(1)

The capital markets union (CMU) presented in the communication of the Commission of 30 September 2015 on an Action Plan on Building a Capital Markets Union aims to develop Union capital markets and decrease their fragmentation along national borders, thereby enabling companies to access 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 will decrease risks for individual companies and the overall economy, as well as help Union companies, including small and mid-sized enterprises (SMEs), realise their growth potential. It is acknowledged that the CMU needs to be realised more quickly and that investment needs to reach the levels made necessary by the Union’s policy priorities related to environmental protection, digitalisation and strategic autonomy. Moving forward in the area of listing is a necessary step for the CMU, especially in the short term, but as a stand-alone measure it cannot be sufficient.

(2)

The CMU requires an effective and efficient regulatory framework that supports access to public equity funding for companies, including SMEs. Directive 2014/65/EU of the European Parliament and of the Council (3) created a new type of trading venue, the SME growth market, to facilitate access to capital specifically for SMEs. Directive 2014/65/EU also expressed the need to monitor how future regulation should further foster and promote the use of SME growth markets and provide further incentives for SMEs to access capital markets through SME growth markets. Such measures need to ensure not only that SME growth markets provide an increasingly attractive opportunity for SMEs to raise funds but also that, with time and success, SMEs are able to access other capital markets, if they choose to do so.

(3)

Regulation (EU) 2019/2115 of the European Parliament and of the Council (4) introduced proportionate alleviations to enhance the use of SME growth markets and to reduce the regulatory requirements for issuers seeking the admission of securities on SME growth markets, while preserving an appropriate level of investor protection and market integrity. Nevertheless, more needs to be done to make access to Union public markets more attractive and render the regulatory treatment of companies more flexible and proportionate to their size. The High-Level Forum on the CMU recommended that the Commission remove regulatory obstacles that hold back companies from accessing public markets. The Technical Expert Stakeholder Group on SMEs set out detailed recommendations on how to foster access by companies and, in particular, SMEs to Union public markets.

(4)

Building on one of the Commission’s initiatives within its post-COVID19 recovery strategy, namely, the Capital Markets Recovery Package, targeted amendments have been introduced into Regulations (EU) 2017/1129 (5) and (EU) 2017/2402 (6) of the European Parliament and of the Council, and into Directives 2014/65/EU and 2004/109/EC of the European Parliament and of the Council (7) to make it easier for companies affected by the economic crisis caused by the pandemic to raise equity capital on public markets, facilitate investments in the real economy, allow for the rapid re-capitalisation of businesses, and increase banks’ capacity to finance the recovery. Overall, however, and for a number of reasons, those measures have had only a limited impact.

(5)

On the basis of the recommendations of the Technical Expert Stakeholder Group on SMEs and building on Regulation (EU) 2019/2115 and on the measures adopted under Regulation (EU) 2021/337 of the European Parliament and of the Council (8), and as part of the Capital Markets Recovery Package, the Commission committed to putting forward a legislative initiative to make access to public markets in the Union more attractive by reducing compliance costs, and by removing significant obstacles that hold back companies, including SMEs, from accessing public markets in the Union. To achieve its objectives, the scope of that legislative initiative should be broad and address obstacles that concern companies’ access to public markets, namely the pre-initial public offering, initial public offering (IPO) and post-IPO phases. In particular, the simplification and removal of obstacles should focus on the IPO and post-IPO phases by addressing burdensome disclosure requirements to seek admission to trading on public markets laid down in Regulation (EU) 2017/1129, and by addressing burdensome ongoing disclosure requirements laid down in Regulation (EU) No 596/2014 of the European Parliament and of the Council (9).

(6)

Regulation (EU) 2017/1129 lays down requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market that is situated in or operating within a Member State. To reinforce the attractiveness of Union public markets, it is necessary to address obstacles stemming from the length, complexity and high costs of the prospectus documentation, both where companies, including SMEs, seek access to public markets for the first time through an IPO, and where companies access public markets for secondary issuances of equity or non-equity securities. For the same reason, the length of the scrutiny and approval process of those prospectuses by competent authorities, and the lack of convergence of those processes across the Union, should also be addressed.

(7)

For small offers of securities to the public, the costs of producing a prospectus might be disproportionate in relation to the total consideration of the offer. Regulation (EU) 2017/1129 does not apply to offers of securities to the public with a total consideration in the Union of less than EUR 1 000 000. In addition, in view of the varying sizes of financial markets across the Union, Member States are able to exempt offers of securities to the public from the obligation to publish a prospectus where such offers have a total consideration below a certain threshold, which Member States are able to set between EUR 1 000 000 and EUR 8 000 000. Certain Member States have made use of that possibility, which has resulted in different exemption thresholds, creating complexity and a lack of clarity for both issuers and investors. In order to reduce complexity under Regulation (EU) 2017/1129 and to foster legal clarity, the lower threshold of EUR 1 000 000, below which that Regulation does not apply, should be removed.

(8)

In order to reduce market fragmentation while also having regard to the different sizes of national capital markets within the Union, the existing system that allows Member States to set various exemption thresholds between EUR 1 000 000 and EUR 8 000 000 should be replaced by a dual-threshold system. A threshold with a total aggregated consideration in the Union of EUR 12 000 000 per issuer or offeror, calculated over a period of 12 months, should be the principal threshold, while Member States should be able to decide to apply a threshold of EUR 5 000 000. Below the threshold of either EUR 12 000 000 or EUR 5 000 000, offers of securities to the public should be exempted from the obligation to publish a prospectus, provided that those offers do not require passporting. In the case of such an exemption, however, Member States should be allowed but not be obliged to require the issuer to publish either a document containing the information referred to in Article 7 of Regulation (EU) 2017/1129, or, a document containing the information requirements at national level, provided that the extent and level of such information is equivalent or lower than the information set out in Article 7 of Regulation (EU) 2017/1129. Nothing in this Regulation should prevent those Member States from introducing rules at national level which allow the operators of multilateral trading facilities (MTFs) to determine the content of the admission document which an issuer is required to produce upon initial admission to trading of its securities or the modalities of its review.

(9)

Cross-border offers of securities to the public that are exempted from the obligation to publish a prospectus should be subject to the national disclosure requirements set out by the concerned Member States, where applicable. However, issuers, offerors or persons asking for the admission to trading on a regulated market of securities which are not subject to the obligation to publish a prospectus should benefit from passporting where they choose to draw up a prospectus on a voluntary basis.

(10)

Regulation (EU) 2017/1129 contains several provisions that refer to the total consideration of certain offers of securities to the public, including ongoing offers of securities to the public, to be calculated over a period of 12 months. To provide clarity to issuers, investors and competent authorities, and to avoid divergent approaches across the Union, it is necessary to specify how the total consideration of those offers of securities to the public are to be calculated over a period of 12 months.

(11)

Article 1(5), point (a), of Regulation (EU) 2017/1129 contains an exemption from the obligation to publish a prospectus for the admission to trading on a regulated market of securities fungible with securities already admitted to trading on the same regulated market, provided that the newly admitted securities represent over a period of 12 months less than 20 % of the number of securities already admitted to trading on the same regulated market and provided that such admission is not combined with an offer of securities to the public. To reduce complexity and to limit unnecessary costs and burdens, that exemption should also apply to an offer to the public under Article 1(4) of that Regulation. For the same reasons, the percentage threshold that determines the eligibility for the exemption should be increased in both the offer to the public and the admission to trading on a regulated market. In addition, the exemption for offers of securities to the public should encompass an offer to the public of securities to be admitted to trading on a regulated market or an SME growth market and that are fungible with securities already admitted to trading on the same regulated market or the same SME growth market. Considering that subscription rights are intrinsically linked to the issuance of new shares, the right to subscribe for shares fungible with existing shares should also be covered by that exemption. To ensure investor protection, in particular for retail investors, a short-form document with key information for investors should be made available to the public when an offer of fungible securities is made under the exemption. The document should be made available to the public and filed with the competent authority of the home Member State, but not be subject to its approval.

