The European Union (EU) needs efficient capital markets to finance companies and drive forward the digital and green transformation of the economy. While large EU member states such as Germany, France and Italy still have untapped potential, Sweden is characterised by a high number of IPOs and listed companies. Between 2016 and 2023, Sweden recorded 508 IPOs, compared to only 450 in France, Italy and Germany combined. The market capitalisation of all listed companies in relation to gross national product is also significantly higher in Sweden (169%) than in France (128%), Germany (47%) and Italy (32%).
The study by Deutsches Aktieninstitut and the Boerse Stuttgart Group/Nordic Growth Market analyses the reasons for the success of the Swedish model and derives recommendations for action for national and European legislators. Three key success factors were identified: the investor base, the legal framework and the SME growth market:
Die Studie des Deutschen Aktieninstituts und der Boerse Stuttgart Group/Nordic Growth Market analysiert die Gründe für den Erfolg des schwedischen Modells und leitet Handlungsempfehlungen für nationale und europäische Gesetzgeber ab. Drei zentrale Erfolgsfaktoren wurden identifiziert: die Investorenbasis, der rechtliche Rahmen und der KMU-Wachstumsmarkt:
The legal framework in Sweden is growth-friendly and makes it easier for companies to access the stock market and raise capital. There are no statutory limits on authorised capital and shares with a nominal value of less than one euro are common. In addition, the prospectuses of Swedish issuers are significantly shorter and easier to prepare and read compared to other EU countries. The Swedish Financial Supervisory Authority has fully digitalised the approval process. However, Swedish experts criticise the complexity of the EU Market Abuse Regulation. Furthermore, there is no notarisation requirement for the transfer of off-market shares in Sweden, which simplifies transactions in the start-up sector.
The third success factor is the active SME growth market. Almost 90 per cent of IPOs in Sweden take place on these EU-regulated segments, which offer companies with a market capitalisation of up to EUR 200 million a tailor-made regulatory concept. Compared to the regulated market, the accounting and prospectus requirements are simplified.
The study derives a series of recommendations for action from these success factors:
- Investor base: Promotion of equity investments in all three pillars of old-age provision, introduction of a tax-incentivised investment savings account based on the Swedish model, nationwide introduction of the school subject ‘Economics and Finance’, appointment of a coordinating body for financial education (e.g. the German Bundesbank). At EU level, an annual investment of two per cent of wages and salaries in the statutory pension, the introduction of an EU label for a long-term savings product and the reform of the PEPP are recommended.
- Legal framework: Increasing the limit on authorised capital, introducing penny shares, abolishing the notarial requirement for the transfer of off-market shareholdings. At EU level, the creation of a growth-friendly 28th regime for company law, measures to reduce the fear of prospectus errors and the simplification of the EU Market Abuse Regulation are proposed.
- SME growth market: Avoiding further regulatory tightening and creating a clear gap between the intensity of regulation and the regulated market. The introduction of a familiarisation phase for newly listed companies based on the US model is also recommended.
Adopting these recommendations for action could help to strengthen the capital markets in Germany and the EU, promote the equity culture and thus provide more capital for innovation, growth and employment.
Translated with DeepL.com