Initial Public Offerings 2018 Second Edition Contributing Editors: Ilir Mujalovic & Harald Halbhuber With contributions by: CONTENTS Preface Ilir Mujalovic & Harald Halbhuber, Shearman & Sterling LLP Foreword Sean C. Davy, The Securities Industry and Financial Markets Association (SIFMA) 1 General chapters Paving the road for SMEs’ access to public equity markets Cédric Pacheco, Association for Financial Markets in Europe (AFME) 7 Going public in the USA: An overview of the regulatory framework and capital markets process for IPOs Ilir Mujalovic, Harald Halbhuber & Rupa Briggs, Shearman & Sterling LLP 14 An overview of structuring and governance considerations for Initial Public Offerings in the USA, Stacy J. Kanter & Michael J. Hong, Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates 30 Trends shaping an evolving IPO market, Pippa Bond, Daniel Forman & Lily Desmond, Proskauer Rose LLP 40 Country chapters Australia Daniel Scotti & Nicole Sloggett, MinterEllison 56 Bermuda David Cooke & Edward Rance, Conyers Dill & Pearman Limited 68 Brazil Fernando Zorzo, Pinheiro Neto Advogados 75 British Virgin Matthew Gilbert, Greg Knowles & Richard May, Maples and Calder 86 Islands Cayman Islands Suzanne Correy & Daniel Lee, Maples and Calder 93 China Shiwei Zhang, Zhong Lun Law Firm 102 Denmark Rikke Schiøtt Petersen, Chantal Pernille Patel & Mads Robert Bording Jensen, Gorrissen Federspiel Private Limited Partnership 111 Finland Tarja Wist, Maria Pajuniemi & Emilia Saloranta, Waselius & Wist 121 France Jérôme Lombard-Platet & Gacia Kazandjian, DS Avocats 130 Germany Dr. Achim Herfs & Dr. Anna Schwander, Kirkland & Ellis International LLP 143 Hong Kong Angel Wong & Agatha Chun, ONC Lawyers 154 India Venkatesh Vijayaraghavan, Juhi Singh & Pratichi Mishra, S&R Associates 165 Ireland Matthew Cole, A&L Goodbody 177 Italy Marco Lantelme, BSVA Studio Legale Associato 187 Japan Kagayaki Funakoshi & Shunsuke Aoki, Anderson Mori & Tomotsune 199 Mexico Ricardo Maldonado, Patricio Trad & Manuel Echave, Mijares, Angoitia, Cortés y Fuentes, S.C. 210 Netherlands Jetty Tukker, Emma Schutte & Duco Poppema, Houthoff Coöperatief U.A. 220 Norway Anne Lise E Gryte & Joakim Gjerde, Advokatfirmaet CLP 231 Poland Rafał Sieński, Federico “Fed” Salinas & Mateusz Zaleński Greenberg Traurig Grzesiak sp.k. 242 Portugal Eduardo Paulino, Margarida Torres Gama & Inês Magalhães Correia, Morais Leitão, Galvão Teles, Soares da Silva & Associados Sociedade de Advogados, SP, RL 254 Country chapters cont. Russia Nadezhda Minina, Alexander Nektorov & Ilia Rachkov, Nektorov, Saveliev & Partners (NSP) 266 Singapore Wee Woon Hong, Opal Lawyers LLC 281 South Africa Alastair Dixon, Christina Pretorius & Amber von Steiger, Norton Rose Fulbright South Africa Inc 292 Sweden Johan Wigh & Viktor Olsson, Advokatfirman Törngren Magnell KB 302 Switzerland Theodor Härtsch, Stefan Knobloch & Alex Nikitine, Walder Wyss AG 313 Turkey Orhan Yavuz Mavioğlu, ADMD Law Office 322 United Arab Mohamed Khodeir, Alex Ghazi & Yousef Al Amly, Al Tamimi & Company 335 Emirates United Kingdom Pawel J. Szaja, Michael Scargill & Brian Butterwick, Shearman & Sterling (London) LLP 343 Netherlands Jetty Tukker, Emma Schutte & Duco Poppema Houthoff Coöperatief U.A. Introduction History of IPOs in the Netherlands The main equity market and stock exchange in the Netherlands is called NYSE Euronext Amsterdam (hereafter Euronext). Trading originates back to 1607 in Amsterdam, where the Dutch East India Company became the world’s first publicly traded company. Euronext Amsterdam is, together with several other regulated markets in different jurisdictions, one of the largest stock exchanges in the world. Euronext’s three most well-known indices are the AEX, the AMX and the AScX. The 25 largest and most frequently traded companies at Euronext are stated on the AEX. The AMX states the 25 next largest and most frequently traded companies, whilst the AScX states the following 25 largest and most frequently traded companies. According to Euronext’s website, there are currently 148 companies listed on Euronext (some of which are dual-listed on other markets as well). Roughly 100 of those companies are Dutch legal entities. Only a couple of companies went public during the financial crises and the years thereafter. Since 2014, however, in spite of difficult market conditions and political uncertainty in Europe and the rest of the world, this trend reversed. In 2017, seven companies obtained a listing in the Netherlands. Amongst those VolkerWessels, Avantium, Veon and NEPI Rockcastle. Although volatility on the stock markets recently increased and new entrants are viewed in a more critical light, it is expected that in 2018 approximately eight companies will go public in the