(12)

Article 1(5), point (b), of Regulation (EU) 2017/1129 contains an exemption from the obligation to publish a prospectus for the admission to trading on a regulated market of shares resulting from the conversion or exchange of other securities or from the exercise of the rights conferred by other securities, provided that the newly admitted shares represent, over a period of 12 months, less than 20 % of the number of shares of the same class already admitted to trading on the same regulated market. That 20 % threshold should be aligned with the threshold for the exemption for securities fungible with securities already admitted to trading on the same regulated market since the two exemptions are equivalent in scope.

(13)

Companies whose securities are admitted to trading on a regulated market or on an SME growth market are to comply with the periodic and ongoing disclosure requirements that are laid down in Regulation (EU) No 596/2014, Directive 2004/109/EC and, for issuers on SME growth markets, in Commission Delegated Regulation (EU) 2017/565 (10). Where those companies issue securities fungible with securities already admitted to trading on those types of trading venues, they should be exempted from the obligation to publish a prospectus, as much of the required content of a prospectus will already be publicly available and investors will be able to trade on the basis of that information. However, such exemption should be subject to safeguards to ensure that the company issuing the securities has complied with the periodic and ongoing disclosure requirements under Union law and is not subject to a restructuring or to the opening of insolvency proceedings, as defined under Union law. Furthermore, to ensure the protection of investors, in particular retail investors, a short-form document with key information for investors should still be made available to the public. The document should be filed with the competent authority of the home Member State, but not be subject to its approval. Where subscription rights are connected to securities covered by the exemption for the offer to the public or the admission to trading on a regulated market the exemption should, consequently, also be applicable to subscription rights representing the preferential right of existing shareholders to subscribe for the securities covered by the exemption. Where the scope of the new exemption makes other existing exemptions redundant, those other exemptions should be removed.

(14)

Article 1(4), point (j), of Regulation (EU) 2017/1129 exempts credit institutions from the obligation to publish a prospectus in the case of an offer or admission to trading on a regulated market of certain non-equity securities issued in a continuous or repeated manner up to an aggregated consideration of EUR 75 000 000 over a period of 12 months. Regulation (EU) 2021/337, as part of the Capital Markets Recovery Package, increased that threshold to EUR 150 000 000 for a limited period to foster fundraising for credit institutions and give those institutions breathing space to support their clients in the real economy. To continue to support fundraising through capital markets of issuers, including credit institutions, the increased threshold introduced by Regulation (EU) 2021/337 should be made permanent.

(15)

To reduce the complexity of the prospectus documentation, and to make the prospectus a more harmonised document thus improving its readability for investors across the Union, irrespective of the jurisdiction where securities are offered to the public or admitted to trading on a regulated market, it is necessary to introduce a standardised format for the prospectus for both equity and non-equity securities and to require that the information included in the prospectus is disclosed in a standardised sequence while taking care that prospectuses are not overloaded with redundant or marginally relevant information.

(16)

In certain cases, the prospectus or its related documents reach considerable sizes, becoming unfit for investors to be able to take an informed investment decision and too expensive for issuers to produce due to the inherent expense associated with lengthy prospectuses. In addition, the length of prospectuses and their format varies greatly across the Union, which is contrary to the objective of fostering convergence within the CMU. To improve the readability of prospectuses, reduce the costs for issuers related to the drafting of prospectuses, create convergence across the Union, and make it easier for investors to analyse and navigate through prospectuses, it is necessary to set a maximum page limit. However, such page limit should only be introduced for offers to the public or admissions to trading on a regulated market of shares. A page limit would not be appropriate for equity securities other than shares or non-equity securities, which include a broad range of different instruments, including complex ones. Furthermore, the following should be excluded from the page limit: the summary; information incorporated by reference, including a universal registration document approved by or filed with a competent authority; information included in a universal registration document that is used as a constituent part of a prospectus; and information to be provided where the issuer has a complex financial history or has made a significant financial commitment, or in the case of a significant gross change as defined in Commission Delegated Regulation (EU) 2019/980 (11).

(17)

The standardised format and the standardised sequence of the information to be disclosed in a prospectus should be set out in this Regulation, irrespective of whether a prospectus, or a base prospectus, is drawn up as a single document or is composed of separate documents, except where information is included in a universal registration document. It is therefore necessary that Annexes I, II and III to Regulation (EU) 2017/1129 set out the standardised sequence of the sections for the information to be disclosed in the prospectus or, separately, in the registration document and in the securities note. Those Annexes should be the basis for the Commission to amend any delegated acts that impose a standardised format and sequence of sections of the prospectus, the base prospectus and the final terms, including on disclosure items within those sections. Furthermore, it is necessary to set out the standardised sequence of the information to be disclosed in the prospectus summary.

(18)

In order to reduce the burden for issuers who seek admission to trading on a regulated market in the Union and simultaneously offer or privately place securities with investors in a third country, and who would otherwise be required to draw up several documents, the page limit as well as the standardised format and standardised sequence should not apply to a prospectus relating to the admission to trading of such securities.

(19)

In order to achieve convergence across the Union on the format of prospectuses, the European Supervisory Authority (European Securities and Markets Authority) (ESMA), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (12) should be required to develop draft implementing technical standards to specify the template and layout of prospectuses, including the font size and style requirements, depending on the type of prospectus and the type of investors targeted. Furthermore, in order to help investors navigate through the prospectus, ESMA should be required to develop guidelines on comprehensibility and on the use of plain language in prospectuses to ensure that the information provided therein is concise, clear and user friendly having regard to the type of prospectus and the type of investors targeted. The Commission should adopt those implementing technical standards by means of implementing acts pursuant to Article 291 of the Treaty on the Functioning of the European Union (TFEU) and in accordance with Article 15 of Regulation (EU) No 1095/2010.

(20)

The prospectus summary is a key and essential document that serves as guidance to support retail investors in better understanding and navigating through the whole prospectus and thus in making informed investment decisions. To make the prospectus summary more easily readable and comprehensible for retail investors, it is necessary to allow issuers to present or summarise information in the prospectus summary in the form of charts, graphs or tables, within the page limit set out in Article 7 of Regulation (EU) 2017/1129.

(21)

Regulation (EU) 2017/1129 allows issuers to extend the maximum length of the prospectus summary by one page when there is a guarantee attached to the securities, since information on both the guarantee and the guarantor needs to be provided. However, where there is more than one guarantor, an additional page might not be sufficient. It is therefore necessary to allow for the length of the prospectus summary to be further extended in the event of guarantees that are provided by more than one guarantor.

(22)

In order to ensure uniform conditions of application of the requirements regarding the prospectus summary, ESMA should be required to develop draft implementing technical standards to specify the template and layout of summaries, including the font size and style requirements. Furthermore, to help retail investors to navigate through the prospectus summary, ESMA should be required to develop guidelines on comprehensibility and on the use of plain language in summaries to ensure that the information provided therein is concise, clear and user friendly. The Commission should adopt those implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1095/2010.

(23)

Regulation (EU) 2017/1129 allows an issuer which has had a universal registration document approved by its competent authority for a period of two consecutive financial years to have the status of frequent issuer and be able to file all subsequent universal registration documents, and any amendments thereto, without prior approval. To reduce unnecessary burdens and incentivise the use of the universal registration document, that period should be reduced to one financial year. Such alleviation will not affect investor protection, as a universal registration document and any amendments thereto are not able to be used as the constituent part of a prospectus without being approved by the relevant competent authority. Furthermore, a competent authority is allowed to review a universal registration document which has been filed with it on an ex post basis whenever that competent authority deems it necessary and, where appropriate, request amendments.

(24)

To facilitate the IPO of private companies on the Union’s public markets and, in general, to reduce unnecessary costs and burdens for companies that offer securities to the public or seek admission to trading on a regulated market, the prospectus for both equity and non-equity securities should be significantly streamlined, while ensuring that a sufficiently high level of investor protection is maintained.

(25)

While being too prescriptive for SMEs, it appears that the level of disclosure in the EU Growth Prospectus would be fit for purpose for companies seeking admission to trading on a regulated market. It is therefore appropriate to align Annexes I, II and III to Regulation (EU) 2017/1129 to the level of disclosure of the EU Growth prospectus, by taking as reference the related Annexes laid down in Delegated Regulation (EU) 2019/980.

