198 5 Equity and Shareholders’ Capital
UKLA/FSA and controlled by Nomura; BOAT, a bank joint venture that merely
records off-exchange share trades;^284 and PLUS Markets, formerly known as Ofex.
Prospectus. Whether the issuer must produce a prospectus depends on whether
there is a public offering. Issuers may benefit from exemptions under the
Prospectus Directive (see below).
Primary and Secondary Listing
Issuers may list their securities on multiple exchanges. A company’s main listing
is referred to as its primary listing while subsequent listings on other exchanges
are referred to as secondary listings. The vast majority of issuing companies
obtain only a primary listing, invariably on a domestic exchange.
Single list for two or more national markets. On the other hand, the primary
listing may be on a list that encompasses two or more regulated national markets.
In this case, issuers choose an initial entry point for the listing of their securities.
Single passport and secondary listing in the EU. EU securities markets law
makes it easier to obtain a second listing in another Member State.
The Prospectus Directive is based on the application of the country of origin
principle and the principle of a “single European passport”.^285 The obligation to
publish a prospectus does not apply to the admission to trading on a regulated
market of securities already admitted to trading on another regulated market
provided that certain conditions have been met. One of the conditions is that a
summary document is made available to the public in a language accepted by the
competent authority of the Member State of the regulated market where admission
is sought.^286 The secondary listing route can thus be used by a company wishing to
“passport” its prospectus into another Member State.
Secondary listing without the consent of the issuer. A secondary listing can, in
exceptional cases, happen even without the consent of the issuer. If a transferable
security has been admitted to trading on a regulated market, it can subsequently be
admitted to trading on other regulated markets. The issuer’s consent is not
necessary.^287
Secondary listing in the US markets, registration. The legal and regulatory
environment in the US has made it more difficult for the NYSE, Nasdaq, and other
exchanges to compete for foreign companies’ secondary listings.
US regulatory requirements and the US litigation environment are often
perceived as too cumbersome and costly. For example, section 5 of the US
Securities Act of 1933 provides that it is unlawful to make any public offer or sale
of any security in the US without the prior filing of a registration statement and a
(^284) The MiFID lays down an obligation on a trader to execute orders, both on- and off-
exchange, on terms most favourable to the client. Traders must be able to supply proof
of best execution. See recital 44 of Directive 2004/39/EC (MiFID) as well as Article 21
(best execution) and Article 25 (reporting).
(^285) Recitals 14 and 45 of Directive 2003/71/EC (Prospectus Directive).
(^286) Article 4(2)(h) of Directive 2003/71/EC (Prospectus Directive). See also Article 38 of
Directive 2001/34/EC (Listing Directive).
(^287) Article 40(5) of Directive 2004/39/EC (MiFID).