ESMA updated its Q&A (the “Q&A”) on Directive 2004/109/EC (“Transparency Directive”), to clarify the obligations applicable to issuers with respect to its choice of home Member State in case the UK withdraws from the EU without any withdrawal agreement in place (the so-called “Hard Brexit” scenario).
An issuer's obligations under the Transparency Directive regime are determined by reference to the requirements of its home Member State for Transparency Directive purposes. For an issuer incorporated in an EU Member State which has its shares (or debt securities with a denomination of less than 1,000 Euro (or equivalent)) admitted to trading on an EU regulated market, it has no choice: its home Member State is automatically the Member State in which it has its registered office. Any other issuer will have, to a limited extent, a choice.
Upon a Hard-Brexit, the UK will become a third country and therefore issuers who have previously chosen the UK as their home member state (or issuers whose home Member State was automatically designated as the UK) will have to choose (and disclose in accordance with Articles 20 and 21 of the Transparency Directive) a new Home Member State among the 27 EU Member States and the three EEA EFTA States, namely Iceland, Liechtenstein and Norway. The choice of a new home Member State must be disclosed, if applicable, to:
- The competent authority in the Member State where the issuer has his registered office;
- The competent authority in the new home Member State of the issuer; and
- The competent authority of all host Member States.
The issuers concerned should make the required disclosures, without delay, and in any case, within three months following the withdrawal of the UK from the EU. Failure to make the required choice and subsequent disclosure, means that the Member State or Member States where the issuer’s securities are admitted to trading on a regulated market will be designated as its home Member State, until a subsequent choice has been made and disclosed by the issuer.