(26)

Due to the growing importance of sustainability considerations in investment decisions, investors are increasingly considering information on environmental, social and governance (ESG) matters when taking informed investment decisions. It is therefore necessary to prevent greenwashing by establishing the ESG-related information to be provided, where relevant, in the prospectus for equity or non-equity securities offered to the public or admitted to trading on a regulated market. That requirement should, however, not overlap with the requirement laid down in other Union legislative acts to provide that information. Companies that offer equity securities to the public or seek the admission to trading of equity securities on a regulated market should therefore incorporate by reference in the prospectus, for the periods covered by the historical financial information, the management and consolidated management reports, which include the sustainability reporting, as required by Directive 2013/34/EU of the European Parliament and of the Council (13). Moreover, the Commission should be empowered to set out schedules specifying the ESG-related information to be included in prospectuses for non-equity securities that are advertised as taking into account ESG factors or pursuing ESG objectives. The Commission should ensure consistency between the information required to be disclosed in a prospectus and, where applicable, the sustainability disclosures required under Directive 2013/34/EU or, where applicable, those under Regulation (EU) 2023/2631 of the European Parliament and of the Council (14), without undermining the voluntary nature of the label and of the opt-in templates set out in that Regulation.

(27)

Article 14 of Regulation (EU) 2017/1129 provides for the possibility to draw up a simplified prospectus for secondary issuances by companies already admitted to trading on a regulated market or a SME growth market continuously for at least 18 months. However, the level of disclosure of the simplified prospectuses for secondary issuances is still considered too prescriptive and too close to that of a standard prospectus to make a significant difference for secondary issuances of companies whose securities are already admitted to trading on a regulated market or an SME growth market and that are subject to periodic and ongoing disclosure requirements. To make the listing documentation easier to understand, and thus to make investor protection more effective, while reducing costs and burdens for issuers, a new and more efficient ‘EU Follow-on prospectus’ for such secondary issuances should be introduced. However, to limit burdens for issuers and to protect investors, it is necessary to provide for a transitional period for prospectuses approved under the simplified disclosure regime for secondary issuances before the date of application of the new regime. Such EU Follow-on prospectus should be available for several categories of issuers whose securities have been admitted to trading on a regulated market or an SME growth market continuously for at least the preceding 18 months, or offerors of such securities. Those criteria should ensure that such issuers have complied with the periodic and ongoing disclosure requirements laid down in Directive 2004/109/EC, where applicable, Regulation (EU) No 596/2014, or, where applicable, Delegated Regulation (EU) 2017/565.

(28)

To enable issuers to fully benefit from the EU Follow-on prospectus as an alleviated prospectus type, its scope should be broad and encompass public offers or admissions to trading on a regulated market of securities that are fungible or not fungible with securities already admitted to trading. Furthermore, to enable successful companies to scale up and benefit from greater exposure to a broader pool of investors, the EU Follow-on prospectus should be available to companies that are seeking to make a transition from an SME growth market to a regulated market, provided that their securities have been admitted to trading on an SME growth market continuously for at least the preceding 18 months. However, an issuer who has only non-equity securities admitted to trading on a regulated market or an SME growth market should not be allowed to draw up an EU Follow-on prospectus for the admission to trading on a regulated market of equity securities, as that requires the disclosure of a full prospectus to enable investors to take an informed investment decision.

(29)

Since 31 December 2022, the EU Recovery prospectus referred to in Regulation (EU) 2017/1129 is no longer able to be used. The EU Recovery prospectus had the advantage that it was composed of a single document that was limited in size, making it easy for issuers to draw it up and easy for investors to understand. For those reasons, where the EU Follow-on prospectus relates to shares and is subject to a page limit, the EU Follow-on prospectus could follow a similar model and should be subject to the same reduced scrutiny period as the EU Recovery prospectus. However, the limited scrutiny period should not apply in the case of a transfer from an SME growth market to a regulated market. Moreover, the requirements for the EU Follow-on prospectus should, for obvious reasons, not require Covid-19 crisis-related disclosures. As the EU Follow-on prospectus should replace both the simplified prospectus for secondary issuances and the EU Recovery prospectus, it should be permanent and available for secondary issuances of both equity and non-equity securities. In addition, its use should not be subject to any restrictions beyond the requirement of the minimum and continuous period of admission of the securities concerned to trading on a regulated market or an SME growth market.

(30)

The EU Follow-on prospectus should contain an alleviated summary as a useful source of information for retail investors. That summary should be set out at the beginning of the EU Follow-on prospectus and should focus on key information enabling investors to decide which offers to the public and admissions to trading of securities to study further, and subsequently to review the EU Follow-on prospectus as a whole to take an informed investment decision. However, the summary should not be required for the admission to trading of non-equity securities as referred to in Article 7(1) of Regulation (EU) 2017/1129.

(31)

In order to make the EU Follow-on prospectus a harmonised document and facilitate its readability for investors across the Union, irrespective of the jurisdiction where securities are offered to the public or admitted to trading on a regulated market, its format should be standardised for both equity and non-equity securities. For the same reason, the information in the EU Follow-on prospectus should be disclosed in a standardised sequence. However, in order to support secondary issuances of non-equity securities, including as part of offering programs, the scope of application of the EU Follow-on prospectus for non-equity securities should be broad, and provide issuers with the possibility to draw it up either as a single document, or as separate documents.

(32)

To improve the readability of the EU Follow-on prospectus and to make it easier for investors to analyse it and navigate through it, it should be subject to a page limit for secondary issuances of shares. A page limit would, in contrast, not be appropriate for the broad category of equity securities other than shares or non-equity securities, which include a wide range of different instruments, including complex ones. Furthermore, the following should be excluded from the page limit: the summary; information incorporated by reference, including a universal registration document approved by, or filed with, a competent authority; and information to be provided where the issuer has a complex financial history or has made a significant financial commitment, or in the case of a significant gross change.

(33)

One of the key objectives of the CMU is to facilitate the access of SMEs to public markets in the Union and to provide those SMEs with sources of funding other than bank lending and the opportunity to scale up and grow. The cost of producing a prospectus might be a deterrent for SMEs willing to offer securities to the public, considering the typically small size of the consideration of those offers. The EU Growth prospectus is a lighter prospectus, introduced by Regulation (EU) 2017/1129, and is available for SMEs and a few other categories of beneficiaries, including companies with a market capitalisation of up to EUR 500 million whose securities are already admitted to trading on an SME growth market. The EU Growth prospectus aimed to reduce the costs of preparing a prospectus for smaller issuers, while providing investors with material information to assess the offer and take an informed investment decision. While issuers who draw up an EU Growth prospectus can achieve quite substantial costs savings, the level of disclosure of an EU Growth prospectus is still considered too prescriptive and too close to that of a standard prospectus to make a significant difference for SMEs. There is therefore a need for an EU Growth issuance prospectus that has lighter requirements to make the listing documentation for SMEs even less complex and burdensome and to enable SMEs to achieve even more important savings. In order to limit burdens for issuers and to protect investors, it is, however, necessary to provide for a transitional period for EU Growth prospectuses approved before the date of application of the new regime.

(34)

The requirements concerning the content of the EU Growth issuance prospectus should be light, taking into account the level of disclosure of the EU Recovery prospectus and some of the most straightforward admission documents that some SME growth markets require issuers to produce in the case of an exemption from the obligation to publish a prospectus, the content of which is laid down in the SME growth markets’ rulebooks. The reduced information to be disclosed in an EU Growth issuance prospectus should be proportionate to the size of the companies listed on SME growth markets and their fundraising needs and ensure an adequate level of investor protection. Furthermore, the EU Growth issuance prospectus should consist of a single document, in order to make it an easy and straightforward document to be drawn up by companies, especially SMEs, and in order for it to be easily read by investors.

(35)

The EU Growth issuance prospectus should be available for SMEs, issuers other than SMEs whose securities are admitted or are to be admitted to trading on an SME growth market, and small unlisted companies whose total consideration for the securities offered to the public is not higher than EUR 50 000 000 over a period of 12 months. To avoid a two-tier disclosure standard on regulated markets depending on the size of the issuer, the EU Growth issuance prospectus should not be available for companies whose securities are already admitted or are to be admitted to trading on regulated markets. However, in order to facilitate an upgrade to a regulated market and to enable issuers to benefit from an exposure to a broader base of investors, issuers whose securities have already been admitted to trading on an SME growth market continuously for at least the preceding 18 months should be allowed to use an EU Follow-on prospectus to transfer to a regulated market.

