Listing Act - Do Not Undermine its Objectives in the Final Phase of Negotiations

The overarching objective of the Listing Act is clear and unambiguous – to strengthen capital markets within the EU. It is hugely important that this objective remains the guiding compass for co-legislators, and that they do not lose track. Nevertheless, some deeply concerning proposals, undermining the Directive’s core objective, are still being pushed by the European Parliament to be included in the proposed Directive on multiple-vote share structures. The push continues in spite of a lack of impact assessments and without support from experts in the field. On the contrary, leading business organizations, with support from widely respected representatives from the academia, have jointly called on the legislators to remain focused on the core purpose of the proposed Directive, and to remove those provisions likely to have negative impacts.

The proposals that cause the greatest concern include restrictions that the Member States may choose to adopt, including sunset clauses and constraints on using enhanced voting rights on certain sustainability related matters. It may seem like an easy way forward to accept voluntary restrictions, as these would not be binding on Member States. However, we continue to stress that the inclusion of this type of language is highly inappropriate. The reasons for this include the following:

• It would prove counterproductive to the purpose of the Listing Act. The restrictions proposed by the European Parliament are not evidence-based, and their introduction in one or several of the EU Member States would discourage listings on these markets. This poses the risk that companies would instead turn to capital markets outside the EU. It would be inappropriate for EU legislation to encourage the inclusion of these types of restrictions – weakening the listing climate rather than strengthening it as the Directive was supposed to.
• It follows from generally applicable legal principles that matters that do not need to be regulated should not be. The Member States are free to legislate as they wish in this area, and EU legislation should not recommend introducing restrictions that are deemed unnecessary and counterproductive by such a wide array of experts and sector representatives.
• It risks being a step towards the harmonisation of corporate governance - an area that does not benefit from top-down harmonisation. Well-functioning, well-established governance models and frameworks are already in place in the Member States; these must be safeguarded, and the principles of subsidiarity and proportionality respected.

Instead, the Directive should acknowledge the broad agreement that there is no ‘one-size-fits-all’ solution in this area. Equally important, any potential review clauses that encourage increased regulatory interventions that lack an evidence base should be avoided. This is in order not to divert focus from the implementation and realisation of the Directive’s important objectives.