For a long time, the European capital market was perceived as cumbersome: complex prospectus requirements, extensive ongoing obligations and significant costs discouraged many small and medium-sized enterprises from even considering an IPO. This is precisely where the EU Listing Act comes in whose main parts go into force in March 2026. With this reform package, the European Union pursues a clear objective: to simplify, accelerate and reduce the cost of access to capital markets, without lowering investor protection standards.
The reform is aimed not only at potential IPO candidates, but also at companies that are already listed and have found capital increases and life as a listed company disproportionately burdensome. The Listing Act seeks to make public listings a realistic financing option again, not just for large corporations, but also for capital-market-oriented mid-sized businesses.
What changes under the Listing Act: an Overview
The Listing Act is not a single piece of legislation but a package of targeted amendments, particularly in prospectus law, market abuse rules and ongoing transparency requirements. The guiding principle is consistent throughout: less bureaucracy, greater proportionality. The core idea is that companies should no longer be subject to a rigid “one-size-fits-all” regime. Instead, regulatory requirements are better aligned with company size, maturity and the specific capital markets transaction. This is particularly relevant for capital increases and secondary placements, areas where the previous regulatory burden was often economically disproportionate.
Easier access to Capital Markets: Key innovations
Reduced and shorter financial track record requirements: One of the main cost drivers in IPO processes was the extensive requirement for historical financial information. The Listing Act significantly reduces this burden. In many cases, only two audited financial years are now required instead of three. For younger companies with a limited operating history, this removes one of the most significant practical barriers to going public.
New simplified prospectus formats: Standardized and considerably shorter prospectus formats have been introduced, particularly for capital increases and follow-on offerings. These rely more heavily on already published information and avoid unnecessary duplication. This not only saves time but also reduces legal, audit and advisory costs.
Facilitated capital measures for listed companies: Companies that are already listed benefit in particular: capital measures become simpler, faster and more cost-efficient. As a result, the capital market becomes a flexible financing tool again – not merely a one-off IPO event.
How does a company go public today? The process in practice
Even after the Listing Act, an IPO remains a demanding project; but it is now more structured, more predictable and less formalistic than in the past. It begins with a strategic decision: Is the company seeking growth capital? Are existing shareholders planning a partial exit? Or is the objective long-term financing flexibility and increased visibility? Only once these objectives are clearly defined does the IPO preparation truly begin.
The operational process typically starts with a structured selection procedure for the underwriting bank (a “beauty contest”). The bank later acts as lead manager, coordinates the transaction, conducts the bookbuilding process and serves as the interface to investors. Together with the company, it refines the equity story – the investment rationale explaining why the business model is robust, what growth potential exists and how the proceeds will be used.
At the same time, comprehensive due diligence is launched. Legal, tax, financial and operational matters are systematically reviewed and documented. The objective is not only prospectus readiness but also the early identification of issues that investors might critically assess. Financial IPO readiness is particularly important: audited financial statements, reliable financial planning, consistent reporting and clear explanations of performance development.
On this basis, the prospectus is prepared, the central document of the transaction. It combines regulatory requirements with the equity story and transparently presents the business model, risk factors, governance structures and financial information. The simplifications introduced by the Listing Act make this step more efficient, particularly regarding the structure and scope of financial disclosure.
In parallel, a structured pre-marketing phase often takes place. In confidential discussions with selected institutional investors, feedback is gathered on valuation, timing and placement volume. This helps to define a realistic price range and to structure the offering appropriately. Depending on market conditions, the appropriate timing for the transaction process (the “launch”) is selected and the shares are publicly offered. Only at the end of the offering period is the final offer price determined, the shares are allocated and trading commences.
Once the prospectus has been approved by the competent authority, the formal listing procedure with the stock exchange begins. In addition to regulatory requirements, segment-specific criteria – such as minimum free float, minimum market capitalization or corporate governance standards – must be met. Only thereafter is the final offer price set, shares are allocated and trading commences.
The first day of trading marks the end of the transaction process – and the beginning of life as a public company. Investor relations, transparent communication and compliance with ongoing obligations are decisive for the long-term success of the listing.
