Danish Ministry of Business Affairs publishes consultation responses on proposed Capital Markets Act

Before the second reading of the bill to amend the Capital Markets Act - implementing certain elements of the EU Listing Act, including, among other things, an increase in the threshold at which companies seeking admission to trading, or already admitted to trading, are required to publish a prospectus in connection with a public offering of shares or other securities. The Danish Ministry of Business Affairs (the 'Ministry') published a consultation note addressing the feedback received from various stakeholders.

Proposed amendments that have received stakeholder feedback

• The removal of the concept of official listing. 
• The reduction of the free float requirement from 25% to 10%. 
• Operator's requirement to identify multiple-vote share structures. 

The removal of the concept of official listing.

The bill proposes removing the concept of 'official listing', which is deemed to have had limited practical relevance since the implementation of EU regulation introduced the concept of 'admitted to trading', known from MiFID I, MiFID II and the Market Abuse Regulation.

One stakeholder, a university professor, argued that the concept of 'official listing' as such, should have been continued, or alternatively that the concept of 'listing' should be introduced, as both issuers and non-capital-markets-professionals still use the term frequently. Further, the stakeholder notes that all current issuers admitted to trading on Nasdaq Copenhagen have sought official listing as well.

Furthermore, it is argued that the practical implication is insignificant, as the DFSA has already delegated the option to accept issuers as admitted to 'official listing' on Nasdaq Copenhagen, the same entity that admits issuers to trading.

Finally, the stakeholder suggests that the concept of listing should be included in article 75 of the Capital Markets Act, as it currently does not regulate the operator's decision to admit issuers to trading something the stakeholder views as an omission.

The Ministry has responded that it is their view the inclusion of 'official listing' or 'listing' in article 75 of the Capital Markets Act will be misleading, as the term 'listed' is used frequently both in relation to issuers being listed on a regulated market and on an MTF. Further, the Ministry notes that the current iteration of article 75, in their view, is compliant with article 51(1) and (2) of MiFID II and therefore does not need to be amended.

Consequently, the term 'official listing' will not be retained in the new bill. However, we cannot see that the rules would restrict Nasdaq Copenhagen from deciding to keep the concept in its own rulebook.

The reduction of free float requirement from 25% to 10%

In line with the Listing Act, the bill proposes a reduction of the free float requirements for companies seeking admission to trading, from 25% to 10%, to encourage more companies to seek admission to trading and increase flexibility for issuers.

One stakeholder acknowledges that more companies might seek admission to trading based on this reduction but argues that the reduction of the free float requirement will risk decreasing the liquidity in the secondary market. Further, the stakeholder highlights that a 10% free float requirement enables a single shareholder to come very close to the >90% ownership required for mandatory compulsory acquisition under the Companies Act.

For the reasons above, the stakeholder does not support the proposition.

Another stakeholder has expressed support for the proposed reduction of the free float requirement, as it will increase the number of companies that might seek admission to trading. 

The Ministry notes that retaining a higher than 10% free float requirement, as is set out in the Listing Act, will be an over implementation of the amendments made to MiFID II under the Listing Act. As a result, the proposed 10% free float requirement will not be adjusted. 

It should be noted that MiFID II article 51(a) allows for the national competent authorities to set out alternative requirements to the 10% free float requirement, to ensure an adequate spread in the ownership of the shares admitted to trading. The national competent authority may choose one or more of the following criteria: 

1. A sufficient number of shares held by the public; 
2. The shares are held by a sufficient number of shareholders; or
3. The market value of the shares held by the public represents a sufficient level of subscribed capital in the class of the shares concerned.

It remains unclear whether these alternative methods of ensuring an adequate level of spread of ownership of the shares admitted to trading will be utilised but has merely noted that such option exists. We expect that Nasdaq Copenhagen will seek to address the required spread in ownership of the shares admitted to trading in its next Rulebook for Issuers of Shares.

Finally, the Ministry notes that the requirement should be interpreted as the current rule, meaning that the free float requirement only has be met at the time of admission to trading and is not a strict requirement on an ongoing basis.

The operator's requirement to identify multiple-vote share structures 

The proposed bill includes, as part of implementation of the Listing Act, a requirement for operators of MTF to 'clearly identify' shares admitted to trading, where there are multiple-vote share structures. Such identification only applies to new issuers seeking admission to trading will have to be included in the prospectus.

A stakeholder has noted that an elaboration of the specific requirement would help operators make the correct adjustment, if needed, noting that operators today use 'A' and 'B' specification in the ticker-code. Further the stakeholder inquiries about the implementation timeline.

The Ministry confirms that the ticker-code specification will suffice, and as such no change in existing practice is intended, as a result of the new bill in this regard. The new rules will be in place on 5 December 2026.

Next steps

Next steps when finalising the second version of the proposed bill, the Ministry will make certain changes based on the consultation responses, as deemed necessary or prudent by the Ministry. Afterwards the second reading of the bill will take place in the Danish Parliament.

Note

Plesner notes that the above does not reflect all consultation responses in full nor the full extent of the proposed changes made in the bill.

See the full proposed bill and consultation responses (in Danish)

For more capital markets law updates, see Plesner's LinkedIn-page: Plesner Capital Markets Update