City of London’s IPO prospects boosted by new rules
As the wind of change blows through British government, London’s financial regulator is also shaking things up – with proposals to change listing rules to make the UK capital more attractive for companies.
The Financial Conduct Authority (FCA) today announced what are described as the biggest changes to the UK's stock market rules in over 30 years – with the new ones coming into effective from July 29, 2024.
It seeks to attract a broader range of companies to list in the UK, by aligning London with international standards to boost growth and innovation.
This new regime intends to merge the existing two-tier system of standard and premium listings on the London Stock Exchange into a single category – though this will still remain separate to the Alternative Investment Market (AIM).
The idea is that it will simplify the listing process and reduce the associated costs of retaining a listing in London.
Companies will no longer require shareholder votes for significant transactions, although votes will still be necessary for reverse takeovers and delistings.
This deregulation will also enable more flexible arrangements around enhanced voting rights for certain cohorts of shareholders (for example company founders and/or pre-IPO investors), which could be retained for 10 years post IPO.
“A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors,” FCA executive director Sarah Pritchard said in a statement.
“That’s why we are acting to make it more straightforward for those seeking to list in the UK, while retaining vital protections so investors can help steer the businesses they co-own.”
The UK’s Association of Investment Companies (AIC) reckons the new rules will add momentum to the drive to make the UK’s capital markets more competitive.
“The next step must be for the FCA to fast-track prospectus reform, which will lower the cost of capital raising for UK-listed companies. The FCA needs to act swiftly on this to help accelerate economic growth,” AIC chief executive Richard Stone added.
