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New listing rules aim to bring more innovative companies to London
In a bid to improve the attractions of the UK stock market as a venue of choice, the Financial Conduct Authority has introduced new rules for companies wanting to float their shares in this country.
Firms can now list with a dual class structure within the London Stock Exchange’s premium listing category to ‘encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK’.
The free float, or amount of shares an issuer is required to have in public hands, will be reduced from 25% to just 10%, ‘reducing potential barriers for issuers’ according to the regulator.
Lastly, the minimum market value threshold for both the premium and standard listing segments of the market will rise from £700,000 to £30 million to give investors ‘greater trust and clarity’ about the types of company with shares admitted to different markets.
The FCA’s director of market oversight Clare Cole says the changes are designed ‘to meet the needs of an evolving marketplace, helping support new types of companies and giving investors more choice with appropriate protection’.
While raising the minimum market capitalisation would help liquidity, reducing the available free float requirement to 10% and permitting a dual share structure will surely give small investors less of a voice.
According to the UK Listing Review, between 2015 and 2020 London only accounted for 5% of the global IPO market.