(36)

The EU Growth issuance prospectus should contain an alleviated summary, as a useful source of information for retail investors, having the same format and content as the summary of the EU Follow-on prospectus. That summary should be set out at the beginning of the EU Growth issuance prospectus and should focus on key information enabling investors to decide which offers to the public of securities to study further, and subsequently to review the EU Growth issuance prospectus as a whole in order to take an informed investment decision.

(37)

The EU Growth issuance prospectus should be a harmonised document which is easy for issuers, especially SMEs, to draw up and easy for investors to read, irrespective of the jurisdiction within the Union where the securities concerned are offered to the public. Its format should therefore be standardised for both equity and non-equity securities and the information included in the EU Growth issuance prospectus should be disclosed in a standardised sequence. To further standardise and improve the readability of the EU Growth issuance prospectus and make it easier for investors to analyse it and navigate through it, a page limit should be introduced in the event that an EU Growth issuance prospectus is drawn up for issuances of shares. That page limit should also be effective in terms of providing the necessary information to enable investors to make informed investment decisions and efficient in terms of the lighter requirements as to the content of the EU Growth issuance prospectus. A page limit would, however, be inappropriate for the broad category of equity securities other than shares or non-equity securities, which encompass a wide range of different instruments, including complex ones. Furthermore, the following should be excluded from the page limit: the summary, any information incorporated by reference, and any information to be provided when the issuer has a complex financial history or has made a significant financial commitment, or in the case of a significant gross change.

(38)

The EU Follow-on prospectus and the EU Growth issuance prospectus should complement the standard prospectus in Regulation (EU) 2017/1129. Therefore, unless expressly stated otherwise, all references to ‘prospectus’ under Regulation (EU) 2017/1129 are to be understood as referring to all different forms of prospectuses, including the EU Follow-on prospectus and the EU Growth issuance prospectus. The voluntary nature of the prospectus types means that an issuer is permitted to choose one from among the prospectus types available when an offer to the public or admission to trading on a regulated market requires a prospectus.

(39)

In order to instil confidence in the use of the EU Follow-on prospectus and the EU Growth issuance prospectus, it is important that their effectiveness and scope are clear, as the EU Follow-on prospectus and the EU Growth issuance prospectus are subject to the same liability regime as a full prospectus, for both domestic and cross-border offers or admissions to trading. Therefore, where an issuer is entitled to use an EU Follow-on prospectus or an EU Growth issuance prospectus, both of which make the preparation of the transaction at stake more efficient and less onerous, and no other material considerations against the use of either of those prospectuses exist, the issuer’s choice from among the prospectus types available to the issuer should be protected and neither advisers nor competent authorities should drive the issuer towards drawing up a full prospectus where that is not strictly required.

(40)

Risk factors that are material and specific to the issuer and its securities should be mentioned in the prospectus. For that reason, risk factors are also to be presented in a limited number of risk categories depending on their nature. However, to ease the burden for issuers, the requirement to rank the most material risk factors should be replaced by a requirement to list, in each category, the most material risk factors in a manner which is consistent with the assessment undertaken by the issuer. To make the prospectus more comprehensible and make it easier for investors to take informed investment decisions, it is necessary to specify that issuers should not overload the prospectus with risk factors that are generic, that only serve as disclaimers, or that could conceal specific risk factors of which investors should be aware.

(41)

Under Article 17(1) of Regulation (EU) 2017/1129, where the final offer price or amount of securities to be offered to the public cannot be included in the prospectus, the investor has a withdrawal right which can be exercised within two working days of the filing of the final offer price or amount of securities to be offered to the public. To increase the level of investor protection, the period during which investors can exercise that withdrawal right should be extended.

(42)

Article 19 of Regulation (EU) 2017/1129 gives issuers the possibility to incorporate into the prospectus certain information by reference. That possibility was introduced to reduce the burden for issuers and to avoid duplication of information that has already been disclosed and published under other Union financial services law. The possibility to incorporate information by reference will be further facilitated in the future once investors are able to access it in a more efficient and effective way on the European single access point (‘ESAP’) established under Regulation (EU) 2023/2859 of the European Parliament and of the Council (15). ESAP should enable investors to find in one place the majority of relevant information, hence further facilitating access to information incorporated by reference in prospectuses. Furthermore, companies should be allowed to incorporate by reference on a voluntary basis information that is not to be disclosed in a prospectus, provided that such information fulfils the conditions laid down in Regulation (EU) 2017/1129 on incorporation by reference.

(43)

To remove unnecessary costs and burdens and to increase the efficiency and effectiveness of the incorporation into the prospectus of information by reference, it should be clarified that companies should not be required to publish a supplement for new annual or interim financial information in a base prospectus which is still valid, contrary to the situations specified in Delegated Regulation (EU) 2019/979. It should instead be possible for the new annual or interim financial information to be incorporated by reference in the base prospectus, provided that the requirements for incorporation by reference, such as electronic publication and language requirements, are fulfilled. However, companies should be allowed to voluntarily publish such information in a supplement.

(44)

Regulation (EU) 2017/1129 promotes the convergence and harmonisation of rules related to the scrutiny and approval of prospectuses by competent authorities. In particular, criteria for the scrutiny of the completeness, comprehensibility and consistency of the prospectus were laid down in Delegated Regulation (EU) 2019/980. That list of criteria is, however, not exhaustive, because it should allow for the possibility to take into account developments and innovations in financial markets. As a result, Delegated Regulation (EU) 2019/980 allows competent authorities to apply additional criteria for the scrutiny and approval of prospectuses where necessary for investor protection. The peer review report from ESMA pointed out that that possibility has created material differences in the way competent authorities apply additional scrutiny criteria and request issuers to provide additional information in the prospectus under their scrutiny.

(45)

To foster convergence and harmonisation of prospectus supervisory activity by competent authorities, which should provide certainty to issuers and confidence to investors, it is appropriate to specify the circumstances under which a competent authority may use such additional criteria, the type of additional information that competent authorities may require to be disclosed in addition to the information that is required for drawing up a prospectus, an EU Follow-on prospectus or an EU Growth issuance prospectus, including the type of additional information that may be required to be disclosed under the additional criteria, and the timeline for the approval of the prospectus.

(46)

In order to ensure that issuers are timely informed of the result of the scrutiny of their prospectus, competent authorities should be required to respect a clear deadline for their scrutiny. In the case of failure to take a decision on the prospectus within the set time limits, a competent authority should notify the reason for that failure to the issuer, the offeror or the person asking for admission to trading on a regulated market as well as to ESMA, which should publish on a yearly basis an aggregate report on the competent authorities’ compliance with the set time limits. Furthermore, Member States should ensure that appropriate measures are in place to address any failure by competent authorities to comply with the set time limits to take a decision on the prospectus. However, such failure should not be deemed to constitute approval of the application.

(47)

In addition, a maximum timeframe should be set for finalising the scrutiny procedure and for the competent authority’s decision on the prospectus. Given that the duration of the scrutiny procedure is influenced also by factors outside the control of the competent authority, the timeframe should be established as the maximum duration of the procedure overall, covering activities from both the person applying for approval of a prospectus and the competent authority. As it may be difficult to anticipate all situations where scrutiny cannot be finalised within the set timeframe, it is important to specify the conditions for possible derogations from that timeframe. In addition, in the same way as for the time limits laid down in Article 20 of Regulation (EU) 2017/1129, a failure by the competent authority to take a decision on the prospectus within that maximum timeframe should not be deemed to constitute approval of the prospectus. For the sake of legal clarity, the definition of ‘approval’ should also clarify that it does not concern the accuracy of the information in a prospectus.

(48)

ESMA’s peer review of the scrutiny and approval of prospectuses by competent authorities was conducted and the peer review report was published prior to the Commission proposal for this amending Regulation. Given that ESMA can conduct peer reviews at any time ESMA deems appropriate in accordance with Regulation (EU) No 1095/2010, it is not necessary to specify such a requirement in Regulation (EU) 2017/1129. Article 20(13) of Regulation (EU) 2017/1129, which requires ESMA to organise and conduct a peer review of the scrutiny and approval procedures of competent authorities, should therefore be removed.

