Amendment to the AMF General Regulation makes 'retail' tranche optional for initial public offerings

At its meeting on 19 March 2024, the AMF Board decided to abolish the obligation to include a retail tranche for companies applying for admission of their shares to trading on the Euronext Paris regulated market in the context of an initial public offering (IPO).

Please note that the French version of this press release was published on 19 March 2024.

It is recalled that this obligation derives from Article 315-6 of the AMF General Regulation which stipulates that, in the context of an IPO, the lead manager shall to do its upmost to ensure that applications from individual investors are satisfied to a significant extent. This objective is deemed to be met when a minimum of 10% is placed with retail investors.

This obligation is particularly burdensome for issuers wishing to list on the Paris Regulated Market, as it requires them to offer to the public for at least six business days and by making the operation more complex to put together. A number of applicants for listing on the Euronext Paris regulated market have been complaining about this for several years.

As a result of this specific French regulatory constraint, there is a risk that IPO projects planned for Paris will be carried out on foreign financial markets, thereby depriving retail investors of investment opportunities on the Euronext Paris market.

In the absence of such an obligation, issuers may offer a retail tranche if they so wish. The amendment adopted by the AMF's Board is simply intended to make such a retail tranche optional, rather than mandatory, for IPOs on the Euronext Paris regulated market. Moreover, if an issuer decides to launch a private placement without a retail tranche, retail investors will still be able to buy the securities on the secondary market, once the price has been set and has stabilised, on the basis of the information provided in the prospectus.

The Board's decision is fully in line with the various projects currently underway to enhance the attractiveness of the Paris financial centre. This is particularly of the case with the draft law on the financing of companies and the attractiveness of France, presented on 12 March by Alexandre Holroyd, which, while pointing out that "France has become the preferred destination in Europe for many international investors and financial institutions of international standing", stressed that "it is essential to strengthen this attractiveness", in particular by "facilitating" initial public offerings. On 8 January 2024, the Minister for the Economy, Finance and Industrial and Digital Sovereignty, speaking to economic operators, recalled that "we have become the most attractive country in Europe for investment" and that it was necessary to "consolidate this position".

It should be noted that the AMF is committed to not over-transposing European rules in the absence of a major investor protection issue, particularly in the context of a deepening of the Capital Markets Union. However, the obligation to include a retail tranche on the regulated market as part of IPOs launched in Paris is the result of a purely domestic regulatory text and constitutes goldplating of European law.

However, in order to protect investors, the Board of the AMF has decided to maintain paragraph 3 of Article 315-6 of the AMF General Regulation, in a slightly modified form, so that when an issuer wishes to target all categories of investors, including retail investors, in the context of its IPO on a regulated market, the lead manager must ensure that, in satisfying the applications of retail and institutional investors, there is no manifest imbalance to the detriment of retail investors.

In addition, given the importance of retail participation in the primary and secondary stock markets, the Board considered that a detailed study should be carried out within three years to assess the practical effects and consequences of these measures, particularly on the participation and treatment of retail investors in the context of IPOs on the Euronext Paris regulated market.

The decision of the AMF Board is subject to the approval of the corresponding amendment to the General Regulation by the Minister of Economy, Finance and Industrial and Digital Affairs.

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en

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