Is the EU Listing Act considered a major revolution in the sphere of capital market legislation?

The EU Listing Act has introduced a new information document called the "11-pager", which has been gaining traction in Germany and Austria. This document, also known as the "Annex IX Document", is designed to streamline the process of raising capital on the capital market without the need for a prospectus.

Since early December 2024, issuers have been exempt from the obligation to publish a prospectus for public offers, thanks to the simplifications introduced into the capital markets prospectus regime by the EU Listing Act. This exemption applies to the admission of securities to trading on a regulated market.

The 11-pager requires issuers to specify reasons for the issue, plans for use of proceeds, and describe specific issuer risks. It also mandates the provision of information about dilution and share ownership after the issue for shares. The document must be deposited and simultaneously published with the nationally competent authority in each country. In Germany, the competent authority is BaFin.

Most issuers adhere strictly to the order prescribed in Annex IX of the EU Prospectus Regulation for the presentation of individual information components. However, no uniform market standard has yet developed for the detailed presentation of risk factors, dilution, and share ownership after the issue.

The unclear liability situation has been a point of criticism, with a draft bill to clarify it (Second Future Finance Act) failing due to the premature failure of the traffic light coalition under Federal Chancellor Olaf Scholz. The new federal government is currently making a new attempt to clarify the liability situation around the 11-pager with the so-called Location Promotion Act.

Questions have been raised about whether securities can be offered outside the EU based on the 11-pager, particularly in the USA. It remains to be seen whether the 11-pager will gain acceptance in the market and become a success story as a "big bang" in capital market law.

Dr. Valentin Pfisterer, LL.M. (NYU) and Dr. Torsten Göcke, LL.M., attorneys and partners in the Transaction Law practice at EY Law, have been closely following the development of the 11-pager. They have noted that several equity issues based on an 11-page document have already been carried out in Germany and Austria, with initial indications of an emerging market standard.

The layout of most published 11-pagers is oriented towards the securities information sheet, a maximum of three A4 pages long investor information document for small issues. This orientation suggests a move towards more concise and accessible information for investors.

However, the challenge in summarizing essential information for investors in such a short document has been criticized by legal science and practice. The 11-pager's success will depend on its ability to strike a balance between brevity and comprehensive disclosure.

As the market continues to adapt to the 11-pager, it can be assumed that future issues based on an 11-pager will contribute to the establishment of uniform market standards. Whether this will lead to a widespread acceptance of the 11-pager remains to be seen.

Is the EU Listing Act considered a major revolution in the sphere of capital market legislation?