(49)

Article 21(1) of Regulation (EU) 2017/1129 requires, for an IPO to the public of a class of shares that is admitted to trading on a regulated market for the first time, the publication of a prospectus at least six working days before the end of the offer. In order to foster swift book-building processes, especially in fast moving markets, and to increase the attractiveness of the inclusion of retail investors in such offers, the current minimum period of six days between the publication of the prospectus and the end of an offer of shares should be reduced, without affecting investor protection.

(50)

In order to collect data that support the assessment of the EU Follow-on prospectus and the EU Growth issuance prospectus, the storage mechanism referred to in Article 21(6) of Regulation (EU) 2017/1129 should cover both the EU Follow-on prospectus and the EU Growth issuance prospectus, which should be clearly differentiated from the other types of prospectuses.

(51)

To make the distribution of the prospectus to potential investors more sustainable, to increase digitalisation in the financial sector and to remove unnecessary costs, potential investors should no longer be entitled to request a paper copy of a prospectus. Therefore, a copy of the prospectus should be delivered to potential investors only in electronic format, upon request and free of charge.

(52)

Article 23(3) of Regulation (EU) 2017/1129 requires financial intermediaries to inform investors who have purchased or subscribed securities through that financial intermediary of the possibility of a supplement being published and, under certain circumstances, to contact those investors on the day when a supplement is be published. Regulation (EU) 2021/337 introduced paragraphs 2a and 3a to that Article, which provide for a more proportionate regime to reduce burdens for financial intermediaries, while maintaining a high level of investor protection. Those paragraphs specify which investors should be contacted by financial intermediaries when a supplement is published and extended both the deadline by which those investors are to be contacted and the deadline for those investors to exercise their withdrawal rights. In addition, those paragraphs specify that financial intermediaries should contact investors who purchase or subscribe securities at the latest at the closing of the initial offer period. That period refers to the period during which issuers or offerors offer securities to the public as prescribed in the prospectus and excludes subsequent periods during which securities are resold on the market. The regime introduced by Article 23(2a) and (3a) of Regulation (EU) 2017/1129 expired on 31 December 2022. Considering the overall positive feedback from stakeholders on that regime, it should be made permanent.

(53)

Article 23(2a) and (3a) of Regulation (EU) 2017/1129 extended the deadline to contact eligible investors about the publication of a supplement to the end of the first working day following that on which the supplement is published. To enable financial intermediaries to comply with that deadline, it is necessary to lay down that financial intermediaries will only be required to inform those investors who agreed to be contacted by electronic means, for example by email, about the publication of a supplement. Furthermore, financial intermediaries should offer those investors that indicated their wish to be contacted only by means other than electronic ones an opt-in for electronic contact, for the purpose of receiving notification of the publication of a supplement. It is also necessary to oblige financial intermediaries to point out to those investors that do not agree to be contacted by electronic means and refuse the opt-in for electronic contact that they can consult the issuer’s or the financial intermediary’s website to check whether a supplement is published.

(54)

Diverging interpretations on whether an issuer should be allowed to supplement a base prospectus to introduce other securities, or securities with different features than the ones for which that base prospectus has been approved, have led to a lack of convergence between Member States. In order to ensure investor protection and foster regulatory convergence across the Union, it is therefore appropriate to lay down that a supplement to a base prospectus should not be used to introduce a new type of security for which the necessary information has not been included in that base prospectus unless doing so is necessary to comply with capital requirements under Union law or national law transposing Union law. Furthermore, to further foster convergence on the use of the base prospectus, ESMA should provide additional clarity by means of guidelines on the circumstances in which a supplement is to be considered to introduce a new type of security that is not already described in a base prospectus.

(55)

Article 27 of Regulation (EU) 2017/1129 requires issuers to produce translations of their prospectus to enable authorities and investors to appropriately scrutinise those prospectuses and to assess risks. In most cases, a translation must be provided in at least one of the official languages accepted by the competent authorities of each Member State where an offer is made or admission to trading is sought. To significantly reduce unnecessary burdens, companies should be allowed to draw up the prospectus in a language customary in the sphere of international finance, irrespective of whether the offer or admission to trading is domestic or cross-border, while the translation requirement should be limited to the prospectus summary to ensure the protection of retail investors. However, a Member State should be allowed to opt out and instead require that the prospectus for an offer of securities to the public or an admission to trading on a regulated market which is sought only in that Member State is drawn up in a language accepted by the competent authority of that Member State. In such cases, that Member State should be required to notify the Commission and ESMA of its decision. To provide transparency to issuers and investors, ESMA should publish on its website a list of the languages accepted by the competent authorities of each Member State for an offer of securities to the public or an admission to trading on a regulated market which is sought only in that Member State.

(56)

Article 29 of Regulation (EU) 2017/1129 currently requires that a prospectus drawn up and approved in accordance with, and subject to, the national laws of a third country (‘third country prospectus’), is approved by the competent authority of the home Member State of the issuer of the securities concerned, irrespective of whether that third country prospectus has already been approved by the relevant third country authority. That Article also requires the Commission to adopt a decision stating that the information requirements imposed by the national law of such a third country are equivalent to the requirements under Regulation (EU) 2017/1129. To facilitate the access of third-country issuers, including SMEs, to public markets in the Union and provide investors in the Union with additional investment opportunities, while ensuring their protection, it is necessary to amend the provisions on the equivalence regime. It should be clarified that, in the case of an admission to trading on a regulated market, or of an offer of securities to the public in the Union, equivalent third country prospectuses that have already been approved by the third country supervisory authority, are only to be filed with the competent authority of the home Member State. Furthermore, the general equivalence criteria, which are currently to be based on the requirements laid down in Articles 6, 7, 8 and 13 of Regulation (EU) 2017/1129, should be expanded to encompass provisions on liability, validity of the prospectus, risk factors, scrutiny, approval and publication of the prospectus and supplements. To ensure the protection of investors in the Union, it is also necessary to specify that the third-country prospectus is to entail all the rights and obligations provided for under Regulation (EU) 2017/1129. Third-country issuers are also allowed to use the procedure under Article 28 of Regulation (EU) 2017/1129 for any type of offers of securities to the public or admissions to trading on a regulated market, by drawing up a prospectus in accordance with that Regulation.

(57)

Effective cooperation with the supervisory authorities of third countries concerning the exchange of information with those authorities and the enforcement of obligations under Regulation (EU) 2017/1129 in third countries is necessary to protect investors in the Union and ensure a level playing field between issuers established in the Union and third-country issuers. In order to ensure an efficient and consistent exchange of information with supervisory authorities, the competent authorities of the Member States or ESMA, upon the request of at least one competent authority, should establish cooperation arrangements with the relevant supervisory authorities of third countries, and the Commission should be empowered to determine the minimum content and the template to be used for such arrangements. Furthermore, ESMA should facilitate the coordination of the development of cooperation arrangements between competent authorities and the relevant supervisory authorities of third countries and, where necessary, the distribution to competent authorities of the information obtained from supervisory authorities of third countries that might be relevant to measures to be taken under Articles 38 and 39 of Regulation (EU) 2017/1129. However, in order to ensure investor protection, it is necessary that third countries that are in the EU list of non-cooperative tax jurisdictions for tax purposes or the list of jurisdictions which have strategic deficiencies in their national anti-money laundering and in countering the financing of terrorism regimes that pose significant threats to the financial system of the Union should be excluded from such cooperation arrangements.

(58)

It is necessary to ensure that the EU Follow-on prospectus, the EU Growth issuance prospectus and related prospectus summaries are subject to the same administrative sanctions and other administrative measures as other prospectuses. Those sanctions and measures should be effective, proportionate and dissuasive and ensure a common approach in Member States.

