Thought Leadership

Changes to Listing Requirements across London Stock Exchanges

March 3, 2022 Reports and White Papers

Changes to Listing Rules on Eligibility Criteria

In November 2020, the U.K.’s former European Commissioner for Financial Services, Lord Hill, was commissioned to lead a review of the U.K. listing regime. The objective of the review was to examine how the U.K. could enhance its position as an international destination for IPOs and improve the capital-raising process for companies seeking to list in London.

The results of the review were published on 3 March 2021 and with the FCA then launching a consultation on the proposed changes to the Listing Rules over that summer. Following the closure of the consultation, in December 2021, the FCA published a policy statement (PS21/22) confirming its amendments to the Listing Rules, with a view to removing barriers to listing and to protect and enhance market integrity.

The key changes include:

  • Increasing the minimum market capitalisation (MMC) threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £30 million.
  • Allowing a targeted form of dual class share structures within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the U.K.
  • Reducing the amount of shares an issuer is required to have in public hands (i.e., free float) from 25% to 10%, reducing potential barriers for issuers created by current requirements. This applies both at the time of listing and as a continuing obligation.

The £700,000 cap was introduced in 1984, but it had remained unchanged due to it being enshrined in EU legislation. Given economic growth since then, this was considered to be very much out of date. The idea in raising the minimum market capitalisation is to give investors more confidence in the quality of companies which have been admitted on each segment of the Main Market.

With regard to the dual class share structures, the Listing Rules previously only allowed for a ‘one share, one vote’ structure. This change will bring the U.K. Listing Rules more in line with the markets in the United States, Hong Kong and Singapore, which already allow a dual class share structure. The aim of this change is to encourage founder-led companies to list and ensure that the founder still retains some element of control over the company.

The FCA has also made a number of minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules, and the Prospectus Regulation Rules, to simplify the rules and reflect current practices, which came into force on 10 January 2022.

Changes to AQSE Rules Applicable to SPACs

AQSE have also recently introduced changes to the rules applicable to Special Purpose Acquisition Companies (SPACs) planning to list on the AQSE’s Access segment.

The new term “enterprise company” is set to replace the SPAC definition within the rules, and to be eligible for admission, an enterprise company must raise a minimum of £2 million by or at the time of admission, have an expected market capitalisation of no more than double its net tangible assets, and have a minimum free float of 25%. The effect of these rule changes is that the route to market in London for micro-cap shell companies (unable to meet these fundraising requirements, or, in the case of the Standard list, the new minimum market capitalisation threshold) is now effectively closed, at least across the principal London markets.

Overall, while micro- to small-cap companies have had their avenues to market in London closed off, the intentions of both the FCA and AQSE (in line with the objectives of Hill’s review) are to bolster London as a competitive listing location alongside other key financial centres. These rule changes should hopefully achieve this.

Armstrong Teasdale’s Capital Markets team are experienced in all types of public company work, involving AIM and the Main Market of the London Stock Exchange, as well as the AQUIS Growth Market.

This publication is provided by Armstrong Teasdale Limited for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to Armstrong Teasdale’s U.K. Capital Markets team.

Resources

Contact Us
  • Worldwide
  • Boston, MA
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
Worldwide
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
1980 Festival Plaza Drive, Suite 750
One Summerlin
Las Vegas, NV 89135
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1250
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
201 South Main Street
Suite 750
Salt Lake City, UT 84111
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1050 Connecticut Avenue NW
Suite 500
Washington, DC 20036
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware