On 11 December 2019 a new Regulation amending the revised Markets in Financial Instruments Directive (MiFID II), Market Abuse Regulation (MAR) and Prospectus Regulation (PR) was published in the Official Journal of the European Union, introducing changes to support small- and medium-sized enterprise growth markets as trading venues. SME growth markets are a new sub-category of multilateral trading facility introduced by MiFID II in January 2018 to facilitate access to capital for SMEs. In October 2019, the EU brought in a new regulation supplementing MiFID II to address regulatory barriers to the take-up of SME growth markets. This amending Regulation furthers those efforts.
The key change to MiFID II is the introduction of an expert stakeholder group that should be established by the European Commission by 1 July 2020 to monitor the functioning and success of SME growth markets. The group will publish a report on its conclusions by 1 July 2021.
The key changes to MAR include: (i) an exemption from the market soundings regime that means disclosures of inside information in the context of a private placement of bonds to qualified investors will not be deemed to be a market sounding, provided that an adequate non-disclosure agreement is in place; (ii) an exemption from the market manipulation regime that means issuers of securities admitted to an SME growth market may enter into a liquidity contract for their shares, subject to satisfaction of certain conditions; and (iii) reducing the burden of maintaining insider lists for issuers whose securities are admitted to an SME growth market, but allowing them to maintain only a list of persons who have regular access to inside information (e.g. directors and in-house counsel), although it is open to Member States to introduce a requirement for such issuers to provide more extensive insider lists including all persons who have access to inside information.
The key changes to the PR include: (i) a requirement that unlisted companies seeking admission to trading on a regulated market following an exchange offer, merger or division should publish a prospectus; (ii) extension of the simplified disclosure regime to benefit issuers that issue securities on SME growth markets; and (iii) amendments to the PR to allow issuers seeking an initial public offer with a tentative market capitalization below €200,000,000 to draw up an EU Growth prospectus.
The amending Regulation entered into force on 31 December 2019 and applies directly in all EU Member States from that date, with the exception of the amendments to the MAR, which will apply from 1 January 2021.
View the regulation to amend MIFID II, MAR and the PR here.
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