Sweeping overhaul of UK listing rules comes into force

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Major UK financial regulators have completed a drastic review of listing rules with the aim of making the city more attractive to fast-growing companies in the technology and biotechnology sectors.

The reforms that come into effect on Friday are part of a broader government-led push to make London more. Attractive destination For global investors and businesses after Brexit.

The reforms announced by the Financial Conduct Authority will allow only 10% of a company’s stock to be listed on the stock market, down from a minimum of 25%.

This package also gives founders of companies listed on the premium portion of London’s major stock markets more control after listing.

Additional control comes from a dual-class structure that gives these founders, and other executives who hold shares prior to listing, additional voting rights in certain situations, such as voting to dismiss a director. The lack of such a double-class structure discouraged high-tech entrepreneurs from listing in London.

London hopes the new regime will help compete with global rivals such as New York, Hong Kong and Amsterdam for sought after listings such as tech and biotechnology companies and “blank check” investment tools. is.

Nick Bailey, managing director of Kroll and former regulatory agency, said: “They represent a bold attempt to thwart London’s relentless long-term decline as a global listing.”

The reforms will also force SMEs worth less than £ 30 million to be listed on London to choose growth stock platforms such as Aim and Aquis Growth Market over the major London Stock Exchanges.

The new regulations will raise the minimum market value for listing on London’s major markets from £ 700,000 to £ 30 million.Some market participants are from FCA First suggestion The £ 50m threshold was too high.

Alasdair Haynes, Chief Executive Officer of the Aquis Stock Exchange, said the change “encourages SMEs to be listed on the venue with proportional regulation and support” and “for SMEs, investors and the UK.” A positive step. ”

The reform of the “dual class” voting structure will make the UK more aligned with other markets, especially New York, but some UK fund managers say that a company’s shareholding is based on “one share”. I am concerned about violating London’s long-standing principles. , 1 vote “.

The move by the FCA follows the recommendations of two separate reviews led by former Worldpay Chief Executive Officer Ron Kalifa and former EU Financial Services Commissioner Lord Jonathan Hill.

Regulatory experts said the UK did not have to wait for Brexit to make changes and noted that the listing system varies widely from EU member state to EU member state.

Julia Hoggett, CEO of LSE, welcomed the reforms, but called for further regulatory action to ensure that the UK listing system “responds to the evolving funding needs of companies.” ..

Chris Horton, a partner at law firm Latham & Watkins, said “more reforms” next year after regulators have finished discussions on areas such as prospectus, secondary offerings, and the structure of the listing system. He said he was expecting it.

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