Since the UK's transition period for leaving the European Union has now officially ended UK incorporated issuers which have obtained an admission to trading of their securities on a regulated market in a EEA Member State will need to choose a new home Member State for the purposes of the Transparency Directive (2004/109/EC) if their former home Member State has been the UK.
Given that some of these UK incorporated issuers have obtained regulated market listings on the Luxembourg Stock Exchange it should be worthwhile having a closer look at the mechanism to be followed if such issuers intend to choose Luxembourg as their new home Member State for transparency purposes. In this respect the below is intended to be a brief and practical overview of the steps which need to be effected in order to have Luxembourg as new Transparency Home Member State (the "THMS").
Luxembourg law of 11 January 2008 on transparency requirements
With respect to article 1 (9) (b) of the Luxembourg law of 11 January 2008 on transparency requirements (the "Luxembourg Transparency Law") such a UK incorporated issuer can choose Luxembourg as new THMS from among those EEA Member States where its debt securities have been admitted to trading on a regulated market (provided the issuer maintains a regulated market listing of debt securities in Luxembourg). This choice is however only possible provided the issuer has not issued and listed on a regulated market other than in Luxembourg (1) equity securities or (2) debt securities where the per unit denomination is of less than EUR 1000.
Should the issuer in question have issued securities which have only been admitted to trading on a regulated market in Luxembourg such "choice" is automatic and Luxembourg will become the issuer's new THMS in any event.
THMS notification to be submitted to the CSSF
If the issuer chooses Luxembourg as THMS or, in case the election is automatic due to the issuer having only one regulated market listing in Luxembourg, the fact that Luxembourg has become the issuer's new THMS must be notified to the Luxembourg financial supervisory authority (CSSF).
Such notification is to be made by way of submission of the duly filled-in ESMA Standard form for the notification of Home Member State (ESMA/2015/1596) which can be downloaded from the CSSF's website under https://www.cssf.lu/en/Document/standard-form-for-the-notification-of-home-member-state/ (the "ESMA Form"). The ESMA Form must be sent to transparency@cssf.lu.
In addition the THMS must also be disclosed to the competent authorities of any applicable EEA host Member States (i.e. the EEA Member States where the issuer maintains additional regulated market listings of its securities).
The choice of the THMS will remain valid for at least three years unless its securities admitted to trading on the regulated market in Luxembourg have been delisted before the end of this three year period or in case the issuer has issued and obtained a regulated market listing of equity securities or of debt securities the per unit denomination is of less than EUR 1000 in the meantime. In this respect, there is consequently a certain "lock-in" effect.
There is no specific timing for the submission of the ESMA Form. However, it must be taken into account that, should the above-mentioned disclosure to the CSSF and, if applicable, to the competent authorities of the host Member States not have occurred within a period of three months after the end of the Brexit transition period (i.e. as of 31 March 2021), all the Member States where the issuer's securities have been admitted to trading on a regulated market will be considered the issuer's THMS until a subsequent choice and disclosure has been made.
It is therefore important, in order for the issuer to avoid having to comply with several transparency disclosure regimes in more than one Member State, that the disclosure of the new THMS is proceeded to within this three month period.
It is, however, always advisable to effect the THMS election and to get registered to the applicable storage system for regulated information for Transparency Directive purposes as soon as possible since the requirement to publish ad-hoc regulated information such as, for instance, inside information can arise at any time during the life of a regulated market listing.
Publication of the THMS election according to effective dissemination means and storage with the OAM
In addition to the submission of the ESMA Form the Luxembourg Transparency Law considers the election of a THMS to be regulated information which triggers the issuer's obligation to publish the election of the THMS in accordance with effective dissemination means and to store it with the officially appointed mechanism for the storage of regulated information (the "OAM") pursuant to article 20 (1) of the Luxembourg Transparency Law.
The OAM is a storage system operated by the Luxembourg Stock Exchange where any issuer whose THMS is Luxembourg must store regulated information within the meaning of the Luxembourg Transparency Law whenever such regulated information arises.
In fact, regulated information under the Luxembourg Transparency Law must always be treated in a threefold manner:
- publication according to effective dissemination means (i.e. publication of a notice on the website of the Luxembourg Stock Exchange, or any other recognised news dissemination service);
- storage with the OAM; and
- filing with the CSSF (by sending the regulation information to transparency@cssf.lu).
In order to comply with the issuer's publication obligation (1) the issuer must publish the ESMA Form on a financial information news service platform which has been recognized as such for Transparency Directive publication purposes. From a practical perspective this can easiest be done by way of a posting of the ESMA Form on the news service platform operated by the Luxembourg Stock Exchange via the use of the below described First system.
