Rules change looms for London Stock Exchange as watchdog aims to attract more businesses to the City Stock Exchange
- Upcoming changes build on recommendations from two reviews
- A company will only have to freely float at least 10% of its share capital when it goes public.
- Britain saw an increase in the number of initial public offerings in 2021
The UK’s financial services watchdog has announced a new set of rules that could encourage more businesses to register in London.
The Financial Conduct Authority (FCA) said that from tomorrow a company will only have to float freely 10% of its share capital when listed on the London Stock Exchange (LSE), down from 25% previously. .
It will also allow for a ‘targeted form’ of dual class equity structure within premium listing segments, which will give company founders more control over important decisions and, hopefully, lead to company listing. earlier.
New rules: From tomorrow the Financial Conduct Authority (FCA) said a company would only have to freely float at least 10 percent of its share capital when listed in London
Finally, it will raise the minimum market capitalization threshold at which a company can have a premium or standard listing from just Â£ 700,000 to Â£ 30million.
These changes follow a five-month consultation on two reviews ordered by the UK government; one on the financial technology sector, led by former Worldpay boss Ron Khalifa, and the other led by former EU financial services commissioner Lord Jonathan Hill.
Their reports made a long list of recommendations, including expanding research and development tax credits, a special visa flow to attract foreign FinTech workers, and an in-depth review of the prospectus regime.
Clare Cole, FCA’s director of marketing oversight, said the changes “would support new types of businesses looking for investments that drive economic growth and providing investors with more choice with appropriate protection.” .
She added: âOver the past few months, we have moved quickly to address areas where our rules could be improved to encourage innovation in primary markets. By taking this agile approach, we are pleased that new IPOs in 2022 can benefit from the revised rules. ‘
Britain has seen a flurry of IPOs this year, with tech firms such as money transfer firm Wise, cybersecurity firm Darktrace and Oxford Nanopore accounting for the bulk of new listings.
Quotes boom: Britain has seen a surge in IPOs this year, including money transfer firm Wise, whose founder Kristo Kaarmann is pictured above
According to recent Refinitiv data released by City AM, 113 companies were listed in London in 2020/21 compared to just 36 the year before, as the value of company listings tripled to over Â£ 50 billion. .
But the British capital faces growing competition in Europe from Amsterdam and Frankfurt as a destination for public listings, not to mention the United States.
The LSE said the changes to the rules would go a long way in helping Britain remain a global financial center, but more can be done to ensure that regulations remain responsive to the changing financing needs of businesses.
âWe will be working closely with the FCA on introducing these changes,â said Julia Hoggett, CEO of the UK Stock Exchange Unit.
FCA embarked on transformation agenda following criticism of its handling of high-profile scandals
Chris Cummings, Managing Director of the Investment Association, said he welcomed the reforms made by the FCA.
But he warned: âSuccess should be measured, not by the number of companies listed, but rather by the quality of those companies and the long-term, sustainable returns they provide to shareholders.
“It is now important to focus on a broader set of reforms to the broader listing ecosystem, including promoting the UK as a listing venue and improving the advice and support that clients receive. high growth companies throughout their listing journey. “
The FCA introduced new rules in August to facilitate the listing of Special Purpose Acquisition Companies, or SPACs, which have featured prominently on Wall Street, where $ 125 billion of so-called “blank check” companies have. been listed this year to date.
Only one PSPC has registered in London under the new rules, with most European PSPC registrations taking place in Amsterdam. The FCA has said it may make further changes to the registration rules.