The admission to official listing, as it has been underlined, is disposed upon request of the issuer. The request itself is obviously not enough to directly obtain such admission. As the status of listed company brings with it a series of consequences and has an inherent public interest, a designated competent authority must neatly examine such request and decide whether the admission sought could be granted or not. The
66 “1. The undertaking must ensure that all holders of debt securities ranking pari passu are given equal treatment in respect of all the rights attaching to those debt securities.
Provided they are made in accordance with national law, this condition shall not prevent offers of early repayment of certain debt securities being made to holders by an undertaking in derogation from the conditions of issue and in particular in accordance with social priorities.
2. The undertaking must ensure that at least in each Member State where its debt securities are officially listed all the facilities and information necessary to enable holders to exercise their rights are available.
In particular, it must:
(a) publish notices or distribute circulars concerning the holding of meetings of holders of debt securities, the payment of interest, the exercise of any conversion, exchange, subscription or renunciation rights, and repayment,
(b) designate as its agent a financial institution through which holders of debt securities may exercise their financial rights, unless the undertaking itself provides financial services.”
67 “1. An undertaking planning an amendment to its instrument of incorporation or its statutes affecting the rights of holders of debt securities must forward a draft thereof to the competent authorities of the Member States in which its debt securities are listed.
2. That draft must be communicated to the competent authorities no later than the calling of the meeting of the body which is to decide on the proposed amendment.”
68 Directive 2001/34/EC, articles 72-78.
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nature of such authority, if it should be a private or a public regulator, is not specified by the Directive. Article 105 only requires Member States to ensure that the selected one or ones (with the notification of details on the division of powers among them69) have the necessary powers to carry out their task.
This is why, among all the Member States, different legislative choices were made.
They have a right to entrust either a public or a private (usually the market regulator of the market on which the control should be carried out) body. The first approach was adopted by the United Kingdom after the “de-mutualization” of the stock exchanges that has brought a change in the primary legislation, by implementing the Financial Services and Markets Act 2000. As a consequence the admission to official listing is now conceded by a public authority, the UK Listing Authority (the “UKLA”)70. On the other side, an example of the second approach is represented by Italy, where the admission to official listing is disposed by Borsa Italiana S.p.A., i.e. the private market operator of the stock exchange in the country. The only exception is represented by the admission to listing of the shares of Borsa Italiana itself, the so-called “self-listing”, which is disposed, for obvious reasons, by the Commissione Nazionale per le società e la Borsa (CONSOB), the public authority for listed companies and financial markets71.
The choice between these two different systems should be guided by the necessity to assure legal certainty on a such delicate theme. The decision must be made taking into account both the pressing need for minimum and common standards for the admission to listing and the avoidance of an excessive freedom and margin of discretion for the market regulator, which may have destroying effects on potential issuers and investors.
Scholars have underlined that, in contexts where the competition between different
69 Directive 2001/34/EC, article 105(1).
70 See chapter 2 for a further discussion on the topic and a focus on the distinction between admission to listing and admission to trading in the United Kingdom’s approach.
71 For a further discussion on the topic see FERRARINI, G. (2002) L’ammissione a quotazione: natura, funzione, responsabilità e “self-listing”, p. 11-49; See also DI NOIA, C. (2002) Considerazioni sull'evoluzione della “governance” nelle borse e sul “self-listing”, p. 51-68. In particular, see p. 62, the author anticipated the theme by underlying that the potential decision on the admission to listing should be referred to a public authority: “La mera verifica di requisiti oggettivi di ammissione (bilanci in utile, flottante, ecc) non pone naturalmente alcun problema. È però regola delle principali borse quella di adottare valutazioni anche soggettive sui requisiti delle società quotande, in particolare del posizionamento strategico e delle prospettive economico-finanziarie: certamente, in tal caso, le normali procedure adottate nei confronti di normali società dovrebbero essere radicalmente modificate affidando le competenze a soggetti almeno organizzativamente esterni (quali un comitato ad hoc) ovvero all’autorità pubblica di vigilanza.”.