Access to the OAM
As discussed above in order to be able to also store the THMS election as regulated information (in addition to its publication and filing/submission to the CSSF) the issuer will need to obtain access to the OAM. Such access can be obtained by the subscription to the First tool operated by the Luxembourg Stock Exchange (see below).
In this respect, it is important to note that even issuers which are exempted from publishing periodic financial information such as annual and half-yearly financial reports under the Luxembourg Transparency Law must obtain an OAM registration since the obligation to publish, store and file specific ad-hoc financial information such as inside information (which also qualifies as regulated information under the Luxembourg Transparency Law) can occur at any time and is not impacted by the exemption.
Subscription to First in order to be able to process regulated information
The Luxembourg Stock Exchange proposes the use of a new simplified tool which is called First for the process of regulated information which arises under the Luxembourg Transparency Law.
By subscribing to this tool the issuer will in fact not only be able to store the regulated information in the OAM but will also be able to simultaneously comply with its publication and filing requirements (as referred-to above). By simply uploading the regulated information notice in question into the First tool all three requirements can be automatically met. Before the introduction of the First tool issuers were required to proceed to all three steps (i.e. publication, storage and filing) by separate actions. Both the subscription to First and its use are relatively straightforward and should not cause major concerns. The First tool however also allows choosing the application of particular services such as only dissemination and/or storage in specific contexts.
In order to activate First the issuer must sign a so-called Services Selection Sheet which can be downloaded from the website of the Luxembourg Stock Exchange under https://www.bourse.lu/first.
In this respect, 4 steps are required to be done to get access to First:
- Download and review the Services Selection Sheet
- Sign the Services Selection Sheet and send a scanned copy of the sheet by email to customersupport@bourse.lu
- Send two originals of the signed sheet by mail to: Luxembourg Stock Exchange at B.P. 165, L-2011 Luxembourg
- Once the scanned copy of the Services Selection Sheet has been received by email, the issuer will get access to the full suite of FIRST services.
Fees triggered by subscription to First
The utilisation of the first tool will incur fees. A one-off set-up fee of EUR 500 will need to be paid. Going forward an annual service fee of EUR 500 will arise as well. This means that for the first year combined fees of EUR 1000 Euro will arise. Furthermore, any uploading of a notice/document into the First system will incur an additional fee of Euro 250.
Choice of home Member State under the Prospectus Regulation ((EU) 2017/1129)
Finally, it might also be useful to have a closer look at the choice of home Member State under the Prospectus Regulation of UK incorporated issuers which after the end of the Brexit transition period qualify as third-country issuers under that regulation as well. The following aspects should be taken into account:
Pursuant to article 2 (m) (iii) of the Prospectus Regulation a third country issuer of shares or debt securities the per unit denomination of which is less than EUR 1000 can choose as prospectus Home Member State (the "PHMS") the EEA Member State where the relevant securities are to be offered to the public or admission to trading on a regulated market will be sought.
Should such public offer or admission to trading be intended to occur in more than one EEA Member State the issuer will be able to choose its PHMS from among such EEA Member States. In this respect (i.e. the issuer has a choice), a certain "lock-in" effect will arise since with respect to any subsequent public offer or admission to trading on a regulated market relating to equity securities or debt securities the per unit denomination of which is less than EUR 1000 the PHMS chosen cannot be changed any more.
The result is similar to the situation which EEA incorporated issuers of such securities face given that these issuers do not have a choice since they always have as their PHMS the EEA Member State where their registered office is located.
In contrast, both EEA incorporated and third country issuers of non-equity securities which have a per unit denomination of at least EUR 1000 and of certain convertible securities pursuant to article 2 (m) (ii) of the Prospectus Regulation can always choose as PHMS (1) the EEA Member States where their registered office is located (in case of EEA incorporated issuers) or (2) where the relevant securities will be offered to the public or (3) where they will be admitted to trading on a regulated market.
In this respect, there is no "lock-in" effect and a new PHMS can be chosen for any subsequent public offer or admission to trading of such securities (this also applies to UK incorporated issuers as third country issuers).
In other words and in contrast to the situation under the Luxembourg Transparency Law the PHMS can be changed every time again provided article 2 (m) (ii) of the Prospectus Regulation is applicable. This is also the reason why there is no specific CSSF election form for the purposes of the election of a PHMS as the relevant information will be provided by way of submitting the required entry form (i.e. prospectus approval request form) in the context of the submission to the CSSF of a draft prospectus or draft supplement for approval.
For any further information please feel free to contact Isabelle Lentz, Michael Logie or Markus Waitschies.
Authors: Isabelle Lentz, Partner and Markus Waitschies, Senior Associate
