2023-12-15
Bank of Lithuania decisions are a major step towards integration of the Baltic capital markets
The Bank of Lithuania has approved the disclosure requirements, which will allow Lithuanian companies to raise funds for their business in the capital markets of all three Baltic states at a lower cost and a more rapid pace.
“A year ago, the Bank of Lithuania initiated a capital markets integration project in the Baltic region. After active collaboration with the institutions of our neighbouring countries, we have achieved a tangible result: Lithuanian companies can enjoy new opportunities to more easily attract financing across the Baltic region. This is an important step in promoting the development of the Lithuanian capital market and increasing the attractiveness of the entire region to investors. We also plan on preparing further measures to make it easier for companies to borrow and give Lithuanian investors a greater choice,” says Simonas Krėpšta, Member of the Board of the Bank of Lithuania.
By reducing the costs of raising funds necessary for business development, the Bank of Lithuania, together with the Latvian and Estonian authorities, agreed to establish common disclosure requirements to enable companies to carry out public offering in all three Baltic states.
This will make the capital market more accessible to small and medium-sized enterprises, since at present, in order to offer securities to the public in all three Baltic states, they have to draw up three separate documents of different content and ensure that they comply with the national legislation of all three countries. Whereas from 2024, if securities are offered to the public not only in Lithuania, but also in other Baltic countries, companies will be able to publish only one information document in English.
The unified disclosure requirements have been developed in line with the practices of all three countries, by excluding some provisions (e.g. the period for the submission of audited financial statements has been shortened, debt granularity has been excluded) and complementing them with the current developments (e.g. disclosure of specific information in offering of securities using distributed ledger technology (DLT) and similar technologies), as well as by harmonising the format of the information document and making other changes.
The Bank of Lithuania has already approved the information document requirements, and the Latvian and Estonian financial market supervisory authorities are also expected to do it soon. The requirements will take effect from 1 January 2024. They will apply to public offerings worth €1–8 million over 12 months.
In order to further develop the capital market in the Baltic states, the next step is to harmonise the maximum threshold for submission of the information document. The maximum threshold in Latvia and Lithuania is €8 million, while in Estonia it currently equals €5 million. This threshold is planned to be increased in the first half of 2024.
Recast of the Resolution of the Board of the Bank of Lithuania on the approval of the description of the procedure for the preparation and publication of the information document required for the public offering of medium-sized issues of securities and medium-sized crowdfunding transactions (in Lithuanian, entry into force from 1 January 2024).