COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE 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
Date: 2022-12-07
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: capital market, insider trading, investment protection, issue of securities, official market, public limited company, shareholder, small and medium-sized enterprises, stock-exchange listing

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   EUROPEAN COMMISSION  Brussels, 7.12.2022  SWD(2022) 763 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE 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) 762 final}  
 
 
A core aim of the Capital  Markets  Union (CMU) is  to  improve the  access  to  market-based 
sources of financing for small and large firms. This would help them grow and diversify their 
funding, which is particularly important for small and medium-sized enterprises (SMEs) that 
rely  excessively  on  bank  financing.  To  the  extent  that  this  limits  companies’  funding 
opportunities, the lack of market-based funding affects the real economy as it leads to foregone 
investment,  and  lower  levels  of  economic  growth,  job  creation  and  innovation.  EU  capital 
markets  also  remain  underdeveloped  compared  to  other  major  jurisdictions,  with  EU  stock 
exchanges sometimes facing difficulties in attracting new listings as evidenced by a number of 
EU companies that preferred to list on a third country exchange.  

Since the first CMU Action plan in 2015, it has become easier and cheaper for companies and 
in  particular  SMEs  to  access  public  markets.  Stakeholders  however  continue  to  argue  that 
further regulatory actions need to be considered, in particular in order to streamline the listing 
process  and  to  achieve  a  more  proportionate  regulatory  treatment  of,  in  particular,  smaller 
companies.  

The current initiative follows up on the Commission’s commitment to simplify the listing rules, 
as detailed in Action 2 of the 2020 CMU Action Plan.  It  aims to alleviate and render more 
proportionate to companies of different size the requirements that apply both at the moment of 
listing and when listed. The proposed alleviations seek in parallel to preserve a sufficient degree 
of transparency, investor protection and market  integrity.  In  addition,  the initiative seeks to 
address the issue of fragmentation in national laws that restricts the flexibility of companies to 
issue dual-class shares.  

Two problems are identified and assessed as part of this Impact Assessment: 1) founders of 
some  EU  companies  cannot  maintain  the  desired  level  of  control  when  listing,  due  to  the 
restriction on voting rights (multiple voting right shares) in some Member States; 2) there is 
currently a degree of unnecessary regulatory burden for companies seeking a listing or already 
listed.  

The Impact Assessment focuses on identifying and addressing specific regulatory barriers at 
each  stage  of  the  listing  process.  It  discusses  barriers  at  the  pre-IPO  stage  stemming  from 
company law, in particular, from the fact that a listing based on a multiple voting right share 
structure is not possible in some Member States. It then focuses on barriers at the IPO stage 
arising from the Prospectus Regulation, notably from the high costs of drawing up a prospectus. 
Finally,  it  addresses  barriers  encountered  at  the  post-IPO  stage  stemming  from  the  Market 
Abuse Regulation (MAR), in particular, costs due to the legal uncertainty regarding the issuers’ 
obligation to publicly disclose inside information.  

The Impact Assessment identifies a need to act at EU level. Member States have only limited 
possibility to address the identified problems via changes at national level, either because the 
financial legislation applying to issuers and trading venues is largely harmonised at EU level 
or because  Member States  are  unlikely to  introduce reforms  on their own (i.e. on company 
law).  The  regulatory  amendments  to  EU  legislation  set  out  in  the  Impact  Assessment  are 
expected to make it more attractive for companies to seek listing and stay listed on EU public 
markets,  by mitigating the identified barriers and costs. On their own,  the proposed actions 
will,  however,  not  be  able  to  address  all  the  challenges  that  EU  public  markets  face  today. 
Nevertheless, they should contribute to improved access to public markets by companies and 
further development of EU capital markets in general.  

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Possible solutions 

For each stage of the listing process, the Impact  Assessment sets out two alternative policy 
options,  after  having  analysed  the  available  empirical  evidence  and  accounting  for 
stakeholders’ views. This evidence base, which was used to assess and compare policy options, 
includes the input received from the European Securities and Markets Authority (ESMA), two 
groups  of  experts,  a  commissioned  study  on  the  functioning  of  primary  and  secondary  EU 
equity markets,  research papers, and stakeholders’ consultations, including through targeted 
workshops.  