(59)

Article 47 of Regulation (EU) 2017/1129 requires ESMA to publish every year a report containing statistics on the prospectuses approved and notified in the Union and an analysis of trends. It is necessary to lay down that that report should also contain statistical information about the EU Growth issuance prospectuses, differentiated by types of issuers, and should analyse the usability of disclosure regimes applicable under the EU Follow-on prospectus, the EU Growth issuance prospectuses and the universal registration documents. That report should also analyse the new exemption for secondary issuances of securities fungible with securities already admitted to trading on a regulated market or on an SME growth market. Furthermore, that report should include, based on a report provided by ESMA to the Commission, an analysis of whether the scrutiny and approval procedures of competent authorities ensure supervisory convergence throughout the Union and remain appropriate in light of their pursued objectives. Finally, that report should include an analysis of whether the possibility for Member States to require national disclosures below the relevant exemption threshold of EUR 12 000 000 or EUR 5 000 000 for an offer of securities to the public is conducive to converging national disclosure requirements and whether those national disclosures constitute an obstacle to the offer of securities to the public in those Member States.

(60)

The Commission should, after an appropriate period following the date of application of this amending Regulation, review the application of Regulation (EU) 2017/1129 and assess in particular whether the provisions on the prospectus summary, on the disclosure regimes for the EU Follow-on prospectus, on the EU Growth issuance prospectus and on the universal registration document remain appropriate to meet their objectives. It is also necessary to lay down that that report should analyse the relevant data, trends and costs in relation to the EU Follow-on prospectus and the EU Growth issuance prospectus. In particular, that report should assess whether those new regimes strike the proper balance between investor protection and the reduction of administrative burden. Given the importance of ensuring that the CMU gathers momentum, and that it reflects market realities as soon as possible after they occur, the appropriate period for the conduct of such reviews by the Commission needs to be shorter than that which was the case prior to the adoption of this amending Regulation. The Commission should also assess whether further harmonisation of the provisions on prospectus liability is warranted and, if so, consider amendments to the liability provisions set out in Regulation (EU) 2017/1129.

(61)

Regulation (EU) No 596/2014 establishes a robust framework to preserve market integrity and investor confidence by preventing insider dealing, unlawful disclosure of inside information and market manipulation. It subjects issuers to several disclosure and record-keeping obligations and requires issuers to disclose inside information to the public. Six years after the entry into force of Regulation (EU) No 596/2014, feedback from stakeholders collected in the context of public consultations and expert groups highlighted that some aspects of that Regulation place a particularly high burden on issuers. It is therefore necessary to enhance legal clarity, address disproportionate requirements for issuers and increase the overall attractiveness of Union capital markets, while ensuring an appropriate level of investor protection and market integrity.

(62)

Articles 14 and 15 of Regulation (EU) No 596/2014 prohibit insider dealing, the unlawful disclosure of inside information and market manipulation. Article 5 of that Regulation, however, contains an exception to those prohibitions for buy-back programmes and stabilisation. For a buy-back programme to benefit from that exemption, issuers are obliged to report to all competent authorities of the trading venues on which the shares have been admitted to trading or are traded each transaction relating to the buy-back programme, including information specified in Regulation (EU) No 600/2014 of the European Parliament and of the Council (16). In addition, issuers are obliged to subsequently disclose the trades to the public. Those obligations are overly cumbersome. It is therefore necessary to simplify the reporting procedure by requiring an issuer to report information on the buy-back programme transactions only to the competent authority of the most relevant market in terms of liquidity for its shares. It is also necessary to simplify the disclosure obligation by allowing an issuer to only disclose to the public aggregated information which indicates the aggregated volume and the weighted average price per day and per trading venue.

(63)

The notion of inside information set out in Article 7(1), point (d), of Regulation (EU) No 596/2014 is too limited in that it only applies to persons charged with the execution of orders concerning financial instruments, whereas in practice other persons might also be aware of a forthcoming order or transaction. That notion should therefore be expanded to also cover cases where information is passed by virtue of management of a proprietary account or of a managed fund, and in particular to cover all categories of persons that may be aware of a future order.

(64)

According to Article 11(1) of Regulation (EU) No 596/2014, a market sounding comprises the communication of information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and the conditions relating to it, such as its potential size or pricing, to one or more potential investors. A market sounding is an established practice which contributes to efficient capital markets. A market sounding may, however, require the disclosure of inside information to potential investors and expose the parties involved to legal risks. The definition of market sounding should be broad in order to cater for the different typologies of soundings and different practices across the Union. The definition of a market sounding should therefore also include communications of information not followed by any specific announcement of a transaction, as inside information might be disclosed to potential investors also in that case and issuers should be able to benefit from the protection afforded by Article 11 of Regulation (EU) No 596/2014.

(65)

Article 11(4) of Regulation (EU) No 596/2014 provides that the disclosure of inside information in the course of a market sounding is deemed to be made in the normal exercise of a person’s employment, profession or duties, and therefore does not constitute unlawful disclosure of inside information, where the disclosing market participant, in addition to the mandatory requirements laid down in Article 11(3) and in Article 11(6), complies with the requirements laid down in Article 11(4) of that Regulation. In order to avoid an interpretation whereby disclosing market participants carrying out a market sounding are obliged to comply with all of the requirements set out in Article 11(4) of Regulation (EU) No 596/2014, it should be specified that the market sounding regime and the requirements in Article 11(4) are optional for the disclosing market participants and entail the protection from the allegation of unlawful disclosure of inside information. At the same time, while there should be no presumption that disclosing market participants that do not comply with the requirements set out in Article 11(4) of Regulation (EU) No 596/2014 when conducting a market sounding have unlawfully disclosed inside information, those disclosing market participants should not be able to take advantage of the protection afforded to market participants that do comply with those requirements. To ensure the possibility for competent authorities to obtain an audit trail of a process that may imply disclosure of inside information to third parties, it should also be specified that the requirements set out in Article 11(3) and (6) of Regulation (EU) No 596/2014 are mandatory for all disclosing market participants, regardless of whether the optional procedure in Article 11(4) of that Regulation is followed.

(66)

Liquidity in an issuer’s shares can be enhanced through liquidity provision activities, including market making arrangements or liquidity contracts. A market making arrangement comprises a contract between the market operator and a third party who commits to maintaining the liquidity in certain shares and, in return, benefits from rebates on trading fees. A liquidity contract comprises a contract between an issuer and a third party who commits to provide liquidity in the shares of the issuer, and on its behalf. Regulation (EU) 2019/2115 introduced into Article 13 of Regulation (EU) No 596/2014 the possibility for issuers of financial instruments admitted to trading on SME growth markets to enter into a liquidity contract with a liquidity provider, provided certain conditions are met. One of those conditions is that the market operator or the investment firm operating the SME growth market has acknowledged in writing to the issuer that it has received a copy of the liquidity contract and has agreed to that contract’s terms and conditions. The operator of an SME growth market is not, however, a party to a liquidity contract and the requirement that such operator has agreed to the liquidity contract’s terms and conditions leads to excessive complexity. In order to remove that complexity and to foster liquidity provisions on those SME growth markets, it is appropriate to remove the requirement for operators of SME growth markets to agree to the terms and conditions of liquidity contracts.

(67)

The prohibition of insider dealing has the objective of preventing any possible exploitation of inside information and should apply as soon as that information is available. The requirement to disclose inside information aims, primarily, to enable investors to take well-informed decisions. When information is disclosed at a very early stage and is of a preliminary nature, it might mislead investors, rather than contribute to efficient price formation and address information asymmetry. Therefore, in a protracted process, the disclosure requirement should not cover announcements of mere intentions, ongoing negotiations or, depending on the circumstances, the progress of negotiations, such as a meeting between company representatives. The issuer should only disclose information related to the particular circumstances or the particular event that the protracted process intends to bring about or results in (‘final event’), as soon as possible after the occurrence of such circumstances or event. For instance, in the case of a merger, disclosure should be made as soon as possible after the management has taken the decision to sign off on the merger agreement, once the core elements of the merger have been agreed upon. In general, for contractual agreements the final event should be deemed to have occurred when the core conditions of that agreement have been agreed upon. In the case of non-protracted processes related to a one-off event or set of circumstances, notably when the occurrence of that event or set of circumstances does not depend on the issuer, the disclosure should take place as soon as the issuer becomes aware of that event or set of circumstances.

