Euronext Growth, the secondary market for equities listed in Ireland, has been designated as an SME Growth Market for the purposes of the Markets in Financial Instruments Directive II (2014/65/EU) (MiFID II).
This designation means that there will be fewer regulatory obligations for issuers listed on this market including:
- inside information may now be disclosed on Euronext Growth’s website instead of on the relevant issuer’s website;
- an exemption from the requirements to draw up insider lists applies provided certain conditions are met;
- an option to elect to draw up an EU Growth prospectus applies where a prospectus must be prepared in accordance with the Prospectus Regulation.
In addition to reduced administrative burdens, as Euronext Growth is now an SME Growth Market, certain information will have to be maintained on the issuer’s website for 5 years, including annual and semi-annual financial statements.
Background – SME growth markets
Under MiFID II, a sub-category of market was created entitled the ‘SME Growth Market’ to facilitate the access to capital markets by SMEs by reducing the administrative burdens associated with a market listing.
On 29 October 2019, Euronext Growth was designated as an SME Growth Market. This follows the designation earlier this year of the London Stock Exchange’s AIM market, which is broadly equivalent to Euronext Growth, as an SME Growth Market.
As a result of this new designation, issuers listed on Euronext Growth are subject to altered reporting requirements.
Market Abuse Regulation – Less onerous insider dealing obligations for SME issuers
As a result of this new designation, issuers on Euronext Growth are no longer required to disclose inside information on their own website and may post such information on Euronext Growth’s website instead.
In addition, and likely of more benefit from an administrative perspective, relevant issuers are no longer obliged to draw up an insider list, provided that:
- the issuer takes all reasonable steps to ensure that any person with access to inside information acknowledges the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information; and
- the issuer is able to provide the competent authority, upon request, with an insider list.
Prospectus Regulation – Reduced disclosure obligations available
Where an issuer listed on an SME Growth Market is obliged to prepare a prospectus pursuant to the Prospectus Regulation, it can choose now to draw up an EU Growth prospectus where it has a market capitalisation of less than EUR 500,000,000.
The key benefit of the EU Growth prospectus is that reduced disclosure requirements apply, but the prospectus still must contain enough information to allow a prospective investor to make an informed investment decision.
Requirements to maintain information for 5 years
Issuers listed on an SME Growth Market are obliged to ensure that the following information must be maintained on its website (and direct links to this information must also be available on Euronext Growth’s website):
- any prospectus drawn up in accordance with prospectus rules;
- admission documents drawn up where prospectus rules do not apply;
- annual financial reports and semi-annual financial statements; and
- inside information that is disclosed under the Market Abuse Regulation (unless this is available on Euronext Growth’s website).
Contributed by: Paul McNamara