When is a company “IPO-Ready”? Practical benchmarks
While the Listing Act lowers formal barriers, it does not replace the economic rationale of an IPO. Investors continue to expect a minimum level of substance. Typically, a company should have a scalable business model, a clear growth strategy and a professional finance organization. Revenues in the double-digit million range are often helpful for a traditional listing, but smaller companies may also find suitable market segments. Ultimately, what matters is that the business model is understandable, the financials are consistent and the management team is experienced or appropriately supported in capital markets matters.
Simplifications for debt instruments
The Listing Act also introduces substantial simplifications for debt instruments such as bonds and comparable financing products. In this area, too, prospectus requirements were often seen as disproportionate, especially for smaller issuances or repeat programs. The new regime differentiates more clearly between equity and debt, resulting in leaner, more standardized and modular prospectus structures for debt instruments. Existing information (for example from annual reports or previous issuances) can more easily be reused rather than being fully restated.
For SMEs, this is particularly relevant because bond issuances are often a first step into the capital markets. The Listing Act reduces costs, shortens preparation time and makes smaller issuance volumes economically viable. As a result, the capital market becomes a more attractive complement or alternative to traditional bank financing.
Excursus: Tokenization of securities — What changes and what remains the same
Tokenization can be understood as the digital issuance of securities, not in paper form or via traditional global notes, but on a blockchain. Economically, nothing fundamentally changes: a tokenized security represents the same rights as a traditional security, such as interest and repayment claims or shareholder rights, but ownership is technically represented by a digital token.
In practice, tokenization may be implemented either as a direct issuance by the company or in cooperation with a specialized technology provider handling the technical infrastructure. The key difference lies in the market infrastructure: certain intermediaries may no longer be required or their role may change significantly. There may be no need for a paying agent, no traditional central custody and no depositary structure, as securities can be directly allocated to investors for self-custody in a digital wallet. Interest payments, redemptions and other corporate actions can be automated via the blockchain.
At the same time, it is important to emphasize the parallels: tokenization is not a regulatory shortcut. Tokenized securities are generally subject to the same capital markets requirements as traditional issuances. A prospectus may be required, governance structures must be appropriate, financial information must be robust and investor communication must comply with established standards. The added value of tokenization lies not in reduced regulation, but in more efficient processes, lower operational complexity and enhanced technical flexibility, particularly attractive for SMEs seeking leaner and more direct financing structures.
Where do costs actually decrease?
The cost benefits of the Listing Act arise from tangible relief measures. Shorter prospectuses mean lower legal fees, fewer review cycles and reduced audit costs. Fewer required financial years decrease the burden on auditors and internal finance teams. Simplified follow-on offerings significantly reduce the cost of raising capital after the IPO and make smaller capital increases economically feasible where they might previously have been avoided.
An oftentimes underestimated factor is the reduction of ongoing costs. Less formalistic ad hoc processes, clearer rules and proportionate obligations lower internal compliance efforts – a key advantage for the legal and finance departments of SMEs.
Conclusion: Capital Markets become SME-friendly
The Listing Act represents a paradigm shift. It acknowledges that European capital markets will only grow if mid-sized businesses can realistically access them. For decision-makers and legal departments, this means that the option of an IPO or capital increase deserves renewed consideration. What previously failed due to excessive cost, complexity or formal hurdles may now be realistic and economically viable. The capital market can once again become what it is meant to be for SMEs: a tool for financing growth.
About us
Dr Volker Glas, LL.M., is a partner in the Banking & Finance and Capital Markets team at Cerha Hempel and is widely regarded as one of Austria’s leading capital markets lawyers, with decades of experience in equity and debt transactions. He regularly advises issuers, underwriting banks and investors on complex capital markets, corporate and financing matters, and has extensive experience in IPOs, bond and convertible bond issuances as well as structured finance transactions. He is admitted to practice in Austria and New York.
Dr Oliver Völkel, LL.M., is a partner at Cerha Hempel specializing in fintech, crypto-assets, banking and capital markets law. He is widely recognized as a pioneer in Austria in the field of digital assets and blockchain-based financial and capital markets regulation. He regularly publishes on MiCA, tokenization and capital markets topics and is the editor of leading specialist works in this field.