and stay listed. The baseline scenario, therefore, features EU capital markets that would continue to suffer from inefficiencies regarding to the regulatory framework for listing, which in turn would reduce attractiveness to list, resulting in an economic cost for EU issuers, investors and the EU economy as a whole. The declining trend in IPOs and increasing delistings by companies would likely continue under the baseline scenario. With falling IPO numbers, the EU markets would gradually lose scale, creating a vicious cycle whereby an increasingly higher number of companies would stay private or be even driven out of EU markets to more efficient markets, impairing the EU overall global competitiveness. The potential for the EU to grow and innovate would be considerably hampered. The EU economy would continue to be financed mainly by banks. The development of capital markets in the EU would lag behind that of other developed economies. In the absence of liquid public markets, price discovery for assets would be impaired in the EU: financial intermediaries would increasingly rely on benchmarks in financial centres in third countries. With reduced risk sharing, the EU economy would also become less resilient to shocks. Overall, EU companies would most likely lose in terms of foregone growth opportunities (e.g. when going/staying public), the EU – in terms of innovation, jobs and growth potential, Member States – in terms of fiscal revenue, and investors – in terms of reduced investment opportunities. Over a longer terms, the EU might become more dependent on financial markets in third countries, hence reducing its strategic autonomy. While the regulatory amendments set out in the options below, on their own, could not address all the challenges faced by the EU public markets, together with other measures considered as part of a wider plan to enhance companies’ access to public capital markets, they would seek to contribute to reversing the current negative trend. These broader measures in particular include the forthcoming retail investment strategy that would address the low level of retail participation, the SME IPO Fund that aims to make listings more attractive and strengthen the investor base for SME IPOs, the DEBRA proposal that seeks to address the debt/equity bias for investors and the forthcoming withholding tax proposal that would address barriers related to cross-border taxation procedures. While these measures would be expected individually and jointly to contribute to the creation of a more favourable listing environment in the EU, they would not be able to address the specific legislative challenges addressed by this initiative, which would continue to weigh on listing by EU companies, unless tackled. 5.2.Description of the policy options Policy options presented below aim to tackle the problem drivers identified in the pre-IPO, IPO and post-IPO stages of the listing life-cycle. The policy options that address the same problem driver in a given IPO stage (e.g. post-IPO (MAR)) are mutually exclusive (i.e. only one option can be chosen). Policy options across different IPO stages are, however, cumulative (i.e. the preferred options in the pre-IPO, IPO and post-IPO stages all add up to jointly form a final set of options). While this initiative has a specific focus on SMEs and SME growth markets, the envisaged policy options cover all companies, including companies trading (or seeking admission to trading) on regulated markets. This is in line with Action 2 of the CMU Action Plan and the feedback received from expert groups and respondents to the public consultation. In Action 2 of the CMU Action Plan, the Commission committed to simplifying the listing rules for all public markets. Furthermore, both the CMU HLF as well as the TESG recommended that the Commission introduce targeted amendments to the listing framework both on regulated markets as well as on SME growth markets. The feedback to the public consultation confirmed that the regulatory compliance costs are seen as an important factor in explaining the lack of attractiveness of listing on both types of trading venues. Addressing all relevant regulatory listing problems (i.e. both on SME growth markets and regulated markets) in one legislative initiative avoids a piece-meal approach to legislation, where the same legislative acts would have to be re-opened several years later to then address problems relevant to, for example, only regulated markets. Furthermore, the envisaged policy options do not differentiate between SME issuers and non-SME issuers which are listed on the same trading venue. Issuers seeking admission to trading on the same type of trading venue (be it a regulated market or a SME growth market), irrespective of their size, are currently subject to the same listing requirements. Different listing requirements for smaller issuers compared to larger issuers on the same venue are likely to confuse stakeholders, and in particular investors. This is a fundamental principle underpinning EU financial legislation, as it aims to ensure that investors on the same type of trading venue feel confident that all companies listed thereon are subject to a single set of rules. 5.2.1. Options addressing unequal opportunities for EU companies regarding governance structure, when listing, due to different national rules on MVR share structures (Pre-IPO phase) Option 1: Minimum harmonisation of MVR share structures across the EU Under this option, the Commission would introduce into EU law the possibility for companies to adopt MVR share structures and for MVR shares to be admitted to trading across all Member States. This option would leave flexibility to Member States to determine how the rule would exactly apply, allowing them to better tailor it to national specificities. Member States would be given discretion in determining effective conditions and safeguards attached to the MVR shares (e.g. voting ratios, sunset clauses). The general high-level principles could, however, be set out at EU level, in particular the need to ensure an adequate balance between the interests of founders and minority investor protection or the need to take into account specific considerations, for example, related to sustainability, when designing those safeguards. Furthermore, appropriate safeguards would also need to be put in place to avoid the situation where a Member State imposes far-reaching protections for investors, rendering the issuance of MVR share structures unattractive for issuers. The scope of this option could either cover all companies or be targeted at a specific subset of companies, e.g. issuers listing on SME growth markets. The latter approach could have the benefits of allowing for targeting the measure where it is most needed, reducing risks stemming from a possibly overly permissive approach by some Member States and offering a possibility to those Member States who already have a flexible regime in place not to adjust it. Option 2: Maximum harmonisation of MVR share structures across the EU Under option 2, the general principles and the options on scope set out in option 1, would be complemented with a detailed set of rules on the safeguards for minority investors, such as voting power limitation clauses, sunset clauses, clauses setting out the limitation on the number of votes attached to a single share, all of which would seek to protect other (minority) investors in the company from undue impact of MVR share structures. Furthermore, under option 2, the EU law could also prescribe inter alia who can hold MVR shares, in which decisions the additional voting rights are taken into account and on which conditions (and whether) they can be transferred to a third party. This option would be quite restrictive in the sense that all Member States would be obliged to implement the same rigid framework including the same safeguards. This policy option would create a harmonised regime in the EU for MVR share structures and would be far more detailed and far-reaching than policy option 1. 5.2.2.Options addressing the overly burdensome regulatory listing requirements (IPO phase) Options set out below refer to both instances where companies seek access to public markets for the first time (IPO) and where they access public markets for follow-on or secondary issuances of equity and/or non-equity securities. In both instances, under the current rules, companies produce voluminous prospectuses that are scrutinised and approved by NCAs in a lengthy process.