(68)

The exact identification of the moment when a set of circumstances or an event becomes final is not always straightforward. In order to enable the issuer to identify the moment when disclosure of the inside information is required, the Commission should be empowered to adopt a delegated act to set out a non-exhaustive list of final circumstances or final events in protracted processes which would trigger the obligation to disclose the information and, for each event or circumstance, the moment when the event or circumstance is deemed to have occurred.

(69)

Issuers should ensure the confidentiality of information related to intermediate steps where the circumstances or event that a protracted process intends to bring about or results in have not yet been disclosed. Once there has been disclosure of those circumstances or that event, the issuer should no longer be required to protect the confidentiality of the information related to intermediate steps.

(70)

There might be cases where an issuer needs to postpone the disclosure of certain circumstances or events after they have occurred. Article 17(4) of Regulation (EU) No 596/2014 provides that an issuer or an emission allowance market participant, may, on its own responsibility, delay disclosure to the public of inside information provided that certain conditions are met. Non-disclosure by an issuer of inside information related to intermediate steps in a protracted process should not be subject to the requirements laid down in Article 17(4) of Regulation (EU) No 596/2014. To ensure legal certainty for the issuer or the emission allowance market participant and a consistent interpretation of the conditions for delaying the disclosure of inside information, those conditions should be clarified by direct reference to previous public statements or other types of communications by the issuer or the emission allowance market participant. In order to provide further clarification, the Commission should be empowered to adopt a delegated act setting out a non-exhaustive list of situations in which the inside information that the issuer or the emission allowance market participant intends to delay is in contrast with the latest public announcement or other type of communication by the issuer or emission allowance market participant on the same matter to which the inside information refers.

(71)

Article 18(1) of Regulation (EU) No 596/2014 obliges issuers and any person acting on their behalf or on their account to draw up and to keep updated a list of all persons who have access to inside information and who are working for them under a contract of employment, or otherwise perform tasks through which they have access to inside information, including advisers, accountants and credit rating agencies. Article 18(6) of Regulation (EU) No 596/2014, however, limits that obligation for issuers whose financial instruments are admitted to trading on an SME growth market so that those issuers are required to include in their insider lists only those persons who, due to the nature of their function or position within the issuer, have regular access to inside information.

(72)

In some Member States, insider lists are considered particularly important for ensuring a high level of market integrity. For that reason, Article 18(6), second subparagraph, of Regulation (EU) No 596/2014 allows Member States to require issuers on SME growth markets to draw up more extensive insider lists that include all persons who have access to inside information, albeit on the basis of an alleviated format, requiring less information. To avoid excessive regulatory burden, while maintaining the essential information for competent authorities to investigate market abuse breaches, such an alleviated format should be used for all insider lists.

(73)

Article 19 of Regulation (EU) No 596/2014 provides for preventive measures against market abuse and, more specifically, insider dealing, concerning persons discharging managerial responsibilities and persons closely associated with them. Such measures range from the notification of transactions in financial instruments of the relevant issuer to the prohibition to conduct transactions in such instruments during certain defined periods. In particular, Article 19(8) of Regulation (EU) No 596/2014 provides that persons discharging managerial responsibilities are required to notify the issuer and the competent authority where those persons have transactions reaching the threshold of EUR 5 000 in a calendar year, as well as any subsequent transaction in the same year. The notifications concern, as regards issuers, transactions conducted by persons discharging managerial responsibilities or persons closely associated with them on their own account relating either to the shares or debt instruments of that issuer, or to derivatives or other financial instruments linked thereto. Article 19(9) of Regulation (EU) No 596/2014 provides that competent authorities are able to increase the threshold to EUR 20 000.

(74)

In order to avoid an undue requirement for persons discharging managerial responsibilities to report, and for companies to disclose, transactions which would not be meaningful to investors, it is appropriate to raise the threshold for reporting and related disclosures from EUR 5 000 to EUR 20 000. At the same time competent authorities should be given flexibility to increase that threshold to EUR 50 000 or to decrease it to EUR 10 000, where justified in light of national market conditions.

(75)

Article 19(11) of Regulation (EU) No 596/2014 prohibits persons discharging managerial responsibilities from trading, during a period of 30 calendar days before the issuer’s financial reporting (closed period), shares or debt instruments of the issuer or derivatives or other financial instruments linked to them, unless the issuer gives its consent and specific circumstances are met. That exemption from the closed period requirement currently includes employee shares or saving schemes as well as qualifications or entitlement of shares. In order to promote consistency of rules across different asset classes that exemption should be expanded to include among the exempted employees’ schemes those concerning financial instruments other than shares and also to cover the qualification or entitlement of instruments other than shares.

(76)

Certain transactions or activities carried out by the person discharging managerial responsibilities during the closed period might relate to irrevocable arrangements entered into outside of a closed period. Those transactions or activities might also result from a discretionary asset management mandate executed by an independent third party under a discretionary asset management mandate. Such transactions or activities might also be the consequence of duly authorised corporate actions not implying advantageous treatment for the person discharging managerial responsibilities. Furthermore, those transactions or activities might be the consequence of the acceptance of inheritances, gifts and donations, or the exercise of options, futures, or other derivatives agreed outside the closed period. Such activities and transactions, do not, in principle, involve active investment decisions by the persons discharging managerial responsibilities. Prohibiting such transactions or activities throughout the closed period would excessively restrict the freedom of persons discharging managerial responsibilities, as there is no risk that they will benefit from an informational advantage. In order to ensure that the prohibition to trade during the closed period applies only to transactions or activities that depend on the wilful investment activity of the person discharging managerial responsibilities, that prohibition should not cover transactions or activities that depend exclusively on external factors or that do not involve active investment decisions by the persons discharging managerial responsibilities.

(77)

The increasing integration of markets heightens the risk of cross-border market abuse. To protect market integrity, competent authorities should cooperate in a swift and timely manner, also with ESMA. To strengthen such cooperation, ESMA should be able to act at the initiative of one or more competent authorities to facilitate the collaboration of competent authorities with the possibility of coordinating any investigation or inspection that has cross-border effect. Collaboration platforms established by the European Insurance and Occupational Pensions Authority have proven to be useful as a supervisory tool to strengthen the exchange of information and to enhance collaboration among authorities. It is therefore appropriate to introduce the possibility also for ESMA to, at the initiative of one or more competent authorities, set up and coordinate such platforms in the field of securities markets when there are concerns about market integrity or the proper functioning of markets. Considering the strong relations between financial and spot markets, ESMA should also, at the initiative of one or more competent authorities, be able to set up such platforms with public bodies monitoring wholesale commodity markets, including the Agency for the Cooperation of Energy Regulators (ACER), when such concerns affect both financial and spot markets.

(78)

The monitoring of order data is crucial for the surveillance of market activity. Competent authorities should therefore have easy access to the data that they need for their supervisory activity. Some of those data concern instruments that are traded in a trading venue located in another Member State. To enhance the effectiveness of supervision, competent authorities should set up a mechanism to exchange order data on an ongoing basis. To ensure that the scope of that mechanism for exchanging order data is proportionate to its use, only competent authorities that supervise markets that have a high level of cross-border activity should be obliged to participate in that mechanism. Member States whose competent authorities would have an interest in taking part in the mechanism on a voluntary basis should comply with the same provisions and contribute to the funding of the mechanism. ESMA has demonstrated its expertise in setting up data exchange hubs, such as the exchange of transaction reporting data through the proven implementation of the Transaction Reporting Exchange Mechanism (TREM) or through the Single Access Point to EMIR Transaction Data through the implementation of the Trade Reporting and Compliance Engine(TRACE). Therefore, participating competent authorities should be able to set up the new mechanism to exchange order data by delegating the project development to ESMA. The list of trading venues that have a significant cross-border dimension should be determined by the Commission in delegated acts by taking into account, for each class of financial instruments, at least the trading volume on the trading venue as well as the trading volume on that trading venue in financial instruments for which the competent authority of the most relevant market differs from the competent authority of the trading venue. In order to provide legal certainty and not to delay the implementation of the mechanism, the criteria for the determination of trading venues with a significant cross-border dimension should be set in this Regulation with specific thresholds set for shares. To ensure that the criteria remain workable and flexible enough to take into account the developments of financial markets and the need for effective supervision, the Commission should be empowered to amend and update over time the list of designated trading venues by means of a delegated act, while ensuring proportionality, and to ask ESMA for an opinion. Furthermore, that mechanism for exchanging order data should at first only concern shares, before being extended to bonds and futures, considering the relevance of those financial instruments in terms of both cross-border trading and market manipulation. However, to ensure that such mechanism for exchanging order data reflects developments in financial markets as well as the capacity of competent authorities to process new data, the Commission should be empowered to further broaden the scope of instruments whose order data can be exchanged through that mechanism and potentially postpone the inclusion of bonds and futures, taking into account ESMA’s analysis of the deployment of the mechanism, particularly in terms of costs.