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regulated markets is basically non-existent, the English model may be useful in order to grant a proper legislative impartiality in the conditions for the admission to official listing. By contrast, where the competition is set high, the race to the bottom may be the correct approach to grant better conditions for admission to listing.
In particular, de Luca argued that, instead of transposing the United Kingdom’s approach in its entirety, it should be received a different interpretation of the admission to listing, at least with reference to the Italian jurisdiction72. The thesis is based on the construction of the admission to listing as a proper contract that is concluded between the requesting issuer and the market operator, even if subject to the condition precedent of the requirements’ acknowledgment. The set of rules provided by the market regulator may be seen not only as general terms and conditions (referring to the content of the contract) but also as a proper offer to the public (referring to the conclusion of the contract)73. The two perspectives are not mutually exclusive. This viewpoint has some rather interesting outcomes, including the potential draft of a specific right to listing.
This neither means that the admission to listing is automatic nor that the market regulator does not preserve a margin of discretion on the application. In particular, on the “negotiation” point of view, whenever the company requesting the admission doesn’t possess the requirements laid down by the company who runs the market, then this right can not be said to exist74. On the other side, when the requesting issuers has such requirements, this theory grants a better protection against the discretion eventually exercised by the market regulator. The manager preserves the chance to refuse the application only if the verification process is conducted in an objective and technical way, avoiding any opportunistic assessment of the merit.
In particular, the assessment must be referred only to article 11 of the Listing Directive, which requires that the rejection of an application for the admission to official listing may be justified only if such admission would be detrimental to investors’ interests.
This should be the only consideration that the market regulator should make while
72DE LUCA,N. (2009) Sul “diritto” alla quotazione in borsa. Difesa di una tesi nella prospettiva del listing comunitario, p.21-45.
73 Ibid., p. 25.
74 Ibid., p.41.
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deciding on the admission75. Even when, according to article 12 of the Listing Directive, Member States may give the competent authorities power to make the admission of a security to official listing subject to any special condition considered appropriate, the reason could be only to seek enhanced investors’ protection.
Moreover, a legislative measures is required, since the Member States are the ones entitled to permit such derogation.
Another rather interesting outcome would be the positive remedy of a judicial control deriving from an unlawfully rejection of the request of admission to listing made by the market regulator with an abuse of authority. In case of unjustified denial, damages are not sufficiently satisfactory. This is why, article 19 has explicitly provided that the decisions of the competent authorities refusing the admission of a security to official listing or discontinuing such a listing shall be subject to the right to apply to the courts76. This right stands even when the refusal is a consequence of the expiry of the six months period after the receipt of the application, which is the maximum time span disposed by authorities in order to decide on the request77.
National competent authorities, according to the European discipline, have other important powers and rights. Other than the ones related to a more than encouraged dialogue with competent authorities of different member states78, they may request to the issuers whose securities are admitted to listing a series of information. In particular, NCAs may request any information they consider adequate in the light of investors’
protection and the smooth operation of the market79. Moreover, according to article 17, without prejudice to any other action or penalties, in the event of failure on the part of the issuer to comply with the disposed obligations, they may make public the fact that an issuer is failing to comply with those obligations.
The most relevant remedy actionable by national competent authorities is provided by article 18. It establishes, in its two paragraphs, two particularly harsh solutions:
suspension and discontinuance of the listing. The first may be disposed when the
75 Ibid., p. 39.
76 This is also a crucial principal established by recital n. (4) that states as follows: “There should be the possibility of a right to apply to the courts against decisions by the competent national authorities in respect of the application of this Directive, concerning the admission of securities to official listing, although such right to apply must not be allowed to restrict the discretion of these authorities.”.
77 Directive 2001/34/EC, article 12(2) and article 12(3).
78 Directive 2001/34/EC, article 13 and 14.
79 Directive 2001/34/EC, article 16(1).
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smooth operation of the market is, or may be, temporarily jeopardised or where protection of investors makes it necessary. The second one when NCAs, owing to special circumstances, are persuaded that normal regular dealings in a security are no longer possible.
1.8. Information to the public