Listing rule changes will ‘unlock London’s potential’ | Mark Hankinson, Co-Head of ECM, Deutsche Numis
The London stock market entered a new era last week as new listing rules came into force to make it easier for companies to access UK capital markets.
The updated rules, announced by the Financial Conduct Authority (FCA) last month[1], came into force on Monday 29th July. The measures simplify listing categories, ease the requirements on new issuers, reduce friction for listed companies to undertake transactions and allow founders and management greater control of their companies.
The changes are a vital step forward in strengthening the UK market. Deutsche Numis has brought many quality companies to the UK market, but we also know that some have been put off listing in London by some of the old regulations. Some have either delayed listing, or looked to list on overseas markets that have a more flexible approach. These rule changes are a great step forward. They will level the playing field and help us unlock London’s potential as a growth company market.
The rules scrap the two categories of standard and premium listing and replace them with a single category, all eligible for inclusion in the FTSE indices. They also make it easier for growth companies to be eligible for listing, moving from a “rules based” to a “disclosure based” regime, empowering investors with the information they need to best inform their investment decisions.
The greater simplicity and flexibility this allows will make the process of listing less burdensome, enabling young fast-growing businesses to access significant public markets capital earlier in their life-cycle and so accelerate their growth potential.
For listed companies, rules which limited their ability to undertake M&A have been removed. Related party transactions – when a company does a deal with another closely linked business – will no longer need a vote of approval from shareholders.
Other key rule changes will allow company founders and pre-IPO investors to exercise more control over their companies after they have come to market. More flexible voting structures, including dual-class voting rights, brings London into line with US markets, where such approaches are already permitted. These changes will enable founder shareholders to raise capital while retaining more control over the businesses they have created.
These important listing rule changes mean London will now be able to welcome many new international and domestic issuers to its capital markets.
As with any changes in regulation, the letter of the rules is only part of the puzzle. Developing market practice will also be hugely important, and companies seeking a listing will need a highly experienced firm to help them navigate what is a rapidly developing environment.
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The London stock market entered a new era last week as new listing rules came into force to make it easier for companies to access UK capital markets.
The updated rules, announced by the Financial Conduct Authority (FCA) last month[1], came into force on Monday 29th July. The measures simplify listing categories, ease the requirements on new issuers, reduce friction for listed companies to undertake transactions and allow founders and management greater control of their companies.
The changes are a vital step forward in strengthening the UK market. Deutsche Numis has brought many quality companies to the UK market, but we also know that some have been put off listing in London by some of the old regulations. Some have either delayed listing, or looked to list on overseas markets that have a more flexible approach. These rule changes are a great step forward. They will level the playing field and help us unlock London’s potential as a growth company market.
The rules scrap the two categories of standard and premium listing and replace them with a single category, all eligible for inclusion in the FTSE indices. They also make it easier for growth companies to be eligible for listing, moving from a “rules based” to a “disclosure based” regime, empowering investors with the information they need to best inform their investment decisions.
The greater simplicity and flexibility this allows will make the process of listing less burdensome, enabling young fast-growing businesses to access significant public markets capital earlier in their life-cycle and so accelerate their growth potential.
For listed companies, rules which limited their ability to undertake M&A have been removed. Related party transactions – when a company does a deal with another closely linked business – will no longer need a vote of approval from shareholders.
Other key rule changes will allow company founders and pre-IPO investors to exercise more control over their companies after they have come to market. More flexible voting structures, including dual-class voting rights, brings London into line with US markets, where such approaches are already permitted. These changes will enable founder shareholders to raise capital while retaining more control over the businesses they have created.
These important listing rule changes mean London will now be able to welcome many new international and domestic issuers to its capital markets.
As with any changes in regulation, the letter of the rules is only part of the puzzle. Developing market practice will also be hugely important, and companies seeking a listing will need a highly experienced firm to help them navigate what is a rapidly developing environment.
[1] fca.org.uk/publication/policy/ps24-6.pdf