(79)

To enhance the monitoring of orders through technological developments and reinforce market integrity, competent authorities should be able to access order data not only on an ad hoc request, but also on an ongoing basis. Moreover, to facilitate the processing of order data by national competent authorities, it is necessary to harmonise the format of such data.

(80)

The risk of an inadvertent breach of the disclosure requirements under Regulation (EU) No 596/2014 and associated administrative sanctions are an important factor that dissuades companies from seeking admission to trading. To avoid an excessive burden on companies, in particular SMEs, including micro enterprises, the final amount of sanctions for infringements committed by legal persons in relation to disclosure requirements should be proportionate to the size of the company. Article 30(2), points (j)(iii) and (iv), of Regulation (EU) No 596/2014 establishes a minimum of the maximum amount of the sanctions that can be imposed by a national competent authority for an infringement related to the disclosure regime. To ensure proportionality, such amounts should be determined, as a general rule, based on the total annual turnover of the company. Nevertheless, where by applying the maximum established in national law based on the total annual turnover, the final amount of the sanction imposed would be disproportionately low in light of the circumstances set out in Article 31 of Regulation (EU) No 596/2014, Member States should ensure that national competent authorities may increase the final amount of sanctions, by taking into account the maximum established in national law, as expressed in absolute amounts. In those cases, it is also appropriate to allow each Member State in its national law to apply a lower maximum level of sanctions for SMEs, as expressed in absolute amounts, as a way of ensuring their proportionate treatment. Nevertheless, a Member State should be allowed to establish in its national law the same maximum level as expressed in absolute amounts for all types of issuers.

(81)

When processing personal data within the framework of Regulation (EU) No 596/2014, competent authorities should comply with Regulation (EU) 2016/679 of the European Parliament and of the Council (17). With regard to the processing of personal data by ESMA within the framework of that Regulation, ESMA should comply with Regulation (EU) 2018/1725 of the European Parliament and of the Council (18). In particular, ESMA and national competent authorities should keep personal data for no longer than is necessary for the purposes for which the personal data are processed.

(82)

In order to specify the requirements set out in this Regulation, in accordance with its objectives, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of specifying the content and the standardised format as well as the standardised sequence of the prospectus, the base prospectus and the final terms, specifying the minimum information to be included in the universal registration document„ specifying the reduced content and the standardised format as well as the standardised sequence for the EU Follow-on prospectus and for the EU Growth issuance prospectus, fostering supervisory convergence by specifying the criteria for scrutiny and the procedures for the approval of the prospectus by competent authorities, further specifying general equivalence criteria for prospectuses drawn up by third country issuers, determining the minimum content of cooperation arrangements between competent authorities or, where requested by at least one of those authorities, ESMA and third country supervisory authorities, pursuant to Regulation (EU) 2017/1129, as well as setting out and reviewing a non-exhaustive list of final events in protracted processes and situations where disclosure should not be delayed, expanding the list of financial instruments to enable competent authorities to obtain order data, establishing and updating a list of designated trading venues with a significant cross-border dimension in shares, pursuant to Regulation (EU) No 596/2014. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (19). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(83)

In order to ensure uniform conditions for the implementation of this Regulation, the Commission should be empowered to adopt implementing technical standards developed by ESMA, with regard to: the template and layout of prospectuses, including the font size and style requirements, depending on the type of prospectus and the type of investors targeted; the template and layout of the summaries of prospectuses, including the font size and style requirements; the alleviated format of insider lists; the appropriate arrangements required by the mechanism for the exchange of order data; and the appropriate arrangements, systems and procedures for trading venues to set up a mechanism for the ongoing and timely exchange of such data, including format and deadlines for the provision of the data requested by a competent authority. The Commission should adopt those implementing technical standards by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1095/2010.

(84)

Since the objectives of this Regulation cannot be sufficiently achieved by the Member States, as the measures introduced require full harmonisation across the Union, but can rather, by reason of scale and effects be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(85)

Regulations (EU) No 596/2014, (EU) No 600/2014 and (EU) 2017/1129 should therefore be amended accordingly,

(1)

Article 1 is amended as follows:

(2)

Article 2 is amended as follows:

(3)

in Article 3, paragraphs 1 and 2 are replaced by the following:

(4)

in Article 4, paragraph 1 is replaced by the following:

(5)

in Article 5(1), the first subparagraph is replaced by the following:

‘Any subsequent resale of securities which were previously the subject of one or more of the types of offer of securities to the public listed in Article 1(4), points (a) to (db), shall be considered as a separate offer and the definition set out in Article 2, point (d), shall apply for the purpose of determining whether that resale is an offer of securities to the public. The placement of securities through financial intermediaries shall be subject to publication of a prospectus unless one of the exemptions listed in Article 1(4), points (a) to (db), applies in relation to the final placement.’

(6)

Article 6 is amended as follows:

(7)

Article 7 is amended as follows:

(8)

in Article 9(2), the second subparagraph is replaced by the following:

‘After the issuer has had a universal registration document approved by the competent authority for one financial year, subsequent universal registration documents may be filed with the competent authority without prior approval.’

(9)

in Article 11(2), second subparagraph, the introductory part is replaced by the following:

‘However, Member States shall ensure that no civil liability shall attach to any person solely on the basis of the summary pursuant to Article 7, including any translation thereof, unless:’

(10)

Article 13 is amended as follows:

(11)

Article 14 is deleted;

(12)

Article 14a is replaced by the following:

(*7)  Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (OJ L 87, 31.3.2017, p. 1).’;"

(13)

Article 15 is deleted;

(14)

the following article is inserted:

(15)

in Article 16, paragraph 1 is replaced by the following:

(16)

in Article 17(1), point (a) is replaced by the following:

;

(17)

Article 19 is amended as follows:

(18)

Article 20 is amended as follows:

(19)

Article 21 is amended as follows:

(20)

Article 23 is amended as follows:

(21)

Article 27 is amended as follows:

(22)

Article 29 is replaced by the following:

(23)

Article 30 is replaced by the following:

(*8)  Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).’;"

(24)

in Article 38(1), first subparagraph, point (a) is replaced by the following:

;

(25)

in Article 40, the second subparagraph is replaced by the following:

‘For the purposes of Article 20, a right of appeal shall also apply where the competent authority has neither taken a decision to approve or to refuse an application for approval nor has made any request for changes or supplementary information within the time limits set out in Article 20(2), (3), (6) and (6a) in respect of that application.’

(26)

Article 44 is amended as follows:

(27)

Article 47 is amended as follows:

(28)

Article 47a is deleted;

(29)

in Article 48, paragraphs 1 and 2 are replaced by the following:

(30)

the following article is added:

(31)

Annexes I to Va are amended in accordance with the Annex to this Regulation.

(1)

in Article 3, the following point is added:

;

(2)

Article 5 is amended as follows:

(3)

in Article 7(1), point (d) is replaced by the following:

;

(4)

Article 11 is amended as follows:

(5)

in Article 13(12), first subparagraph, point (d) is replaced by the following:

;

(6)

Article 17 is amended as follows:

(7)

Article 18 is amended as follows:

(8)

Article 19 is amended as follows:

(9)

in Article 23(2), point (g) is replaced by the following:

;

(10)

in Article 25 the following paragraph is inserted:

(11)

the following articles are inserted:

(12)

Article 28 is deleted;

(13)

Article 29 is replaced by the following:

(*9)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).’;"

(14)

Article 30 is amended as follows:

(15)

in Article 31, paragraph 1 is replaced by the following:

(16)

Article 35 is amended as follows:

(17)

Article 38 is amended as follows: