Following the political agreement between the European Council and European Parliament on the EU Listing Act, a new report by CFA Institute and BETTER FINANCE finds that investment professionals and retail investors believe the listing package needs to better support SMEs to more efficiently access capital markets for their funding needs.
The European Parliament’s plenary vote on the Act took place in April, and ahead of the vote, the report emphasises the necessity for Member States to judiciously adopt any multiple voting rights shares (MVRS) directives.
The Listing Act’s proposals outlined in the political agreement include an amendment to the Prospectus Regulation that promises to reduce issuer burdens and enhance transparency for investors. However, the surveys found that there were several additional solutions that have the potential to reduce barriers for SMEs. Specifically, concerns related to the introduction of a directive on MVRS, as respondents felt allowing deviations from the ‘one share, one vote’ principle would encourage discrimination among shareholders.
Josina Kamerling, Head of Regulatory Outreach for CFA Institute in EMEA, said: “SMEs account for 99% of all businesses in the EU, so it is imperative they’re able to easily access financing from the public capital market. Although the EU Listing Act includes a series of recommendations to provide a more flexible regulatory environment for SMEs, our findings from both professional and retail investors set out additional recommendations for consideration.
“Specifically, we recommend further refinement of the suggested policy around the introduction of an MVRS directive, to effectively reconcile market integrity, investor protection and proportionality. Moreover, legislative debate would merit further consideration of the views of key stakeholders ahead of finalisation. We strongly urge policymakers and member states to review the recommendations ahead of April’s plenary vote.”
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