The Financial Conduct Authority (FCA) have recently confirmed a series of new listing rules which is said to attract several firms to the UK, encouraging innovation and growth within the capital. Here is everything you need to know about the recent changes and what it means for various stakeholders.
What’s changing
After government considerations of the initiative since 2019, the FCA have permitted a targeted form of dual class share structures in the premium listing segment of the London Stock Exchange (LSE). This is likely to encourage founder-led businesses onto the LSE who were beforehand reluctant to sign due to concern over equity rights. This initiative will therefore give company owner’s more control over major decisions which happen in their business, whilst allowing themselves to attract investors through listing themselves.
The next change is a reduction in the percentage of shares which companies have to offer up to the public. This goes down from the previous 25% and now allows businesses to ‘free float’ at 10%, which is said to break down the barriers which current issuers face when attempting to list on the LSE.
Finally, the MMC (minimum market capitalisation) threshold will see a huge increase between £700,000 and £30 million. This applies to both the standard and premium listing segments of the LSE and is likely to see an increase in trust from investors regarding which companies are listed on the exchange.
Benefits and what this means for UK businesses
After multiple talks between financial top-dogs, the move has been FCA, and government approved in hope to keep up to date with an ever-changing market. The strategy comes to cement the UK’s reputation as a place for market innovation and dynamism and has been redesigned to reap benefits for the country. The FCA is hoping that the implementation of these new rules will boost activity amongst IPO’s who have previously been at an all-time low in the UK, due to more favourable rules overseas.
In previous years, listings on the LSE have dipped. Now, they are projected to increase as barriers are reduced and more SME’s encouraged to list due to the changes of the MMC threshold. This is all a part of the plan to make London a more attractive place for businesses and investors to experience growth.
If you are concerned about any of these changes and what they may mean for you as an investor or business-owner, enlist the help of professional financial advisor who can help you better understand what these rules mean specifically for you.
