On 8 July 2013, the European Securities and Market Authority ("ESMA") issued a consultation paper on regulatory technical standards ("RTS") applicable to the assessment of proposed acquisitions and increases in holdings in investment firms (the "Consultation Paper").
Further to the Markets in Financial Instruments Directive ("MiFID"), as amended, ESMA is obliged to draft the RTS and establish an exhaustive list of the information to be included by proposed acquirers of an investment firm in their notification to the relevant competent authority. Pursuant to MiFID, Member States are required to make publically available the information necessary to carry out assessments of a proposed acquirer. Such information must be provided at the time of the initial notification. This is to ensure that the competent authorities are provided with adequate and proportionate information for the purpose of their assessment of the relevant acquisition.
Section II of the Consultation Paper outlines the background to the proposals.
The main objective of the directive on acquisitions and increase of holdings in the financial sector (Directive 2007/44/EC) (the "Acquisitions Directive"), which amended MiFID, is to provide legal certainty, clarity and predictability regarding the assessment of acquisitions and the increase of holdings in the financial sector.
Section III describes the proposals for the exhaustive list of information to be included by proposed acquirers in their notification. The proposals include a clarification of the proportionality requirement, with ESMA endorsing less rigid, taxing information requirements being imposed where the target entity is a small, non-complex investment firm.
ESMA proposes that the impact of the proposed acquisition on the target entity's relationship with its supervisor be routinely analysed in such circumstances, as should the impact of the proposed acquisition on the consolidated supervision of a target entity's group. It is outlined in the Consultation Paper that additional information be required of third country acquirers belonging to a non-European Economic Area financial group and where acquirers are sovereign wealth funds or any other state/government-owned entities.
Annex IV sets out the full text of the draft RTS.
ESMA will consider the responses it receives by 10 October 2013 in Q4 2013. It will finalise the draft RTS for submission to the European Commission by 1 January 2014.
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