The City regulator has updated its listing rules in line with recommendations made in the Kalifa Review of UK fintech.
The new rules should make it easier for UK fintechs to pursue initial public offerings (IPOs) by retooling the requirements for smaller, founder-led businesses.
From 3 December 2021, the Financial Conduct Authority (FCA) will allow a targeted form of dual class share structure within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner. The FCA said that this will broaden the listed investment landscape for investors in the UK.
The regulator has also reduced the amount of shares that an issuer is required to have in public hands, from 25 per cent to 10 per cent. This is intended to reduce potential barriers for issuers created by current requirements.
The FCA has also increased the minimum market capitalisation threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £30m. Raising this threshold is intended to “give investors greater trust and clarity about the types of company with shares admitted to different markets,” the FCA said.
“We need to act to meet the needs of an evolving marketplace,” said Clare Cole, director of market oversight at the FCA.
“These changes ensure the UK’s markets maintain their reputation for dynamism, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection.”
The regulator said that the rule changes aimed to make the UK’s public markets a trusted and attractive place to list companies, and many of the updates were based on recommendations made in the Kalifa Review, which was published earlier this year.
“Over the last few months, we have moved quickly to address areas where our rules could be improved to encourage innovation in primary markets,” added Cole.
“By taking this agile approach, we are pleased that new IPOs in 2022 will be able to benefit from the revised rules.”
The FCA will continue to consult with industry experts on the overall structure of the UK listing regime and whether wider reforms could improve its longer-term effectiveness. Proposed next steps are set to be published in the first half of 2022.
Read more: “More to do” on Kalifa Review implementation