Netherlands. Euronext remains an attractive market for issuers, selling shareholders and investors. Reasons for choosing the Dutch jurisdiction The Netherlands is a very well-suited jurisdiction to go public in. The Netherlands is prosperous and has a well-maintained, digital infrastructure. On top of that, the political climate is very stable in the Netherlands. These factors increase the accessibility of financing. Moreover, the stable political climate decreases political and other external risks that might affect the company, or its investors, when it goes public and during the period the company is listed. Corporate law in the Netherlands is flexible and conducive. On top of that, European regulation has increased harmonisation in the European Economic Area (hereafter EEA). The main regulator for equity markets and stock exchanges in the Netherlands, the Netherlands Authority for the Financial Markets (hereafter AFM), is a constructive and supportive supervisor. GLI – Initial Public Offerings 2018, Second Edition 220 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Houthoff Coöperatief U.A. Netherlands The Enterprise Chamber of the Amsterdam Court of Appeal is a court that sets the Netherlands apart from other jurisdictions. This court is specialised in corporate proceedings. In this court, among other things, inquiry proceedings can be held to investigate the affairs of the company. Lastly, as of 3 January 2018, MiFID II (a European legislative framework to ensure fairer, safer and more efficient markets and to facilitate greater transparency for all participants) has brought, amongst other things, significant changes to trades in the dark. Pursuant to this new regulation, Euronext has launched Euronext Block, a multilateral trading facility (hereafter MTF) in 2017. This MTF allows participants to trade blocks proactively in a safe environment. Such facility further increases liquidity of stocks on Euronext. Is the regulatory scheme conducive for an IPO? The Dutch regulatory framework is highly conducive for an IPO. Dutch corporate law is flexible and the regulator is constructive. This leaves room for tailoring an IPO to the needs of the specific company. In addition, the Dutch corporate governance code (hereafter the Dutch Code) provides for a set of clear best practice rules and principles that have to be followed on a comply-or-explain basis. Most of the rules and regulations governing an IPO process in the Netherlands originate from the European Union (hereafter EU). Regulation and legislation at EU level increases harmonisation in the EEA. One of the key benefits of these EU rules is the so-called passporting regime. It allows a company to draw up a single prospectus and have it approved by the competent authority of their home member state and ask that the competent authority issues a certificate of approval. By doing so, the company usually does not need to draw up another prospectus for admission to trading of that same offering in another EEA member state. Are companies more frequently of a particular industry? Companies on Euronext are not more frequently related to a particular industry. In 2017 and 2018, the Netherlands saw a well-balanced mixed of companies. Recent examples of IPOs and IPOs that have been announced include Avantium (chemical technology), VolkerWessels (construction), B&S Group (distribution), NIBC (banking) and Varo Energy (integrated fuel supply). Trend of number of IPOs The number of IPOs follows a stable but slightly upward trend. Market sentiment at this time is relatively high and companies are trying to take advantage of this sentiment. In this context, the Netherlands has proven itself a fruitful country in which to list. Market and political developments have impacted the timing of IPOs, but seem to have limited impact on the number of IPOs. Other noteworthy trends An international noteworthy trend is the rise of international coin offerings (hereafter ICOs). ICOs are often structured in such a way that they fall outside the scope of financial supervision by, amongst others, the AFM. The protection provided to investors by financial supervision legislation is therefore absent. The Netherlands ranks relatively high based on the adoption rate of cryptocurrencies. There are many cryptocurrency start-ups based in the Netherlands as a result. Also, after having disappeared in the years following the 2008 financial crisis, the special purpose acquisition company (hereafter SPAC) has now returned. Dutch Star Companies ONE, at the time of its listing in February 2018 not being engaged in any activities, intends to acquire a significant minority stake in a business post-IPO. GLI – Initial Public Offerings 2018, Second Edition 221 www.globallegalinsights.com