For the pre-IPO stage, policy option 1 advocates for minimum harmonisation of multiple voting 
share structures across the EU via general principles, while policy option 2 complements those 
general principles with a detailed set of safeguards for minority investors. For the IPO-stage, 
policy  option  1  proposes:  (1)  transferring  the  scrutiny  of  listing  documents  (including  the 
prospectus) to exchanges, allowing the alleviation of contents only in specific cases (i.e. in the 
case of listings on SME growth markets and for secondary issuances). Policy option 2 proposes 
to  have  a  shorter  prospectus  (or  admission  document)  in  all  circumstances  and  a  more 
streamlined scrutiny process by national competent authorities. For the post-IPO stage, policy 
option 1 seeks to clarify the disclosure obligation under MAR, also by reviewing the conditions 
for  delaying  such  disclosure,  and  to  render  the  sanctioning  regime  more  proportionate  for 
SMEs, while policy option 2 proposes to limit MAR disclosure of inside information to a closed 
pre-identified list of events.  

Comparison of options and impacts of preferred options 

The impact assessment analyses the options in relation to three objectives, that is whether they: 
(i) reduce the regulatory and compliance costs for companies seeking to list or those that are 
already listed, (ii) ensure a sufficient level of investor protection and market integrity, and (iii) 
provide issuers with more incentives to list. The preferred option (for each stage of the listing 
process) should thus be cost-efficient and effective in addressing the identified barrier while 
safeguarding  a  sufficiently  high  level  of  investor  protection  and  market  integrity.  The 
proportionality of measures for smaller companies has been considered when identifying and 
assessing options. 

For  the  pre-IPO  stage,  under  the  preferred  option,  it  is  proposed  to  pursue  minimum 
harmonisation  of  the  multiple  voting  right  share  regime.  For  the  IPO  stage,  the  analysis 
revealed that the introduction of shorter prospectuses combined with streamlined scrutiny by 
NCAs, as proposed in option 2, would be the most appropriate way to address the identified 
regulatory barriers. Finally, for the post-IPO phase, clarifying the disclosure obligation under 
MAR and a more proportionate sanctioning regime for SMEs, as set out in option 1, have been 
identified as the preferred policy option.  

Overall, the proposed measures would make it more attractive to seek listing and remain listed. 
Founders  of  companies  and  family-owned  companies  would  be  able  to  seek  listing  in  any 
Member State, while preserving more control over their firm via the use of  multiple voting 
right shares. In addition, the possibility to draft shorter and less costly prospectuses would make 
the listing requirements during the IPO process less complex and cheaper to comply with, while 
a more efficient scrutiny and approval procedure will result in a quicker listing process. The 
clarification regarding the disclosure (and delay of disclosure) of inside information will make 

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it easier (and less costly) to disclose information at the right moment. Furthermore, smaller 
issuers would also benefit from the introduction of a more proportionate sanctions regime.  

The qualitative and quantitative assessment suggests that it is possible to take  the measures 
identified under the preferred options, while maintaining a sufficiently high level of  market 
integrity, investor protection and proportionality for smaller listed companies.  

The initiative is expected to bring about annual cost savings of approximately EUR 167 million 
for  issuers,  including  SMEs.  It  is  expected  that  NCAs  would  be  able  to  reduce  their  costs 
because simpler and clearer requirements will make it possible to conduct their supervisory 
activities more efficiently. Investors would also benefit from the envisaged regulatory changes, 
as corporate information (at the moment of listing and thereafter) will become shorter, more 
timely and easier to navigate. In terms of wider consequences, the initiative may also positively, 
although marginally, affect the EU labor market and Sustainable Development Goals, while at 
the same time lead to better integrated, deeper and more liquid EU capital markets.  

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