Option 1: Scrutiny by exchanges and non-passportable admission document Under this option, the main change would entail a shift in the scrutiny and approval of the prospectus. Exchanges would have the responsibility of scrutinising and approving the prospectus for first-time issuers, thus alleviating the burden of a currently lengthy scrutiny process carried out by NCAs. As the option moves the scrutiny to exchanges, to balance out the considerations of investor trust, first issuance prospectuses on regulated markets (i.e. where no public information already exists) should remain more informative and detailed when they are scrutinised by exchanges than when they are scrutinised by NCAs. In the case of SME growth markets, where exchanges have already established themselves in the role of entities reviewing admission documents (and investors are confident in the process as it currently stands), the option could combine the transfer of scrutiny of the listing documents to exchanges with modifications (i.e. alleviations) to their substance. In the same vein, in the case of secondary issuances, the content of the prospectus could also be streamlined, as public information on the company and its securities is already available. In the case of IPOs, the responsibility for reviewing the prospectus would be placed on the regulated market where the issuer is seeking admission to trading, while the prospectus would stay substantially unchanged in terms of its contents (for reasons set out above). These prospectuses would only be filed with NCAs (but not scrutinised). SME growth markets would be responsible for the review of a shorter and simpler admission document submitted for publication by issuers. The content of such admission document would be largely left to discretion of the SME growth markets with only minimum standards set at EU level. While this document would allow the offer of securities to the public without a prospectus, it would not be passportable, i.e. securities could not be offered in other Member States. In the case of secondary issuances, a very short and streamlined prospectus similar to the “EU Recovery Prospectus” would replace the simplified prospectus for secondary issuances for both equity and non-equity securities. Like in the case of IPOs, exchanges would be responsible for the scrutiny and approval of these prospectuses. The EU Recovery prospectus format would also be used by companies wishing to transfer from an SME growth market to a regulated market (i.e. replacing the simplified prospectus for secondary issuances as the “transfer prospectus”). In order to ensure that the scrutiny by exchanges is done adequately, a set of conflict of interest rules would be put in place. Furthermore, safeguards would need to be considered in order to avoid that exchanges charge excessive fees for scrutiny and approval of prospectuses. Option 2: Shorter prospectuses with streamlined scrutiny by NCAs Under this option, both the contents and scrutiny of the prospectus would be streamlined, although the scrutiny would stay with NCAs. The option would also seek to exempt issuers from an obligation to draw up a prospectus in certain cases, where a lot of information about the company and securities is already available to public. Furthermore, the prospectus would be further standardised (i.e. its sections would be subject to a fixed order of disclosure), it would be published in an electronic format only (i.e. no paper copies on request) and it would be allowed to draw it up in English as the language customary in the sphere of international finance (except for the summary). In the case of an offer of securities to the public and/or the admission to trading on regulated markets, including the case of an IPO, both the contents and size of the prospectus would be considerably streamlined. On the one hand, it would be clearly set out which sections of the current prospectus would no longer be required or should be alleviated. Furthermore, rules on the incorporation by reference would be further reinforced, making it a legal requirement, rather than a possibility that an issuer could avail itself of. On the other hand, only for shares or other transferable securities equivalent to shares in companies, a limit number of pages (300 pages) would be introduced to avoid overly lengthy prospectuses for companies that do not have a complex financial history. In addition, the ability of NCAs to request issuers to include additional information would be more narrowly framed to limit the duration of scrutiny, as well as the length of the prospectus. Companies offering securities to the public and listing on SME growth markets would have to draw up a shorter and simpler EU IPO admission document, which would be subject to a page limit, as well as subject to scrutiny and approval by a NCA. This EU admission document would allow issuers to offer securities to the public, as well as passport them into other Member States. The powers of NCAs in a scrutiny process would also be better framed. In the case of secondary issuances, issuers of securities fungible with securities already admitted to trad