The issuer must prepare a prospectus in accordance with guidelines set out by the LuxSE or the Commission de Surveillance du Secteur Financier (CSSF). If listing on the EU regulated market, the issuer must comply with the new Prospectus Law requirements and obtain approval of the prospectus from the CSSF. If listing on the Euro MTF, the issuer will not have to comply strictly with the Prospectus Law but will still have to provide information about the company, its management, its business strategy, risk profile and financials, among other things. In essence, the same information is required but with less detail.
The LuxSE questionnaire for existing companies sets out the list of information that must be provided and set forth in the prospectus:
- details on how many shareholders exist and details of all shareholders holding 5% or more of the issued capital;
- what proportion of the shares can be regarded as being disseminated internationally among the public and the probable breakdown of the shareholders by geographic area;
- whether the issuer is using the quotation of its shares as a way of achieving or increasing public dissemination of your shares;
- details of how the issuer intends to achieve this dissemination;
- confirmation of whether, if there is demand on the LuxSE, certain shareholders would be prepared to sell their shares, at least a certain time after an admission to listing;
- if such is the case, whether the issuer has appointed a member firm of the LuxSE to take any appropriate measures;
- if not, how the issuer intends to monitor the market in your shares, and what measures have been taken to deal with a demand for shares in the Luxembourg market;
- what measures will be taken to deal with shares offered for sale a limited period after the admission to listing;
- how the issuer will act to avoid random fluctuations in the price of your shares;
- reasons why the issuer is applying for the listing of its shares;
- reasons why the issuer has you elected to be listed on the LuxSE;
- whether the issuer has applied for a simultaneous admission to listing of its shares on another official exchange;
- whether the issuer envisages doing so after its shares have been admitted in Luxembourg;
- whether the issuer can confirm that it is prepared to simultaneously maintain the listing on the LuxSE and another exchange;
- the approximate value of its shares; and
- what criteria the issuer will be using to be assess the initial price of the shares listed.
Similar information will be requested for debt offerings, as applicable.
Financial and other disclosures
Financials have to be disclosed for the past three years of operation. For newly established issuers, a derogation from this requirement can be requested from the LuxSE with an explanation of why the financials are not available.
The Prospectus Approval Form and Admission to Trading Prospectus Application Form, which must be completed when applying for the listing, is also available on the LuxSE website and includes the following:
- name and contact person of the entity filing and internal references;
- object of the application and confirmation that the prospectus has been drawn up in accordance with the relevant parts of the Prospectus Law;
- name, registered office and contact details of the issuer;
- details of the securities to be listed and desired effective date of admission; and
- name and details of the legal entities assuming payment of the approval fees.
Once the draft prospectus is submitted, the LuxSE will appoint a reader, who will raise questions and work with counsel and the issuer to finalise the prospectus. This process can take anywhere from four to eight weeks, depending upon how well the prospectus is prepared at the outset. Full disclosure is required and there is a requirement that in each prospectus the issuer acknowledges taking full responsibility for the completeness and accuracy of all information contained in the prospectus.
The LuxSE fees are fixed depending upon the terms of the issue and are available on the LuxSE website (www.bourse.lux).
Law firm's role
If a law firm is expected to prepare the prospectus or offering memorandum (the prospectus) from scratch, the fees will reflect this. In general, a Luxembourg law firm will be engaged to provide the following services:
- preparation of materials obtained from the issuer to complete the prospectus;
- ensuring that the prospectus meets all the requirements of the new prospectus law;
- analysis and advising on all reporting and financial disclosure obligations;
- analysis and advising on the transparency and anti-money laundering rules;
- communication with the LuxSE's designated reader and coordination to finalise the prospectus, liaising with representatives from the international clearance and settlement depositaries (ICSD) (obtaining ISIN codes and common codes and dealing with the new issues departments of the various ICSDs, for example) or domiciliation agents, when required; and
- coordination with the listing agent up to the actual listing on the LuxSE.
If, however, the law firm is expected to review an already existing prospectus and tailor it in accordance with the rules and regulations of the LuxSE, the transparency and market abuse rules and regulations, their fees will be less.
There are an increasing number of foreign firms listing on the LuxSE. Luxembourg is an attractive and accessible market for both foreign issuers and investors. A Luxembourg listing has many advantages to offer non-EU companies seeking to raise capital and to claim a greater share of the attention of international investors worldwide. These benefits include:
- access to a large pool of international investment capital;
- access to a high proportion of institutional funds invested in Luxembourg listed securities or units;
- a liquid and active secondary market in international equities;
- worldwide visibility for international companies through dedicated screen-based trading systems;
- a flexible and cost-effective means of raising capital;
- high and well respected regulatory standards;
- a range of products equities, depositary receipts and debt issues, units in funds to meet the varied capital raising requirements of different issuers;
- the ability to passport these securities to different EU member states by mere notifications (if listed on the EU-regulated Bourse de Luxembourg); and
- reasonable listing fees charged by the LuxSE.
Luxembourg is also attractive because it provides skilled services to the international community of issuers and their intermediaries, respects the implementation of important EU directives, has smoothly transposed Mifid and has recruited knowledgeable international staff with enhanced language capabilities to offer support to international issuers (listing and paying agent functions, for example). The high professionalism (under Grignon Dumoulin's leadership and no-nonsense approach) enables issuers to get their securities or units issued in a timely manner and under flexible conditions.
Pamela Gonzales de Cordova